Federal Credit Union Bylaws, 24551-24568 [06-3917]

Agencies

• National Credit Union Administration

[Federal Register Volume 71, Number 80 (Wednesday, April 26, 2006)]
[Rules and Regulations]
[Pages 24551-24568]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-3917]



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Federal Register / Vol. 71, No. 80 / Wednesday, April 26, 2006 / 
Rules and Regulations

[[Page 24551]]



NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Chapter VII


Federal Credit Union Bylaws

AGENCY: National Credit Union Administration (NCUA).

ACTION: Notice of Federal Credit Union Bylaws.

-----------------------------------------------------------------------

SUMMARY: NCUA is adopting changes to update, clarify and simplify the 
Federal Credit Union (FCU) Bylaws. The changes eliminate unnecessary 
provisions and increase the readability of the Bylaws by adding staff 
commentary on frequently-asked questions, new section headings and 
increased use of plain English. FCUs who have previously adopted Bylaws 
may adopt these Bylaws in whole or in part, or they may retain their 
current Bylaws.

DATES: These Federal Credit Union Bylaws are effective April 26, 2006.

FOR FURTHER INFORMATION CONTACT: Elizabeth Wirick, Staff Attorney, 
Office of General Counsel, National Credit Union Administration, 1775 
Duke Street, Alexandria, Virginia 22314-3428 or telephone: (703) 518-
6540.

SUPPLEMENTARY INFORMATION:

A. Background

    On June 30, 2005, the Board issued a Notice and Request for 
comments on proposed revisions to the Federal Credit Union Bylaws 
(Proposal). 70 FR 40924 (July 15, 2005). The Proposal was developed 
after reviewing comments received in response to the Board's notice and 
request for comments on bylaw-related matters, issued September 23, 
2004 (Request). 69 FR 58203 (Sept. 29, 2004). The Board received 
comments on the various issues raised in the Proposal as well as 
numerous other suggestions for improving the Bylaws and NCUA's process 
for issuing the Bylaws and reviewing amendments.

B. Comments

General

    NCUA received thirty comment letters in response to the Proposal. 
Fifteen federal credit unions, nine credit union trade organizations, 
three attorneys, one bank trade organization, one other organization, 
and one individual submitted comments. Most of the commenters praised 
NCUA's efforts to make the FCU Bylaws more understandable and many 
particularly expressed appreciation for the addition of section 
headings and staff commentary. Specific comments regarding the 
revisions and suggestions to alter other bylaw provisions are discussed 
below in the Article-by-Article Analysis.

General Comments

    Several commenters repeated comments made in response to the 
Request. These commenters requested greater flexibility in the FCU 
Bylaws and argued the FCU Act only requires FCU incorporators to use 
bylaws prepared by NCUA and does not require FCUs to continue to use 
NCUA-approved Bylaws after incorporation. Five commenters questioned 
the level of detail NCUA currently uses in the FCU Bylaws and the need 
for NCUA to prepare a set of bylaws for use by all FCUs. Two commenters 
recommended allowing FCUs to draft their own bylaws and submit them to 
NCUA for approval. Three commenters suggested NCUA issue a regulation 
with general content guidelines for bylaws rather than form bylaws. 
Another commenter suggested maintaining a list of approved bylaws on 
the NCUA Web site and allowing FCUs to adopt bylaws from this list. 
Another commenter stated that many of the bylaw provisions could be 
eliminated as duplicative of the FCU Act and NCUA regulations.
    Section 108 of the FCU Act requires NCUA to prepare form bylaws and 
to approve proposed bylaws before an FCU's charter is complete. The 
language of Section 108 is arguably subject to different 
interpretations. NCUA's longstanding position has been that Section 108 
expresses a congressional desire for uniformity regarding FCU 
operations and member rights. Rosenberg v. AT&T Employees FCU, 726 F. 
Supp. 573, 578 (D.N.J. 1989). Accordingly, NCUA views Section 108 as 
providing authority to issue form bylaws that apply to all FCUs, not 
only newly chartered FCUs, and to review proposed bylaw amendments. 
NCUA also believes its responsibility to approve bylaws before an FCU 
can engage in business is given greater effect by its authority to 
issue form bylaws for all FCUs and review proposed bylaw amendments. 
Finally, NCUA's practices of issuing form FCU bylaws and reviewing 
proposed amendments parallel the Office of Thrift Supervision's 
practices related to thrift bylaws. See 12 CFR 552.6.
    NCUA also believes there are several benefits to issuing FCU Bylaws 
for all FCUs. The form FCU Bylaws address the member protections the 
Act affords and function as a contract between the FCU and its members; 
the FCU Bylaws give members notice of their rights, particularly when 
they are unfamiliar with the FCU Act. The FCU Bylaws also ensure that 
all FCUs use essentially the same rules for governing themselves, 
consistent with the requirements and limitations in the Act. This 
uniformity enhances the significance of the federal charter and has the 
practical benefit of reducing the amount of examiner time spent 
reviewing bylaws. Finally, FCUs may request approval to amend their 
bylaws when appropriate on a case-by-case basis. The amendment process 
gives FCUs flexibility to adjust as necessary.
    NCUA acknowledges that several Bylaw provisions repeat requirements 
of the Act or regulations. NCUA agrees that most requirements of the 
Act or regulations do not belong in the Bylaws and has eliminated 
unnecessary repetition. In examining Bylaw provisions that repeat 
statutory requirements, NCUA considered if officials, members and 
employees needed the information in the bylaw provision and if that 
information was accessible elsewhere. The statutory and regulatory 
provisions that remain serve to inform FCU officials, employees and 
members of important rights and responsibilities.

Recommending Bylaw Charges To Address Charter Conversions

    Although the issue of conversion to other types of financial 
institution charters by FCUs was not part of the

[[Page 24552]]

Proposal, NCUA received a number of comments on this topic. Four 
commenters expressed concern about the ease with which credit unions 
can convert to other types of financial institutions, contending the 
end result of these conversions is that the equity that belongs to all 
credit union members is redistributed to insiders. Current law allows 
conversion based on a simple majority vote of credit union members 
voting. 12 U.S.C. 1785(b)(2)(B). The commenters voiced concern that 
members are often inadequately informed of their rights as credit union 
members and how conversion to another type of financial institution 
affects these rights.
    These commenters suggested a variety of bylaw amendments designed 
to protect members' rights during the conversion process. Two 
commenters suggested allowing credit unions to set the percentage of 
members required to approve a conversion vote and prohibiting 
amendments to this provision without notice to members or another 
member vote. Two commenters specifically suggested the FCU Bylaws 
should require a vote of at least 50% of all members for conversion. 
One commenter also asked that the FCU Bylaws include easily adoptable 
check-off options for the conversion process that would: (1) Guarantee 
dissenting members the opportunity and means to discuss the conversion 
proposal; (2) authorize full or partial distribution of equity to 
dissenting voters after a conversion vote and ensure that members are 
informed of their right to apportionment of the equity after 
conversion; (3) permit only members with no conflict of interest to 
initiate the conversion process; and (4) allow credit unions to set a 
minimum percentage of member signatures required for a conversion 
petition.
    While NCUA appreciates the commenters' concerns, these comments and 
recommendations are beyond the scope of the proposed amendments to the 
FCU Bylaws that the Board issued for public comment. Therefore, the 
Board will not consider adding these types of provisions either as a 
change to the form Bylaws or as options that FCUs could adopt. 
Nevertheless, the Board believes this is an area of internal 
governance, and the members, as the owners of an FCU, have an important 
stake in the voting requirements for such a fundamental change. The 
Board believes it is more appropriate for individual credit unions to 
consider how they want to address this issue and suggests that FCUs 
interested in including a bylaw provision related to conversion voting 
requirements should avail themselves of the process for seeking an 
amendment. In any case, proposed amendments cannot be inconsistent with 
the requirements of the FCU Act regarding conversions. The amendment 
process requires an FCU to request approval from its Regional Director 
and this process is now fully described in the Introduction to the FCU 
Bylaws the Board is adopting today.

C. Article-by-Article Analysis of Comments

Introduction--Bylaw Amendment Process

    The Proposal included a revised introduction, which gave specific 
instructions on how FCUs may obtain bylaw amendments. NCUA recently 
received a request to clarify whether changes to provisions that 
include blanks for an FCU's board to fill in are considered bylaw 
amendments. The final version of the bylaws adds a new paragraph to the 
introduction clarifying that changes to ``fill-in-the-blank'' 
provisions are amendments to the bylaws and, as such, require a two-
thirds vote of an FCU's board. The FCU need not, however, submit such 
changes to NCUA for approval, provided the change is within the range 
of permissible options.

Article I, Section 2--Purposes

    One commenter suggested listing the unique characteristics of 
credit unions as set forth in the Credit Union Membership Access Act of 
1998. The Board agrees that listing these characteristics is useful for 
FCU members, staff and officials and has added them to this section.

Article II, Section 2--Membership Application Procedures

    The Proposal did not make any substantive changes to this section, 
which describes the requirements for joining an FCU. One commenter 
suggested deleting references to the uniform entrance fee and paying 
the initial share in installments. The FCU Act, however, requires a 
uniform entrance fee and allows the payment of the initial share in 
installments. 12 U.S.C. 1759(a). Reiterating these requirements in the 
Bylaws is useful for FCU staff and members. The same commenter also 
suggested that the requirement for the board to approve membership 
forms is outdated and not a proper board function. Because the board is 
responsible for the general direction and control of the credit union, 
it is appropriate to retain the requirement that the board approve 
membership application forms.

Article II, Section 3--Maintenance of Membership Share Required

    One commenter found Sections 3 and 4 of Article II inconsistent, 
because Section 3 says members cease to be members if they fail to 
bring their account back to par value within the specified period, 
while Section 4 permits members to remain members until they choose to 
withdraw or are expelled. NCUA does not view these provisions as 
inconsistent. If members fail to bring their account back to par value 
within the time provided, they have also chosen to withdraw their 
membership.
    One commenter stated it is unclear what actions constitute 
withdrawal and suggested it would be helpful to clarify what happens to 
joint account holders who fall below joint minimums of two times par 
value. The term withdrawal is self-explanatory, and joint account 
holders who draw down their account below the joint account par value 
should be treated like other members who draw down their accounts below 
par value.

Article II, Section 4--Continuation of Membership

    The Proposal added a sentence to this section stating disruptive 
members may be subject to limitations on services and access to credit 
union facilities. Five commenters generally agreed including notice 
that credit unions may restrict service to disruptive members is an 
improvement. One of these five commenters requested more specific 
language, such as ``threatening or abusive,'' and one wanted to add 
that credit unions may restrict services to members who have caused a 
loss to the credit union. One commenter suggested deleting the proposed 
language regarding limiting service to disruptive members. This 
commenter stated credit unions are aware of this power, and including a 
bylaw provision will lead to debates with members over the meaning of 
the provision. The addition of the proposed language serves to remind 
members that they may not disrupt credit union operations and the term 
``disruptive'' is sufficiently specific to give members this notice.
    Another commenter noted it is unclear if an FCU that adds 
restrictions on services to members no longer within its field of 
membership (FOM), as permitted by the last sentence of Section 4, must 
submit these restrictions for NCUA's approval under the bylaw amendment 
process. FCUs that place restrictions on services to members no longer 
within the FOM may state these

[[Page 24553]]

restrictions in this section without submitting them for NCUA approval.
    The same commenter deemed the expulsion and withdrawal provisions 
of this Article incomplete. The commenter suggested reorganizing these 
provisions and moving them to Article XIV so all provisions regarding 
member rights, responsibilities and qualifications are in one place. 
Article II, Section IV of the revised Bylaws now includes a reference 
to the complete expulsion provisions of Article XIV, and this reference 
is sufficient clarification.

Article II--Staff Commentary

    One commenter disagreed with the commentary's repetition of the 
Act's requirement to charge a uniform entrance fee, saying his credit 
union wants authority to charge a lower entrance fee to minors. NCUA 
reiterates that, if FCUs charge an entrance fee, the FCU Act requires 
the fee to be the same for all members. 12 U.S.C. 1759(a).

Article III, Section 1--Par Value

    One commenter suggested the reference to paying the initial share 
in installments is irrelevant and should be deleted. The FCU Act 
permits membership after the payment of an initial installment. 12 
U.S.C. 1759(a). By way of historical background, from the 1930s until 
the mid 1980s, the FCU Bylaws set the par value at $5.00 and provided 
for installments of at least $.25 per month. Since the mid 1980s, the 
Bylaws have given FCUs flexibility in determining whether to permit 
payment of the initial share in installments by having a blank for the 
amount of the par value and a blank for the amount of installment 
payments to be made on a monthly basis. Thus, an FCU can, for example, 
can fill in the blank for the par value as $10.00 and also state that 
$10.00 is the amount of an installment, thus establishing that a series 
of installment payments will not be permitted but that payment of a 
full initial share is required for membership. To the extent that prior 
legal opinions have indicated that an FCU is required to permit payment 
of the initial share in installments, those opinions are superseded. 
Nevertheless, the comment demonstrates this provision should remain in 
the Bylaws for informational purposes.

Article III, Section III--Time Periods for Payment and Maintenance of 
Membership Share

    Three commenters found this provision inconsistent with Article II, 
Section 2, because this provision says a member ``may'' be terminated 
for failing to maintain par value, while Article II, Section 2 says a 
member who fails to maintain par value ``ceases to be a member.'' NCUA 
agrees the word ``may'' in Article III, Section 3 is misleading, since 
FCU membership requires maintenance of the membership share, and has 
changed it to ``will.''

Article III, Section 4--Transferability

    One commenter thought this section on transfers of shares between 
members unnecessary and said it reflects a reference to corporate law 
that is generally inapplicable to credit unions. While this issue may 
arise infrequently, it is important for members to know that any earned 
but uncredited dividends will transfer with transferred shares.

Article III, Section 5--Withdrawals

    One commenter suggested Section 5 addresses issues covered by 
regulation and state laws and could be simplified. One commenter termed 
paragraphs (c), (d) and (e) operational issues that do not belong in 
the Bylaws. The Proposal eliminated paragraph (b) of Section 5, leaving 
paragraphs (a), (c), (d), and (e). NCUA has retained these provisions 
because they provide important information to FCU members and staff.
    NCUA has retained paragraph (a), Which allows the board to require 
60 days written notice before funds are withdrawn, because it is 
important for members to understand the board has this right. Paragraph 
(c), which prohibits delinquent borrowers from withdrawing funds below 
the amount of their liability without approval from the credit 
committee or loan officer, provides notice to members about a possible 
consequence of loan delinquency. Paragraph (d), as revised, eliminates 
the arbitrary 4-year cutoff for accounts of a deceased member and 
allows the account to continue until the administration of the estate 
is completed. Stating guidelines for handling the accounts of deceased 
members is useful to both credit union staff and members. Paragraph 
(e), which gives the board the right to impose a fee for excessive 
share withdrawals subject to other regulations requiring disclosure of 
account terms, also provides important information to members. In the 
interest of informing FCU members and staff about basic rights and 
responsibilities regarding withdrawals, NCUA is retaining these bylaw 
provisions at this time.

Article III, Section 6--Trusts

    This section, which was unchanged by the Proposal, clarifies 
membership requirements for shares owned by trusts. Two commenters 
found this provision unnecessary. NCUA has retained this provision 
because it provides useful information to credit union staff and 
members.

Article III, Section 7--Joint Accounts and Membership Requirements

    The Proposal included an option to permit FCUs to decide whether to 
allow joint account holders to be members without each opening a 
separate account. Five commenters supported the proposed option because 
it permits FCUs to determine how they want to institute their 
membership policies and manage their accounts. One commenter opposed 
the change and said joint account holders should not be permitted to 
become members without opening a separate account. One commenter 
suggested the meaning of the terms ``joint membership'' and ``primary 
owner'' are unclear and suggested the option refer only to the ``sole 
owner.'' This same commenter noted the Section fails to disclose the 
requirements for membership and the consequences of not being a member.
    NCUA has not changed the language from the Proposal. The commenter 
who opposed allowing joint account holders to become members without 
opening a separate account is free to encourage her FCU's board to 
choose that option. NCUA disagrees that the term ``joint membership'' 
is unclear, since the remainder of the sentence spells out the 
requirements for joint membership. Further, retaining the term 
``primary owner'' is necessary because a joint account owner opening a 
separate account to establish membership may also want to open a joint 
account. Finally, information on membership requirements and the 
consequences of not being a member are available elsewhere in the 
Bylaws.

Article IV, Section 1--Annual Meeting

    The Proposal amended Section 1 to delete the requirement that the 
annual meeting be held ``within the period authorized by the Act'' 
because the Act no longer specifies a time period for holding the 
annual meeting. Instead, the Proposal added a blank space for an FCU to 
insert the time period of its annual meeting in order to give members 
notice of the time frame for the annual meeting.
    Two commenters supported the Proposal's addition of a blank space 
for the board to fill in the date of the annual meeting. One commenter 
found the blank space ``too restrictive'' and proposed substituting 
``no later than May 31 (or June) of each year.'' The last commenter 
misinterpreted the effect of the amendment, which allows an FCU to 
insert the approximate time of its

[[Page 24554]]

annual meeting and does not dictate a specific time period. NCUA 
clarifies that the examples of meeting dates listed in the instruction 
are examples, and the credit union may insert other dates if it prefers 
to have its annual meeting at other times of the year. FCUs should 
strive to be as specific as possible in listing the date of its meeting 
in the interests of providing this information to members.

Article IV, Section 2--Notice of Meetings Required

    One commenter requested amendments to Section 2 to permit 
electronic notice of meetings to members who have opted to receive 
other credit union information electronically. NCUA agrees that FCUs 
should be able to notify members of meeting electronically if members 
prefer this method of notification. Accordingly, this section, as 
amended, permits electronic notice of meetings if a member has 
affirmatively consented to receive notices and statements 
electronically.

Article IV, Section 3--Special Meetings

    One commenter stated requiring 30 days notice for a special meeting 
is inconsistent with the requirement that the supervisory committee 
call a special meeting within 7 to 14 days after the suspension of a 
director, officer or member, as provided in Article IX, Section 5. The 
commenter appears to be confusing the notice requirement for a special 
meeting, which is 7 days, with the requirement that the board chair 
call a special meeting within 30 days of receiving a written request 
from the greater of 25 members or 5% of the members. Because the 
required notice for a special meeting is 7 days, there is no conflict 
with the requirement to call a special meeting within 7 to 14 days 
after the suspension of a director, officer or member.
    The Proposal increased the maximum number of member signatures 
required to call a special meeting from 500 to 750. Three commenters 
opposed this change and asked that the maximum number of members 
required to request a special meeting remain at 500. Two commenters 
supported the change. Ten commenters favored an increase; one of these 
commenters also suggested increasing the maximum number to 1000 while 
the other nine commenters suggested a cap based on a percentage of 
total members without an absolute numerical cap. Another commenter 
requested the Bylaws impose a time limit for collecting the signatures 
for a special meeting petition, such as 60 days.
    The final bylaw revisions include the provision increasing the 
maximum number of signatures required to call a special meeting to 750. 
In practice, this increase in the cap means that for credit unions with 
15,000 or more members, the maximum number of signatures required on a 
special meeting request is 750. For smaller credit unions, the number 
of signatures required on a special meeting request is 5% of members or 
25 members, whichever is greater. The Board believes this increase is 
appropriate, because, unlike nominations by petition, there is no time 
limit for obtaining the requisite number of signatures. Special 
meetings are expensive and time-consuming to conduct. Increasing the 
limit will ensure special meetings are called only when an issue is of 
interest to a broad group of FCU members, but the increase is not so 
high it will prevent members from obtaining a special meeting.
    The final bylaw revisions also include edits to the second sentence 
of this section to clarify that, if members obtain the requisite number 
of signatures on a special meeting request, the meeting must be held 
within 30 days. NCUA was recently asked if the phrase ``a special 
meeting must be called by the chair within 30 days'' means that the 
meeting must occur within 30 days. The FCU Bylaws track the FCU Act and 
NCUA regulations in using the terms ``call'' and ``hold'' 
interchangeably. For example, the provisions of the FCU Act and NCUA 
regulations allowing NCUA to appoint FCU directors to replace suspended 
directors provides that the temporary directors must ``call'' a special 
meeting within thirty days after their appointment, unless the FCU's 
regular annual meeting is scheduled within that period or the 
suspensions resulting in the appointment of temporary directors are 
terminated. 12 U.S.C. 1786(i)(2); 12 CFR 747.302. Similarly, NCUA's 
merger regulation allows members of a merging FCU to vote on the merger 
proposal at a special meeting ``to be called within 60 days of NCUA 
approval'' unless the FCU's annual meeting is scheduled within 60 days 
after NCUA approval. 12 CFR 708b.106(1). These provisions use the term 
``call,'' but, because the special meeting need not be called if the 
annual meeting is scheduled within the prescribed period, the term 
``call'' means the special meeting must be held within the prescribed 
period. Accordingly, the final bylaw revisions now clarify the 
requirement to ``call'' a special meeting within 30 days means the 
meeting must occur within 30 days.

Article IV, Section 4--Items of Business for Annual Meeting

    The Proposal included a new sentence at the end of Section 4 to 
notify members of the rules of order or procedure the FCU will use when 
conducting member meetings. 70 FR 40926-27 (July 15, 2005). Members are 
entitled to know which rules will govern the process for conducting the 
meeting and making decisions. FCU members may make a motion for member 
action if the Act has entrusted members with such action. Id. Members 
may also make a motion for a member vote to recommend Board action on 
other matters. Id.
    Five commenters supported listing the rules of order an FCU uses. 
Another commenter suggested that, while adopting a particular set of 
rules will provide further guidance, most rules of order will be 
inadequate because of credit unions' unique nature. While the Board 
agrees credit unions are different from corporate and parliamentary 
bodies for which most rules of order are devised, it finds sufficient 
parallels to make the selection and use of rules of order useful to 
members.
    Four commenters--one banking trade group, one state credit union 
and two charter conversion proponents--opposed the addition of the 
rules of order provision because they believe it would allow all member 
motions to be heard. These commenters contended allowing all motions to 
be heard would exceed members' statutory authority and increase annual 
meeting costs and time. One of these commenters stated it is not clear 
what actions the FCU Act entrusts to members and allowing matters to 
come up for the first time at a meeting would not give members notice 
of issues possibly under discussion. Two other commenters, while not 
expressing direct opposition, found the rules of order provision vague 
and possibly subject to misinterpretation.
    Commenters opposed to the rules of order provision misread the 
authority it gives to members. Members may only make motions for action 
by the membership on issues where they have authority to act. The FCU 
Bylaws provide only for members to vote for the election of directors, 
the removal of directors and committee members, and the expulsion of 
members. FCU Bylaws, Articles IV, XIV, XVI. Although not addressed in 
the FCU Bylaws, the FCU Act and NCUA regulations establish the member's 
right to vote on the following matters:
     Conversion to state charter, 12 U.S.C. 1771;

[[Page 24555]]

     Conversion to mutual savings bank, 12 U.S.C. 1785;
     Conversion to private insurance, 12 U.S.C. 1786; and
     Merger where an FCU is acquired, 12 CFR 708b.106.
    Accordingly, members may make motions calling for a member vote 
only if the motions relate to the issues noted here.
    Nevertheless, and in addition, members may make other advisory 
motions requesting an FCU's board to take a specific action on other 
topics. If a member has followed the rules of order chosen by an FCU 
and moves for a membership recommendation to the board, the chair must 
recognize the motion even though the board is not bound to adopt the 
recommendation. Member participation in the governance of an FCU will 
be enhanced by the rules of order provision, which will serve to inform 
members of their right to be heard on fundamental issues affecting 
them. Accordingly, the Board adopts this Section as proposed.
    The Proposal also added the Community Development Revolving Loan 
Program's requirement of a report to members on providing needed 
community services to the report of directors section. One commenter 
said this addition was better addressed in a regulation. This 
requirement is addressed in NCUA's regulations, but NCUA added it to 
the Bylaws to inform members this may be a requirement for credit 
unions participating in the Community Development Revolving Loan 
Program. To accommodate potential revisions to the Revolving Loan 
Program regulation, the final bylaw is revised to state that the report 
to members is required if the Revolving Loan Program requires it.
    One commenter suggested creating separate sections for annual and 
special meetings. Another commenter suggested it was unclear if the 
rule of order provision applies to special meetings since the heading 
for Section 4 includes only annual meetings. The Section heading for 
Section 4 has been changed to ``Items of business for annual meeting 
and rules of order for annual and special meetings.''

Article IV, Section 5--Quorum

    Two commenters stated that requiring only 15 members for a quorum 
for an annual or special meeting potentially allows an inappropriately 
small number of members to wield disproportionate influence. One of 
these commenters suggested allowing credit unions to choose a number 
for a quorum between 15 and 100, while the other commenter stated 
credit unions should be able to set their own quorum level. Because one 
way to expel members is by holding a special meeting, and it is often 
difficult for credit union managers to get 15 members to attend an 
expulsion meeting, NCUA has retained the quorum of 15 for the standard 
Bylaws. NCUA will consider requests for individual bylaw amendments to 
increase this number.

Article V, Options A2-A4, Section 1--Nomination Procedures

    One commenter suggested allowing FCUs to deliver the notice 
regarding the nominating committee's nominees and nominations by 
petition electronically, for those members who consent, in Options A2 
and A3. The Proposal added the option of delivering these notices 
electronically in Option A4. NCUA agrees that FCUs may deliver this 
notice electronically to members who consent regardless of which 
election option the FCU uses. The final version of the Bylaws revises 
Section 1 of Options A2 and A3 to allow electronic delivery of this 
notice.
    The Proposal retained the current bylaw provision allowing members 
to petition to run for board seats by obtaining the signatures of 1% of 
members with a minimum of 20 and a maximum of 500. Four commenters 
requested changes to the 500 signature cap. Two suggested eliminating 
the maximum and requiring the signatures of a straight percentage of 
the membership regardless of the credit union's size. Another commenter 
suggested changing the provision to require the signatures of 750 
members, or 0.5% of members, whichever is greater. Another commenter 
suggested increasing the cap to 750 signatures.
    The Board believes that eliminating or increasing the 500 signature 
cap would make it too difficult for members of larger credit unions to 
be nominated by petition. Because the membership of many FCUs is 
geographically dispersed and many members transact much of their 
business electronically, the requirement to obtain at least 500 
signatures is a significant hurdle to a member seeking nomination. 
Also, members seeking nomination by petition have only the time between 
mailing of the written notice to members that nominations for vacancies 
may be made by petition and 40 days before the annual meeting, which 
may be as few as 30 days. After considering these factors, the Board 
declines to increase the 500 signature maximum.

Article V, Option A4, Section 2(c)(2)--Election Procedures

    The Proposal added a requirement to include a mail ballot with 
electronic election procedure instructions, rather than require a 
member without the requisite electronic device to request a ballot. Two 
commenters supported this change. Twelve commenters opposed placing 
this requirement in the Bylaws. Some commenters found the change 
unnecessary because members can request the mail ballot. They stated 
that FCUs should have the option of changing their policies. Others 
stated the proposal would defeat the purpose of electronic ballots.
    Several of the commenters suggested other alternatives to requiring 
an FCU to mail a paper ballot to all members. Two commenters suggested 
FCUs be allowed to omit the paper ballot for members who have agreed to 
receive electronic ballots and another commenter suggested FCUs be 
allowed to omit the paper ballot for members who have agreed to receive 
statements and notices electronically. Another commenter suggested 
allowing members to request a paper ballot by phone and require earlier 
notice to members of alternatives to electronic voting.
    The Board continues to believe members who lack access to 
electronic devices should be provided paper ballots without having to 
make a separate request. NCUA's examiners and regional offices 
initially suggested the paper ballot requirement, because they had 
concerns that members who have to take additional steps to vote are 
less likely to do so. The Board agrees with the suggestion that FCUs 
should not be required to send paper ballots to members who receive 
other credit union communications electronically. The final bylaw does 
not require inclusion of a mail ballot with electronic election 
procedure instructions for members who have chosen to receive other 
credit union communications electronically.

Article V, Option A4, Section 2(d)(1)--Election Procedures

    The Proposal changed the requirement that the order of names on 
ballots be determined by the drawing of lots. The proposed bylaw 
instead required that names be in some random order, and the staff 
commentary to this section noted that the randomizing procedure should 
be consistent from year to year to avoid favoritism. One commenter said 
the bylaw provision should be consistent with the staff commentary 
allowing any random order, instead of requiring names to be ordered by 
the drawing of lots. NCUA

[[Page 24556]]

confirms that the bylaw does not require ordering names by the drawing 
of lots.

Article V, Section 7--Minimum Age Requirement

    The current version of the Bylaws requires a board to establish the 
minimum age for eligibility to vote by a separate board resolution. In 
the interests of providing as much useful information as possible to 
members in the Bylaws, the Proposal replaced this provision with a 
blank space for the board to fill in. Five commenters supported this 
change. Two of these five commenters, however, suggested NCUA amend the 
provision or provide guidance to clarify that the age the board selects 
may not be greater than 18, or the age of majority under state law. 
This is a useful clarification and it has been added as an item in the 
staff commentary to Article V.
    One commenter also suggested allowing credit unions to establish 
reasonable cut-off dates before the election for purposes of 
determining eligibility to vote. Because it would be difficult to 
establish a cut-off time frame that works for all credit unions, this 
provision is not included this provision. Individual bylaw amendment 
requests will be considered as necessary. Another commenter suggested 
adding provisions allowing a credit union to bar members who have 
caused a loss or have been disruptive from voting. These provisions are 
impermissible under the FCU Act, which gives members the right to vote 
as long as they are members. 12 U.S.C. 1760.

Article V, Section 8--Absentee Ballots

    One commenter suggested the Bylaws should allow members to request 
and submit absentee ballots by electronic means. NCUA agrees and has 
added a new paragraph to the end of this section to clarify that 
members who have chosen to receive notices and statements 
electronically may obtain ballots and vote by electronic means. 
Paragraphs (b) and (c) of this section are revised to clarify that 
members may request absentee ballots by electronic means.

Article V--Staff Commentary

    One commenter suggested the commentary clarify that director 
candidates must be ``members in good standing'' and be ``bondable.'' As 
discussed in the commentary section titled ``Eligibility 
Requirements,'' the FCU Act provides the only requirements for director 
candidates. NCUA regulations require bond coverage for all directors. 
12 CFR 713.3(b). Whether a director candidate is ``bondable'' may not 
be apparent before the application for bond coverage, and so this 
requirement would be impossible to enforce for director candidates. 
Elected directors may not be seated as directors unless they qualify 
for bond coverage, but neither the FCU Act nor NCUA's regulations 
prevent those who might not qualify from being candidates.

Article VI, Section 2--Composition of Board

    One commenter asked that this provision clarify that an FCU may 
fill in ``none'' for the number of paid employees or family members who 
can serve on the board. NCUA agrees this clarification would be useful 
and has changed the parenthetical instruction after the blank space 
from ``Fill in the number'' to ``Fill in the number, which may be 
zero'' in the final version of the Bylaws.

Article VI, Section 4--Vacancies

    The Proposal replaced the current requirement that vacancies on the 
board be filled within a ``reasonable time'' with a requirement that 
vacancies be filled as soon as possible but no later than the next 
regularly scheduled board meeting. Twenty commenters opposed this 
change. Most expressed concern that imposing an arbitrary deadline 
would hamper efforts to identify the best-qualified candidates. Several 
of the objectors also noted this deadline would be impossible to meet 
if a vacancy occurred immediately before a scheduled board meeting. 
Eight of the commenters preferred to have no absolute deadline. Other 
suggestions for the deadline included a blank for the credit union to 
fill in or a range of 30 to 180 days.
    The Board believes it is crucial for FCUs to appoint members to 
fill vacant board spots quickly, but appreciates the requirement that 
vacancies be filled no later than the next regularly scheduled board 
meeting may be too rigid a requirement. Instead, the final version of 
the Bylaws will require board vacancies to be filled ``as soon as 
possible.''

Article VI, Section 6--Board Responsibilities

    The Proposal added a requirement that FCU boards establish a policy 
to address training for board members and other volunteers in areas 
including ethics and fiduciary responsibility, regulatory compliance 
and accounting. Two commenters supported the inclusion of the training 
requirement, noting it would enhance director knowledge and make 
members aware of directors' duties. Five commenters opposed the 
requirement or questioned its placement in the Bylaws, arguing it would 
make finding volunteers more difficult. One of those opposed also noted 
that including a training requirement in the Bylaws could lead to 
unproductive ``second guessing'' by examiners. The Board believes the 
training requirement will assist board members in carrying out their 
duties and make service on an FCU board more attractive, not less so. 
Accordingly, the final version of the Bylaws includes the training 
policy requirement.

Article VII, Section 2--Election and Term of Office

    The Proposal sought comment on whether requiring a board to conduct 
its organizational meeting within seven days of the annual meeting was 
too onerous. NCUA received only four comments on this matter and the 
comments were divided. The Board has retained the seven-day deadline in 
the final version of the Bylaws, but FCUs may consider requesting 
individual bylaw amendments if necessary to lengthen this period.

Article VII, Section 4--Approval Required

    The Proposal did not amend this section, which requires the board 
to approve all individuals authorized to issue orders for disbursement 
of funds. One commenter found this provision unclear and termed it an 
operational matter that does not belong in the Bylaws. The FCU Act 
requires boards to provide fidelity coverage for officers and employees 
having custody of or handling funds. 12 U.S.C. 1761b(2). Retaining this 
section of the Bylaws provides useful information to an FCU's board 
about its responsibilities under the Act.

Article VII, Section 6--Duties of Financial Officer

    The Proposal retained the current requirement for credit unions to 
post monthly financial statements in a conspicuous place in the credit 
union's office. Three commenters supported continuing this requirement, 
with one commenter saying each credit union should be allowed to 
determine what constitutes a conspicuous place and manner of posting, 
such as the credit union's Web site. One commenter found this 
requirement outdated and suggested its removal. The Board agrees with 
the majority of commenters that actual posting of the monthly financial 
statement provides useful information to members and this requirement 
remains in the Bylaws.

[[Page 24557]]

Article VII, Section 8--Board Powers Regarding Employees

    The Proposal did not substantively amend this section, which 
recognizes the board's power to hire, compensate and fire employees or 
delegate this function to the financial officer or management official. 
One commenter suggested deleting this section and allowing each credit 
union to determine its own policies. NCUA has retained this provision 
because it provides useful information to FCU officials and staff.

Article VII, Section 10--Executive Committee

    The Proposal amended this section to clarify that the FCU Act 
permits boards to appoint executive committees and requires specificity 
in these delegations. These changes were made after reviewing comments 
on the Request. One commenter stated it is unnecessary to require that 
the board be specific about the executive committee's duties and stated 
this provision could be construed as requiring limits on a delegation. 
FCU boards should be as specific as possible when delegating their 
responsibilities to executive committees.

Article VIII, Option 1, Section 4 and Option 2, Section 1--Credit 
Committee/Loan Officers

    This section repeats the FCU Act's prohibition on loan officers 
disbursing funds for loans that they have approved. 12 U.S.C. 1761c(b). 
One commenter suggested making this an optional bylaw provision, but 
repeating the statutory prohibition provides useful information to FCU 
officials, staff and members.

Article IX, Section 1--Supervisory Committee

    The Proposal amended Section 1 to prohibit the compensated officer 
and the financial officer from serving on the supervisory committee. 
Three commenters expressed support for this change, and the amended 
language is included in the final version of the Bylaws.

Article XI, Section 2--Delinquency

    The Proposal did not amend this section, which allows the board to 
impose late charges for delinquent loans. One commenter termed this an 
operational issue that should be deleted from the Bylaws. While 
treatment of delinquent loans is no doubt covered in more detail in 
loan agreements between a member and an FCU, repetition of the basic 
concept that delinquency may result in late fees is helpful to some 
members and has been retained.

Article XIII--Deposit of Funds

    This section is deleted from the final version of the Bylaws, as 
proposed. NCUA believes this article is obsolete because FCUs should be 
able to deposit funds properly without guidance in the FCU Bylaws.

Article XIV, Section 1--Expulsion and Withdrawal

    The Proposal expanded Section 1 by including the two methods to 
expel a member under the FCU Act. One commenter specifically supported 
this change and the final version of the Bylaws includes the change as 
proposed.

Article XV--Minors

    The Proposal retained the provision allowing shares to be issued in 
the name of a minor and added language clarifying that state law 
governs transactions between FCUs and minors. One commenter agreed that 
including this information is useful to members and the final version 
of the Bylaws includes this clarification.

Article XVIII, Section 1--Definitions

    The Proposal deleted the definitions of ``household'' and 
``organizations of such persons'' and moved the definition of 
``immediate family member'' to Section 1 of this Article. One commenter 
noted the Bylaws should include definitions of ``organizations of such 
persons'' and ``immediate family member'' because the Bylaws are more 
accessible than the Field of Membership Manual. NCUA clarifies that the 
definition of immediate family member remains in the bylaws, and that 
the term is only used in Article VI, Section 2, which allows an FCU to 
restrict the number of immediate family members of paid employees on 
the board. Upon consideration, NCUA believes that its instruction for 
this section permitting an FCU to insert a more restrictive definition 
of ``immediate family member'' or ``household'' for field of membership 
purposes is confusing, and has deleted this instruction from the final 
version of the bylaws. A member who desires more precise information 
about the FCU's field of membership can obtain it from other readily 
accessible sources, such as the FCU's Web site or advertising 
materials, so the bylaws do not need to address field of membership 
information.

    By the National Credit Union Administration Board on April 20, 
2006.
Mary F. Rupp,
Secretary of the Board.

The Federal Credit Union Bylaws

Introduction

    Effective date. After consideration of public comment, the National 
Credit Union Administration (NCUA) Board adopted these bylaws on ------
------. Unless a federal credit union has adopted bylaws before ------
------, it must adopt these revised bylaws.
    Adoption of all or part of these bylaws. Although federal credit 
unions may retain any previously approved version of the bylaws, the 
NCUA Board encourages federal credit unions to adopt the revised bylaws 
because it believes they provide greater clarity and flexibility for 
credit unions and their officials and members. Federal credit unions 
may also adopt portions of the revised bylaws and retain the remainder 
of previously approved bylaws, but the NCUA Board cautions federal 
credit unions to be extremely careful. Federal credit unions must be 
careful because they run the risk of having inconsistent or conflicting 
provisions because of the various options the revised bylaws provide as 
well as other revisions in the text.
    Bylaw amendments. The FCU Bylaws contain several provisions 
allowing FCU boards to select from an option or range of options and 
fill in a blank. Changes to ``fill-in-the-blank'' provisions are, in 
fact, changes to the FCU's bylaws and require a two-thirds vote of the 
board. As long as the FCU selects from the permissible options for 
completing the blank, the FCU need not submit the change for NCUA 
approval using the process outlined below.
    Federal credit unions continue to have the flexibility to request 
other bylaw amendments if the need arises. NCUA must approve any bylaw 
amendments; federal credit unions may no longer adopt amendments from 
the ``Standard Bylaw Amendments'' booklet because the 1999 revisions to 
the bylaws included sufficient flexibility to make the separate list of 
standard bylaw amendments superfluous. Thus, NCUA no longer 
differentiates between ``standard'' and ``nonstandard'' bylaw 
amendments.
    The procedure for approval of bylaw amendments is as follows:
     The federal credit union wishing to adopt a bylaw 
amendment must file a request with its regional director.
     The request must include the section of the bylaws to be 
amended; the reason for or purpose of the amendment,

[[Page 24558]]

including an explanation of why the amendment is desirable and what it 
will accomplish for the credit union; and the specific, proposed 
wording of the amendment.
     After review by the regional director and consultation 
within the agency, the regional director will advise the credit union 
if a proposed amendment is approved.
    Federal credit unions considering an amendment may find it useful 
to review the section of the agency Web site on bylaws that has 
opinions issued by the Office of General Counsel about particular bylaw 
amendments. Even if an amendment has been previously approved, the 
credit union must submit a proposed amendment to NCUA for review under 
the procedure listed above to ensure the amendment is identical.
    The nature of the bylaws. The Federal Credit Union Act requires the 
NCUA Board to prepare bylaws for federal credit unions. 12 U.S.C. 1758. 
The bylaws address a broad range of matters concerning a credit union's 
organization and governance, the relationship of the credit union to 
its members, and the procedures and rules a credit union follows. The 
bylaws supplement the broad provisions of: A federal credit union's 
charter, which establishes the existence of a federal credit union; the 
Federal Credit Union Act, which establishes the powers of federal 
credit unions; and NCUA regulations, which implement the Federal Credit 
Union Act. As a legal matter, a federal credit union's bylaws must 
conform to and cannot be inconsistent with any provision of its 
charter, the Federal Credit Union Act, NCUA regulations or other laws 
or regulations applicable to its operations.
    NCUA's long standing view is the bylaws, among other effects, 
function as a contract between a credit union and its members. While 
NCUA provides guidance and interpretations of the bylaws, generally 
state corporate law, to the extent it is consistent with the Federal 
Credit Union Act and NCUA regulations, determines disputes regarding 
the enforcement of bylaw provisions. Therefore, NCUA generally does not 
become involved in resolving internal governance disputes in federal 
credit unions involving bylaw disputes unless a matter presents a 
safety and soundness concern.

Bylaws

Federal Credit Union, Charter No. --------
(A corporation chartered under the laws of the United States)

Article I. Name--Purposes

    Section 1. Name. The name of this credit union is as stated in 
Section 1 of the charter (approved organization certificate) of this 
credit union.
    Section 2. Purposes. This credit union is a member-owned, 
democratically operated, not-for-profit organization managed by a 
volunteer board of directors, with the specified mission of meeting the 
credit and savings needs of consumers, especially persons of modest 
means. The purpose of this credit union is to promote thrift among its 
members by affording them an opportunity to accumulate their savings 
and to create for them a source of credit for provident or productive 
purposes. The credit union may add business as one of its purposes by 
placing a comma after ``provident'' and inserting ``business.''

Article II. Qualifications for Membership

    Section 1. Field of membership. The field of membership of this 
credit union is limited to that stated in Section 5 of its charter.
    Section 2. Membership application procedures. Applications for 
membership from persons eligible for membership under Section 5 of the 
charter must be signed by the applicant on forms approved by the board. 
The applicant is admitted to membership after approval of an 
application by a majority of the directors, a majority of the members 
of a duly authorized executive committee, or by a membership officer, 
and after subscription to at least one share of this credit union and 
the payment of the initial installment, and the payment of a uniform 
entrance fee if required by the board. If a person whose membership 
application is denied makes a written request, the credit union must 
explain the reasons for the denial in writing.
    Section 3. Maintenance of membership share required. A member who 
withdraws all shareholdings or fails to comply with the time 
requirements for restoring his or her account balance to par value in 
Article III, Section 3, ceases to be a member. By resolution, the board 
may require persons readmitted to membership to pay another entrance 
fee.
    Section 4. Continuation of membership. Once a member becomes a 
member that person may remain a member until the person or organization 
chooses to withdraw or is expelled in accordance with the Act and 
Article XIV of these bylaws. A member who is disruptive to credit union 
operations may be subject to limitations on services and access to 
credit union facilities. A credit union that wishes to restrict 
services to members no longer within the field of membership should 
specify the restrictions in this section.
    Staff commentary on qualifications for membership:
    Entrance fee--FCUs may not vary the entrance fee among different 
classes of members because the Act requires a uniform fee. FCUs may, 
however, eliminate the entrance fee for all applicants.

Article III. Shares of Members

    Section 1. Par value. The par value of each share will be $------. 
Subscriptions to shares are payable at the time of subscription, or in 
installments of at least $------ per month.
    Section 2. Cap on shares held by one person. The board may 
establish, by resolution, the maximum amount of shares that any one 
member may hold.
    Section 3. Time periods for payment and maintenance of membership 
share. A member who fails to complete payment of one share within ----
-- of admission to membership, or within ------ from the increase in 
the par value of shares, or a member who reduces the share balance 
below the par value of one share and does not increase the balance to 
at least the par value of one share within ------ of the reduction will 
be terminated from membership.
    Section 4. Transferability. Shares may only be transferred from one 
member to another by an instrument in a form as the board may 
prescribe. Shares that accrue credits for unpaid dividends retain those 
credits when transferred.
    Section 5. Withdrawals. Money paid in on shares or installments of 
shares may be withdrawn as provided in these bylaws or regulation on 
any day when payment on shares may be made, provided, however, that
    (a) The board has the right, at any time, to require members to 
give up to 60 days written notice of intention to withdraw the whole or 
any part of the amounts paid in by them.
    (b) Reserved.
    (c) No member may withdraw any shareholdings below the amount of 
the member's primary or contingent liability to the credit union if the 
member is delinquent as a borrower, or if borrowers for whom the member 
is comaker, endorser, or guarantor are delinquent, without the written

[[Page 24559]]

approval of the credit committee or loan officer. Coverage of 
overdrafts under an overdraft protection policy does not constitute 
delinquency for purposes of this paragraph. Shares issued in an 
irrevocable trust as provided in Section 6 of this article are not 
subject to withdrawal restrictions except as stated in the trust 
agreement.
    (d) The share account of a deceased member (other than one held in 
joint tenancy with another member) may be continued until the close of 
the dividend period in which the administration of the deceased's 
estate is completed.
    (e) The board will have the right, at any time, to impose a fee for 
excessive share withdrawals from regular share accounts. The number of 
withdrawals not subject to a fee and the amount of the fee will be 
established by board resolution and will be subject to regulations 
applicable to the advertising and disclosure of terms and conditions on 
member accounts.
    Section 6. Trusts. Shares may be issued in a revocable or 
irrevocable trust, subject to the following:
    When shares are issued in a revocable trust, the settlor must be a 
member of this credit union in his or her own right. When shares are 
issued in an irrevocable trust, either the settlor or the beneficiary 
must be a member of this credit union. The name of the beneficiary must 
be stated in both a revocable and irrevocable trust. For purposes of 
this section, shares issued pursuant to a pension plan authorized by 
the rules and regulations will be treated as an irrevocable trust 
unless otherwise indicated in the rules and regulations.
    Section 7. Joint accounts and membership requirements. Select one 
option and check the box corresponding to that option.

---- Option A--Separate Account Not Required To Establish Membership

    Owners of a joint account may both be members of the credit union 
without opening separate accounts. For joint membership, both owners 
are required to fulfill all of the membership requirements including 
each member purchasing and maintaining at least one share in the 
account.

---- Option B--Separate Account Required To Establish Membership

    Each member must purchase and maintain at least one share in a 
share account that names the member as the sole or primary owner. Being 
named as a joint owner of a joint account is insufficient to establish 
membership.
    Staff commentary on shares:
    Installments--FCUs may insert zero for the number of installments. 
The FCU Act allows membership upon the payment of the initial 
installment of a membership share, but NCUA no longer views this 
provision as requiring FCUs to offer the option of paying for the 
membership share in installments.
    Par value--FCUs may establish differing par values for different 
classes of members or types of accounts, provided this action does not 
violate any federal, state or local antidiscrimination laws. For 
example, an FCU may want to establish a higher par value for recent 
credit union members, without requiring long-time members to bring 
their accounts up to the new par value. A differing par value may also 
be permissible for different types of accounts, such as requiring a 
higher par value for a member with only a share draft account. If a 
credit union adopts differing par values, all of the possible par 
values should be stated in Section 1.
    Reduction in share balance below par value--When a member's account 
balance falls below the par value, Section 3 requires FCUs to allow 
members a minimum time period to restore their account balance to the 
par value before membership is terminated. FCUs may not delete this 
requirement or delete references to this requirement in Article II, 
Section 3.

Article IV. Meetings of Members

    Section 1. Annual meeting. The annual meeting of the members must 
be held [insert time for annual meeting, for example, ``during the 
month of March/on the third Saturday of April/ no later than March 
31''], in the county in which any office of the credit union is located 
or within a radius of 100 miles of an office, at the time and place as 
the board determines and announces in the notice of the annual meeting.
    Section 2. Notice of meetings required. At least 30 but no more 
than 75 days before the date of any annual meeting or at least 7 days 
before the date of any special meeting of the members, the secretary 
must give written notice to each member. Notice may be by written 
notice delivered in person or by mail to the member's address, or, for 
members who have opted to receive statements and notices 
electronically, by electronic mail. Notice of the annual meeting may be 
given by posting the notice in a conspicuous place in the office of 
this credit union where it may be read by the members, at least 30 days 
before the meeting, if the annual meeting is to be held during the same 
month as that of the previous annual meeting and if this credit union 
maintains an office that is readily accessible to members where regular 
business hours are maintained. Any meeting of the members, whether 
annual or special, may be held without prior notice, at any place or 
time, if all the members entitled to vote, who are not present at the 
meeting, waive notice in writing, before, during, or after the meeting.
    Notice of any special meeting must state the purpose for which it 
is to be held, and no business other than that related to this purpose 
may be transacted at the meeting.
    Section 3. Special meetings. Special meetings of the members may be 
called by the chair or the board of directors upon a majority vote, or 
by the supervisory committee as provided in these bylaws. The chair 
must call a special meeting, meaning the meeting must be held, within 
30 days of the receipt of a written request of 25 members or 5% of the 
members as of the date of the request, whichever number is larger. 
However, a request of no more than 750 members may be required to call 
a special meeting.
    The notice of a special meeting must be given as provided in 
Section 2 of this article. Special meetings may be held at any location 
permitted for the annual meeting.
    Section 4. Items of business for annual meeting and rules of order 
for annual and special meetings. The suggested order of business at 
annual meetings of members is--
    (a) Ascertainment that a quorum is present.
    (b) Reading and approval or correction of the minutes of the last 
meeting.
    (c) Report of directors, if there is one. For credit unions 
participating in the Community Development Revolving Loan Program, the 
directors must report on the credit union's progress on providing 
needed community services, if required by NCUA Regulations.
    (d) Report of the financial officer or the chief management 
official.
    (e) Report of the credit committee, if there is one.
    (f) Report of the supervisory committee, as required by Section 115 
of the Act.
    (g) Unfinished business.
    (h) New business other than elections.
    (i) Elections, as required by Section 111 of the Act.
    (j) Adjournment.
    To the extent consistent with these bylaws, all meetings of the 
members will be conducted according to ------------. The order of 
business for the annual meeting may vary from the suggested order, 
provided it includes all required items and complies with the

[[Page 24560]]

rules of procedure adopted by the credit union.
    The credit union must fill in the blank with one of the following 
authorities, noting the edition to be used: Democratic Rules of Order, 
The Modern Rules of Order, Robert's Rules of Order, or Sturgis' 
Standard Code of Parliamentary Procedure.
    Section 5. Quorum. Except as otherwise provided, 15 members 
constitute a quorum at annual or special meetings. If no quorum is 
present, an adjournment may be taken to a date at least 7 but not more 
than 14 days thereafter. The members present at any adjourned meeting 
will constitute a quorum, regardless of the number of members present. 
The same notice must be given for the adjourned meeting as is 
prescribed in Section 2 of this article for the original meeting, 
except that the notice must be given at least 5 days before the date of 
the meeting as fixed in the adjournment.

Article V. Elections

    The Credit Unio