Federal Credit Union Bylaws, 61495-61509 [E7-21397]

Agencies

• National Credit Union Administration

[Federal Register Volume 72, Number 210 (Wednesday, October 31, 2007)]
[Rules and Regulations]
[Pages 61495-61509]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-21397]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 701


Federal Credit Union Bylaws

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: NCUA is issuing a rule reincorporating the Federal Credit 
Union (FCU) Bylaws into NCUA regulations. This change clarifies NCUA's 
ability to use a range of enforcement authorities, in appropriate 
cases, to enforce the FCU Bylaws. In addition, NCUA is adding a bylaw 
provision on director succession, an issue it has previously addressed 
in legal opinions, and is revising the introduction to the Bylaws to 
conform it to these changes.

DATES: This rule is effective November 30, 2007.

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 May 24, 2007, the Board issued a Notice and Request for comments 
on the proposed reincorporation of the Federal Credit Union Bylaws 
(proposal). 72 FR 30984 (June 5, 2007). The proposal also included 
bylaw provisions on director succession, an expedited approval process 
for bylaw amendments previously approved for other FCUs,

[[Page 61496]]

and revisions to the Introduction to the FCU Bylaws to reflect these 
changes. Id. On July 2, 2007, the Board extended the original comment 
period an additional two weeks. 72 FR 37122 (July 9, 2007).
    NCUA is reincorporating the FCU Bylaws into NCUA regulations to 
clarify NCUA's authority to use a range of administrative actions to 
enforce bylaw violations in the rare cases where bylaw disputes cannot 
be resolved within an FCU. As discussed in the proposal, NCUA removed 
the Bylaws from its regulations in the 1980's. 72 FR 30984, 30985 (June 
5, 2007). NCUA is concerned that the policy of requiring members to 
enforce rights granted in the Bylaws in state courts has resulted in 
members being unable to enforce rights granted in the Bylaws. The 
proposal limits NCUA intervention to cases where a fundamental, 
material member right is at issue and outlines a dispute resolution 
process.
    The Federal Register requires the FCU Bylaws to be published as an 
Appendix to Part 701 rather than being incorporated by reference in the 
regulatory text. Accordingly, Sec.  701.2 of the final rule has been 
revised from the proposal and specifically reincorporates the FCU 
Bylaws into NCUA's regulations as an Appendix.

B. Comments

General

    NCUA received 32 comment letters in response to the proposal. Nine 
credit union members, nine state credit union leagues, eight federal 
credit unions, two national credit union trade organizations, one law 
firm, one consultant, and two other organizations submitted comments. 
Sixteen commenters supported reincorporating the Bylaws into NCUA 
regulations and 16 commenters opposed reincorporation. Both supporters 
and opponents of reincorporation sought changes to the revised 
Introduction to the FCU Bylaws, the standards for limiting NCUA's 
involvement, and the dispute resolution process. Many commenters also 
discussed the proposed bylaw provisions on director succession and the 
expedited approval process for certain bylaw amendments; the comments 
on these provisions overwhelmingly favored the proposal. Finally, 
several commenters asked NCUA to increase the cap on the number of 
members required to call a special meeting. The comments on each 
subject are discussed below.

Reincorporation of FCU Bylaws Into NCUA Regulation, Standards for NCUA 
Involvement, and Dispute Resolution Process

    Most commenters opposing reincorporation cited concerns over 
increased regulation and oversight. The NCUA Board reiterates its 
position that reincorporating the Bylaws into NCUA's regulations 
imposes no new regulatory burden, as all FCUs are already required to 
have NCUA-approved bylaws. NCUA publishes form bylaw language and all 
FCUs have adopted some version of the form language. Further, as the 
preamble to the proposal stated, under the risk-based examination 
system in use for FCUs, examiners do not currently, nor will they once 
the Bylaws are incorporated in the regulations, inquire into an FCU's 
bylaws unless management raises the issue.
    In contrast, commenters supporting reincorporation cited the lack 
of other realistic options for bylaw enforcement and the potential for 
credit union boards to violate bylaws with impunity. The most common 
theme was dissatisfaction with NCUA's policy of requiring members to 
enforce bylaws under state contract law. Commenters cited the expense 
and time required to bring suit as well as the possibility courts will 
find members lack standing to litigate bylaw disputes.
    The commenters were split on the issue of whether NCUA needs to 
reincorporate the FCU Bylaws to clarify its ability to use its full 
range of enforcement actions.
    Five commenters expressed the view that NCUA already has authority 
to use its full range of enforcement actions to enforce the Bylaws. 
Three commenters stated the FCU Act gives no authority to NCUA to 
enforce bylaw violations other than by charter suspension or 
revocation. Based on its analysis of the FCU Act, the Board concludes 
reincorporating the Bylaws is necessary to provide clear authority for 
NCUA to use its full range of enforcement actions for Bylaw violations.
    NCUA does not agree with the commenters who assert its authority to 
enforce the Bylaws using the full range of administrative actions is 
clear under the current system. The FCU Act gives NCUA explicit 
authority to suspend or revoke the charter of any FCU, or place the FCU 
into involuntary liquidation, for a violation of any provision of its 
bylaws. 12 U.S.C. 1766(b)(1). A charter revocation or suspension, 
however, is a very extreme remedy and is unlikely to be an appropriate 
remedy for any bylaw violation. The resultant loss of credit union 
service would likely result in far more harm to members than the FCU's 
failure to follow its bylaws. The FCU Act also allows NCUA to place 
FCUs into conservatorship for reasons including protection of members' 
interests. 12 U.S.C. 1786(h)(1). Conservatorship, like charter 
suspension or liquidation, is an extreme remedy NCUA would prefer not 
to use if other enforcement options are available. The FCU Act, 
however, does not explicitly provide for such other options.
    In contrast, the FCU Act explicitly provides NCUA authority to take 
other, less severe administrative actions for other types of 
violations. A cease and desist order, for example, identifies the 
violation, gives the credit union a deadline to come into compliance, 
and may prescribe procedures to come into compliance. NCUA may issue 
cease and desist orders for violations of ``a law, rule, or 
regulation.'' 12 U.S.C. 1786(e)(1). Before promulgating its proposed 
regulation, NCUA considered whether the authority to issue cease and 
desist orders extended to bylaw violations that did not also violate a 
statutory or regulatory requirement or pose a threat to the safety and 
soundness of the FCU. As discussed in the proposal, previous Board 
actions removed the Bylaws from NCUA regulations. 72 FR 30984, 30985 
(June 5, 2007).
    As a result, NCUA has concluded it should now reincorporate the 
Bylaws to give it clear authority to act if a bylaw violation threatens 
a fundamental, material credit union member right.
    Some commenters suggested NCUA simply change its policy on 
enforcement of Bylaws violations not involving another violation or a 
safety and soundness threat without adopting a regulation. Agencies are 
entitled to change their positions, as long as they explain the new 
position and the reasons necessitating the change. Motor Vehicle 
Manufacturers Ass'n v. State Farm Ins. Co., 463 U.S. 29, 41-42 (1983). 
Courts take a dim view of reversals of agency positions adopted without 
public notice, such as agency interpretations adopted in the course of 
litigation. Bowen v. Georgetown University Hosp., 488 U.S. 204, 212 
(1988). NCUA believes an abrupt reversal of prior policy, could leave 
any enforcement action taken for a Bylaw violation not involving an 
issue of safety and soundness or violations of other regulations 
vulnerable to challenge. Instead, the Board is using the rulemaking 
process to adopt its revised policy--which is actually a return to the 
Bylaws' original status as a regulation--to allow for public notice and 
input.

[[Page 61497]]

    In summary, the FCU Act's explicit provisions for enforcing Bylaw 
violations include only limited and drastic options, and the Act's 
provisions for other, less severe remedies do not explicitly cover 
Bylaw violations. The Board has concluded that its authority in this 
area is not clear unless the Bylaws are again incorporated in NCUA 
regulations. Because the reincorporation of the Bylaws changes NCUA's 
most recent policy regarding Bylaws enforcement and returns the Bylaws 
to their original status as regulation, the Board is adopting the 
change using the rulemaking process.
    One commenter who argued NCUA's existing authority would allow the 
use of the full range of actions for bylaw violations suggested that 
if, in fact, the Act provided authority only to liquidate or conserve 
FCUs for bylaw violations, NCUA could not create authority to use other 
actions by adopting the Bylaws as a regulation. Several other 
commenters generally questioned NCUA's authority to adopt this rule 
reincorporating the Bylaws. NCUA disagrees with these comments, as the 
FCU Act provides separate authority for it to adopt regulations. 
Section 120 of the FCU Act gives the NCUA Board broad, general 
authority to ``prescribe rules and regulations for the administration 
of [the FCU Act].'' 12 U.S.C. 1766. This authority is in no way limited 
by the separate authority to suspend or revoke an FCU's charter or 
place an FCU into conservatorship for failing to follow its bylaws. 
Moreover, several provisions of the FCU Act clearly contemplate that 
FCUs will follow their bylaws. The FCU Act's references to bylaws 
include the following requirements:
     FCUs must adopt bylaws prescribed by NCUA. 12 U.S.C. 1758.
     FCUs may impose late charges as permitted by their bylaws. 
12 U.S.C. 1757(10).
     FCUs must hold their annual meetings at the time and place 
prescribed by their bylaws. 12 U.S.C. 1760.
     An FCU's bylaws must prescribe the number of and the 
procedures for electing directors, and may provide for a credit 
committee. 12 U.S.C. 1761; 1761c(a), (b).
     An FCU's bylaws must specify the number of board officers 
and identify the compensated officer, if any. 12 U.S.C. 1761a.
     An FCU's board of directors must follow bylaw provisions 
allowing for an elected or appointed credit committee, the appointment 
of loan officers, the hiring and compensation of officers and 
employees, the appointment of an executive committee, and information 
it is required to review at monthly meetings. 12 U.S.C. 1761b(4), (5), 
(10), (11), (13), (15).
     An FCU's supervisory committee may call a special meeting 
of the members to consider a bylaw violation. 12 U.S.C. 1761d.
     The amount to be refunded to expelled members is to be 
determined according to the bylaws. 12 U.S.C. 1764(c).
     Shares issued to minors are subject to conditions 
prescribed in the bylaws. 12 U.S.C. 1765.
    The FCU Act provisions noted above require an FCU's bylaws to 
provide procedures and rules for an FCU's structure and operation, at 
the time of chartering and going forward. Under its general rulemaking 
authority NCUA is charged with administering the FCU Act. This 
authority is not restricted by the separate authority for charter 
revocation or suspension, or conservatorship, for bylaw violations. The 
FCU Act's many references to the FCU Bylaws demonstrate the Act 
requires FCUs to follow their bylaws. As the FCU Act allows NCUA 
authority to administer its provisions, and the FCU Act requires FCUs 
to have and follow bylaws, the NCUA Board finds reincorporating the FCU 
Bylaws into NCUA regulations will assist in its administration of the 
FCU Act.
    Accordingly, the NCUA Board concludes reincorporating the Bylaws 
will clarify its authority without imposing any new regulatory burden 
on FCUs, and the final rule reincorporates the FCU Bylaws into NCUA 
regulations as an Appendix to Part 701.
    Commenters were also split on whether the proposal adequately 
defined and limited the situations in which NCUA has discretion to take 
action. Seven commenters found the standard adequate or supported 
limiting NCUA intervention to disputes involving fundamental, material 
member rights, as described in the preamble to the proposal. Eight 
other commenters found the standard too broad and expressed concern 
NCUA would start to intervene in all bylaw disputes. The NCUA Board 
reiterates the agency will limit its involvement to bylaw disputes 
involving a fundamental, material credit union member right, including 
the right to: Maintain a share account; maintain credit union 
membership; have access to credit union facilities; participate in the 
director election process; attend annual and special meetings; and 
petition for removal of directors and committee members. The proposal 
added language to the Introduction to the Bylaws explaining NCUA's 
discretion to intervene in disputes involving fundamental, material 
credit union member rights; the final rule includes minor revisions to 
this language to further clarify the Board's intent.
    The preamble to the proposal explained FCUs and FCU members should 
continue to attempt to resolve bylaw disputes within the credit union, 
and contact the regional office with jurisdiction for the FCU if a 
bylaw dispute cannot be resolved internally. 72 FR 30984, 30986 (June 
5, 2007). Six commenters--both supporters and opponents of 
reincorporation--sought additional details regarding the resolution of 
bylaw disputes.
    Four commenters requested additional information on the internal 
procedures FCUs and their members should use to resolve bylaw disputes. 
FCUs and FCU members should attempt to resolve bylaw disputes with the 
usual procedures for addressing member complaints, such as requesting 
review by the supervisory committee. Every FCU must have a supervisory 
committee, appointed from among its members. 12 U.S.C. 1761(b). One of 
the supervisory committee's roles is reviewing member complaints, and 
the Board believes the supervisory committee is well-suited to address 
bylaw disputes, since it has substantial experience in investigating 
and resolving member complaints.
    Several commenters also raised questions about how NCUA will 
determine when to take an enforcement action related to a bylaw 
dispute. The NCUA Board reiterates NCUA's regional offices will analyze 
disputes to see if they affect a fundamental, material credit union 
member right. A determination that a fundamental, material member right 
may be affected allows NCUA the discretion to intervene, but does not 
require intervention. As noted previously in this preamble and in the 
preamble to the proposal, the Board's view is the agency will only 
become involved in bylaw disputes that involve fundamental, material 
credit union member rights. In considering whether to initiate formal 
administrative action, the agency will consider various factors, as it 
would with any regulatory violation, including the specific facts and 
circumstances in a case; alternatives, such as a supervisory letter; 
the willingness of the parties to cure a violation; and the seriousness 
of the violation.
    Two commenters sought clarification about who may report bylaw 
disputes to NCUA. As is presently the case, any FCU member or FCU 
official may report a bylaw dispute within an FCU.

[[Page 61498]]

Likewise, any FCU, member, or official may report a bylaw dispute to 
NCUA.
    One commenter asked if FCU members must seek to enforce an FCU's 
bylaws as a contract, in court, before requesting NCUA intervention. 
The preamble to the proposal noted FCU members still have the right to 
seek enforcement of the Bylaws in court. 72 FR 30984, 30985 (June 5, 
2007). The NCUA Board clarifies FCU members do not need to seek 
judicial relief before reporting a bylaw dispute to NCUA.
    Two commenters asked if regional directors' decisions on bylaw 
disputes may be appealed to the NCUA Board. The right to appeal a 
regional director's decision and to what forum will depend on the 
nature of the decision, namely, whether a regional director's decision 
involves formal administrative action. For example, if the agency takes 
formal administrative action by issuing an immediate cease and desist 
order directing an FCU to cease activity that violates the Bylaws or 
directing an FCU to undertake specific actions to cure a violation, 
then an FCU will have a right to challenge the order in federal court. 
12 U.S.C. 1786(e), (f).
    The preamble to the proposal stated NCUA's intent that FCUs and 
their members continue to attempt to resolve bylaw disputes internally. 
72 FR 30984, 30986 (June 5, 2007). Several commenters asked for a 
similar statement to be added to the Introduction to the Bylaws or the 
text of Sec.  701.2. The Board agrees this would be helpful and the 
final rule revises the Introduction accordingly.

Director Succession Amendments

    The only changes the proposal made to the FCU Bylaws were 
amendments on director succession; the amendments essentially 
incorporated NCUA legal opinions. The proposal added a new Section to 
Article IX to clarify the supervisory committee's responsibilities if 
an FCU has no remaining directors. If an entire board of directors 
resigns, is removed simultaneously, or for whatever circumstance is 
unable to serve, the supervisory committee has the responsibility to 
act as a board of directors until the members elect new directors. The 
proposal also cross-references this new language in Article XVI, 
Section 3, addressing removal of directors by members, and Article VI, 
Section 4, addressing board of director vacancies.
    Seven of eight commenters on this subject generally approved of the 
new language. Two commenters sought clarifications in the process and 
one of these commenters suggested alternative language for the 
amendment to Article IX. The commenter's alternative language would 
give the supervisory committee acting as the board the option of 
holding a special meeting to elect directors if the FCU's annual 
meeting is already scheduled or would usually occur within the next 45 
days. The proposal had required the supervisory committee to serve as 
the board until the next annual meeting if the annual meeting were 
scheduled, or would usually occur, within the next 45 days. The final 
rule adopts the commenter's alternative, as NCUA agrees FCUs in this 
rare situation should have the option of formally electing directors as 
soon as possible, even if the next annual meeting will occur shortly.
    In addition, the final rule includes certain grammatical changes to 
the proposal. The proposal used the term ``temporary board'' to refer 
to the supervisory committee acting as the board and ``interim board'' 
to refer to the new directors elected at the special meeting. A 
commenter's suggested alternative deletes the references to 
``temporary'' and ``interim'' boards in Article IX, and instead uses 
the terms ``supervisory committee acting as the board'' and ``board.'' 
The NCUA Board finds these suggestions improve the bylaw and has 
adopted them.
    The proposal prohibited the supervisory committee acting as the 
board from acting on policy matters. 72 FR 30984, 30987 (June 5, 2007). 
The intent of this prohibition was to ensure that an elected board 
makes decisions affecting the direction and future of an FCU. One 
commenter sought more explanation of permissible actions by the 
supervisory committee acting as the board, and another commenter 
requested the prohibition on acting on policy matters be modified to 
allow for policy action in exigent circumstances. Generally, the 
Board's view is the supervisory committee acting as the board should 
maintain the status quo and defer major decisions, such as opening new 
branches or launching new products, until the FCU's members elect a new 
board of directors. NCUA believes an exception for exigent 
circumstances is unnecessary given the short period of service that is 
likely and the fact that the limitation is only on policy matters. 
Also, an FCU where the supervisory committee is acting as the board 
will likely be in contact with its examiner and can seek advice on 
whether matters should be left to the elected board.
    NCUA also clarifies that newly chartered FCUs and FCUs defined as 
``troubled'' under Sec.  701.14 of NCUA's regulations must follow the 
procedures under Sec.  701.14 and notify NCUA of changes in their 
boards. NCUA recognizes these bylaw provisions may not afford 
sufficient time to notify NCUA 30 days before the effective date of the 
change in board members as required by Sec.  701.14, but the 
supervisory committee acting as the board should notify the Regional 
Office of the change as soon as possible. The regulation also provides 
a waiver of the prior notice requirement for board members elected at a 
members' meeting, if the Regional Office receives notice within 48 
hours of the election. 12 CFR 701.14(c)(2)(i). A newly chartered or 
troubled FCU that loses all its directors will likely be in contact 
with its examiner and can seek further advice on compliance with Sec.  
701.14.
    The sole commenter opposing these provisions argued NCUA lacks 
authority to adopt them because they are inconsistent with the FCU 
Act's requirement for FCUs to be governed by a board of directors and 
for vacancies on the board to be filled by the remaining directors. 
NCUA believes the commenter misunderstood the proposal and its intent. 
The bylaw applies only in the rare circumstance of an FCU losing all 
its directors simultaneously and does not conflict with the FCU Act's 
requirement for director vacancies to be filled by other directors. The 
FCU Act is silent about how to proceed when an FCU has no remaining 
directors, leaving NCUA discretion to address this matter through 
regulation.

Expedited Approval Process for Previously Approved Bylaw Amendments

    The proposed rule also outlined an expedited review process for 
bylaw amendments previously approved for other FCUs, which NCUA is 
adopting as proposed. NCUA will post the actual language of bylaw 
amendments approved since the last major revision of the FCU Bylaws in 
April 2006 on its website. Other FCUs seeking to adopt identical 
language will receive a response from NCUA's regional offices within 15 
business days. All seven commenters on this topic endorsed the 
proposal.
    One commenter also suggested NCUA post the language for all 
previously approved bylaw amendments that remain consistent with 
current NCUA guidance, not only amendments approved since April 2006. 
Because NCUA's Office of General Counsel staff has received only a 
handful of requests for bylaw amendment language predating the 2006 
revisions, the Board has determined posting actual language for all 
bylaw amendments would not be the most productive use of staff 
resources. Further, FCUs seeking exact

[[Page 61499]]

language for an approved bylaw amendment that predates 2006 can access 
the Opinion Letters on NCUA's Web site and contact their regional 
office or the Office of General Counsel to obtain the exact language of 
any approved amendments.

Number of Members Required To Call a Special Meeting

    Although the proposal did not explicitly ask for comments on the 
750-member cap on the number of members required to call a special 
meeting, it noted the NCUA Board has decided it may consider individual 
FCUs' requests to increase this number through the bylaw amendment 
process outlined in the Introduction to the FCU Bylaws. 72 FR 30984, 
30986 (June 5, 2007). Six of the eight commenters on this subject urged 
NCUA to adopt amendments to the FCU Bylaws increasing the cap to either 
a percentage of members, regardless of size, or a higher maximum number 
for larger credit unions. One commenter opposing an increase noted, 
although some increase in the cap may be appropriate for very large 
credit unions, setting the cap too high would disenfranchise members 
just as much as an FCU board ignoring the members' request for a 
special meeting.
    The NCUA Board understands concerns some commenters expressed about 
the potential for a relatively small number of members to make 
disruptive requests for special meetings. NCUA also agrees with the 
commenter who expressed concern about the potential for 
disenfranchisement of FCU members resulting from a higher cap. The cap 
recently increased from 500 to 750 members. 71 FR 24551, 24554 (April 
26, 2006). More time is needed to assess the appropriateness of this 
figure for large FCUs. Obtaining 750 signatures to request a special 
meeting is a significant undertaking, and NCUA is not aware of any 
actual instances since 2006 where members obtained this number of 
signatures to require a board of directors to hold a special meeting 
for a frivolous reason. NCUA repeats any necessary changes in this area 
should be handled through the bylaw amendment process explained in the 
introduction to the Bylaws. Any FCU requesting such an amendment should 
have documented, verifiable reasons why an increase in the cap is 
necessary, such as a history of members' abuse of the special meeting 
request process at that particular FCU.

C. Specific Changes to the FCU Bylaws

    The Federal Credit Union Bylaws, as amended by this final rule, are 
reprinted in their entirety as Appendix A to Part 701. The final rule 
made very few changes to the text of the FCU Bylaws, and these changes 
are listed below.
    (1) The following paragraph was added to the end of Section 3 of 
Article IX:
    If all director positions become vacant simultaneously, the 
supervisory committee immediately assumes the role of the board of 
directors. The supervisory committee acting as the board must generally 
call and hold a special meeting to elect a board that will serve until 
the next annual meeting. The special meeting must occur at least 7 but 
no more than 14 days after all director positions became vacant, and 
candidates for the board at the special meeting may be nominated by 
petition or from the floor. However, if the next annual meeting has 
been scheduled and will occur within 45 days after all the director 
positions become vacant, the supervisory committee may decide to forego 
the special meeting and continue serving as the board until the 
election of new directors at the annual meeting.
    If the next annual meeting has not been scheduled, but the month 
and day of the previous year's meeting plus 7 days falls within 45 days 
after all the director positions become vacant, the supervisory 
committee acting as the board may decide to forego the special meeting 
to elect new directors. In this case, the supervisory committee must 
schedule the annual meeting within 7 days before or after the month and 
day of the previous annual meeting and continue to serve as the board 
until directors are elected at the annual meeting.
    The supervisory committee acting as the board may not act on policy 
matters. However, directors elected at a special meeting have the same 
powers as directors elected at the annual meeting.
    (2) The following sentence was added to the end of Section 3 of 
Article XVI:
    If member votes at a special meeting result in the removal of all 
directors, the supervisory committee immediately becomes the temporary 
board of directors and must follow the procedures in Article IX, 
Section 3.
    (3) The following sentence was inserted after the first sentence of 
Section 4 of Article VI:
    If all director positions become vacant simultaneously, the 
supervisory committee immediately becomes the temporary board of 
directors and must follow the procedures in Article IX, Section 3.
    (4) The sixth paragraph of the Introduction was deleted and 
replaced with the following paragraph:
    Federal credit unions considering an amendment may find it useful 
to review the bylaws section of the agency Web site, which includes 
Office of General Counsel opinions about proposed bylaw amendments. 
Opinions issued after April 2006 will include the language of approved 
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. Credit 
unions requesting previously approved amendments will receive notice of 
the regional office's decision within 15 business days of the receipt 
of the request.
    (5) The last paragraph of the Introduction was deleted and replaced 
with the following two paragraphs:
    NCUA expects federal credit unions and their members will make 
every effort to resolve bylaw disputes using the credit union's 
internal member complaint resolution process. If a bylaw dispute cannot 
be resolved internally, however, credit union officials or members 
should contact the regional office with jurisdiction for the credit 
union for assistance in resolving the dispute.
    NCUA has discretion to take administrative actions when a credit 
union is not in compliance with its bylaws. If a potential violation is 
identified, NCUA will carefully consider all of the facts and 
circumstances in deciding whether to take enforcement action. NCUA will 
not take action against minor or technical violations, but emphasizes 
that it retains discretion to enforce the bylaws in appropriate cases, 
such as safety and soundness concerns or threats to fundamental, 
material credit union member rights.
    (6) The first paragraph of the Introduction was replaced with the 
following paragraph:
    Effective Date: After consideration of public comment, the National 
Credit Union Administration (NCUA) Board adopted these Bylaws and 
incorporated them as Appendix A to Part 701 of NCUA's regulations on 
[date of final]. Unless a federal credit union has adopted bylaws 
before [date of final] it must adopt these revised Bylaws.

Regulatory Procedures

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe any significant economic impact a rule may have on a 
substantial number of small credit unions, defined as those under ten 
million dollars in assets. This rule incorporates the Bylaws into 
NCUA's regulations

[[Page 61500]]

without imposing any regulatory burden, since the FCU Act requires FCUs 
to adopt NCUA-approved bylaws. The rule will not have a significant 
economic impact on a substantial number of small credit unions, and, 
therefore, a regulatory flexibility analysis is not required.

Paperwork Reduction Act

    NCUA has determined the rule would not increase paperwork 
requirements under the Paperwork Reduction Act of 1995 and regulations 
of the Office of Management and Budget. 44 U.S.C. 3501 et seq.; 5 CFR 
part 1320.

Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on state and local interests. In 
adherence to fundamental federalism principles, NCUA, an independent 
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies 
with the executive order. The rule would not have substantial direct 
effects on the states, on the connection between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government. NCUA has 
determined that this rule does not constitute a policy that has 
federalism implications for purposes of the executive order.

The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

    NCUA has determined the rule would not affect family well-being 
within the meaning of Sec.  654 of the Treasury and General Government 
Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 2681 (1998).

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996, 
Pub. L. 104-121 (SBREFA), provides generally for congressional review 
of agency rules. A reporting requirement is triggered in instances 
where NCUA issues a final rule as defined by Section 551 of the APA. 5 
U.S.C. 551. The Office of Management and Budget has determined that 
this rule is not a major rule for purposes of SBREFA. As required by 
SBREFA, NCUA will file the appropriate reports with Congress and the 
General Accounting Office so that the final rule may be reviewed.

List of Subjects in 12 CFR Part 701

    Credit unions.

    By the National Credit Union Administration Board on October 25, 
2007.
Mary F. Rupp,
Secretary of the Board.

0
Accordingly, NCUA amends 12 CFR part 701 as follows:

PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS

0
1. The authority citation for part 701 is revised to read as follows:

    Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759, 
1761a, 1761b, 1766, 1767, 1782, 1784, 1786, 1787, 1789. Section 
701.6 is also authorized by 15 U.S.C. 3717. Section 701.31 is also 
authorized by 15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and 3601-3610. 
Section 701.35 is also authorized by 42 U.S.C. 4311-4312.

0
2. Part 701 is amended by adding Sec.  701.2 to read as follows:


Sec.  701.2  Federal credit union bylaws.

    (a) Federal credit unions must operate in accordance with their 
approved bylaws. The Federal Credit Union Bylaws are hereby published 
as Appendix A to part 701 pursuant to 5 U.S.C. 552(a)(1) and 
accompanying regulations. Federal credit unions may adopt amendments to 
their bylaws as provided in the Bylaws, with the approval of the Board.
    (b) Copies of the Federal Credit Union Bylaws may be obtained at 
https://www.ncua.gov or by request addressed to ogc-mail@ncua.gov or 
National Credit Union Administration, 1775 Duke Street, Alexandria, VA 
22314.
    (c) The National Credit Union Administration may issue revisions or 
amendments of the Federal Credit Union Bylaws from time to time. An 
historic file of amendments or revisions is maintained and made 
available for inspection at the National Credit Union Administration, 
1775 Duke Street, Alexandria, VA 22314.


0
3. Appendix A to 12 CFR Part 701 is added to read as follows:

Appendix A to Part 701--Federal Credit Union Bylaws

Introduction

    A. Effective date. After consideration of public comment, the 
National Credit Union Administration (NCUA) Board adopted these Bylaws 
and incorporated them as Appendix A to Part 701 of NCUA's regulations 
on November 30, 2007. Unless a federal credit union has adopted bylaws 
before November 30, 2007, it must adopt these revised bylaws.
    B. 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.
    C. Bylaw amendments. 1. 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.
    2. 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.
    3. The procedure for approval of bylaw amendments is as follows:
    a. The federal credit union wishing to adopt a bylaw amendment must 
file a request with its regional director.
    b. The request must include the section of the bylaws to be 
amended; the reason for or purpose of the amendment, 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.
    c. 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.
    4. Federal credit unions considering an amendment may find it 
useful to review the bylaws section of the agency Web site, which 
includes Office of General Counsel opinions about proposed bylaw 
amendments. Opinions issued after April 2006 will include the

[[Page 61501]]

language of approved 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. Credit unions requesting previously approved 
amendments will receive notice of the regional office's decision within 
15 business days of the receipt of the request.
    D. The nature of the bylaws. 1. 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.
    2. NCUA expects federal credit unions and their members will make 
every effort to resolve bylaw disputes using the credit union's 
internal member complaint resolution process. If a bylaw dispute cannot 
be resolved internally, however, credit union officials or members 
should contact the regional office with jurisdiction for the credit 
union for assistance in resolving the dispute.
    3. NCUA has discretion to take administrative actions when a credit 
union is not in compliance with its bylaws. If a potential violation is 
identified, NCUA will carefully consider all of the facts and 
circumstances in deciding whether to take enforcement action. NCUA will 
not take action against minor or technical violations, but emphasizes 
that it retains discretion to enforce the bylaws in appropriate cases, 
such as safety and soundness concerns or threats to fundamental, 
material credit union member rights.

Table of Contents

Page

Article I. Name--Purposes
Article II. Qualifications for Membership
Article III. Shares of Members
Article IV. Meetings of Members
Article V. Elections
Article VI. Board of Directors
Article VII. Board Officers, Management Officials and Executive 
Committee
Article VIII. Credit Committee or Loan Officers
Article IX. Supervisory Committee
Article X. Organization Meeting
Article XI. Loans and Lines of Credit to Members
Article XII. Dividends
Article XIII. Reserved
Article XIV. Expulsion and Withdrawal
Article XV. Minors
Article XVI. General
Article XVII. Amendments of Bylaws and Charter
Article XVIII. Definitions

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 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

[[Page 61502]]

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:
    i. 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.
    ii. 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.
    iii. 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. a. 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.
    b. 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. a. 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.
    b. 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.
    k. 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 
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 Union must select one of the four voting options. 
This may be done by printing the credit union's bylaws with the 
option selected or retaining this copy and checking the box of the 
option selected. All options continue with Section 3 of this 
article.

Option A1--In-Person Elections; Nominating Committee and 
Nominations From Floor

    Section 1. Nomination procedures. At least 30 days before each 
annual meeting, the chair will appoint a nominating committee of 
three or more members. It is the duty of the nominating committee to 
nominate at least one member for each vacancy, including any 
unexpired term vacancy, for which elections are being held, and to 
determine that the members nominated are agreeable to the placing of 
their names in nomination and will accept office if elected.
    Section 2. Election procedures. After the nominations of the 
nominating committee have been placed before the members, the chair 
calls for nominations from the floor. When nominations are closed, 
the chair appoints the tellers, ballots are distributed, the vote is 
taken and tallied by the tellers, and the results announced. All 
elections are determined by plurality vote and will be by ballot 
except where there is only one nominee for the office.

Option A2--In-Person Elections; Nominating Committee and 
Nominations by Petition

    Section 1. Nomination procedures. a. At least 120 days before 
each annual meeting the chair will appoint a nominating

[[Page 61503]]

committee of three or more members. It is the duty of the nominating 
committee to nominate at least one member for each vacancy, 
including any unexpired term vacancy, for which elections are being 
held, and to determine that the members nominated are agreeable to 
the placing of their names in nomination and will accept office if 
elected.
    b. The nominating committee files its nominations with the 
secretary of the credit union at least 90 days before the annual 
meeting, and the secretary notifies in writing all members eligible 
to vote at least 75 days before the annual meeting that nominations 
for vacancies may also be made by petition signed by 1% of the 
members with a minimum of 20 and a maximum of 500. The secretary may 
use electronic mail to notify members who have opted to receive 
notices or statements electronically.
    c. The written notice must indicate that the election will not 
be conducted by ballot and there will be no nominations from the 
floor when the number of nominees equals the number of positions to 
be filled. A brief statement of qualifications and biographical data 
in a form approved by the board of directors will be included for 
each nominee submitted by the nominating committee with the written 
notice to all eligible members. Each nominee by petition must submit 
a similar statement of qualifications and biographical data with the 
petition. The written notice must state the closing date for 
receiving nominations by petition. In all cases, the period for 
receiving nominations by petition must extend at least 30 days from 
the date that the petition requirement and the list of nominating 
committee's nominees are mailed to all members. To be effective, 
nominations by petition must be accompanied by a signed certificate 
from the nominee or nominees stating that they are agreeable to 
nomination and will serve if elected to office. Nominations by 
petition must be filed with the secretary of the credit union at 
least 40 days before the annual meeting and the secretary will 
ensure that nominations by petition, along with those of the 
nominating committee, are posted in a conspicuous place in each 
credit union office at least 35 days before the annual meeting.
    Section 2. Election procedures. a. All persons nominated by 
either the nominating committee or by petition must be placed before 
the members. When nominations are closed, the chair appoints the 
tellers, ballots are distributed, the vote is taken and tallied by 
the tellers, and the results announced. All elections are determined 
by plurality vote and will be by ballot except where there is only 
one nominee for each position to be filled.
    b. If sufficient nominations are made by the nominating 
committee or by petition to provide at least as many nominees as 
positions to be filled, nominations cannot be made from the floor. 
In the event nominations from the floor are permitted and result in 
more nominees than positions to be filled, when nominations have 
been closed, the chair appoints the tellers, ballots are 
distributed, the vote is taken and tallied by the tellers, and the 
results announced. When the number of nominees equals the number of 
positions to be filled, the chair may take a voice vote or declare 
each nominee elected by general consent or acclamation at the annual 
meeting.

Option A3--Election by Ballot Boxes or Voting Machine; Nominating 
Committee and Nomination by Petition

    Section 1. Nomination procedures. a. At least 120 days before 
each annual meeting, the chair will appoint a nominating committee 
of three or more members. It is the duty of the nominating committee 
to nominate at least one member for each vacancy, including any 
unexpired term vacancy, for which elections are being held, and to 
determine that the members nominated are agreeable to the placing of 
their names in nomination and will accept office if elected.
    b. The nominating committee files its nominations with the 
secretary of the credit union at least 90 days before the annual 
meeting, and the secretary notifies in writing all members eligible 
to vote at least 75 days before the annual meeting that nominations 
for vacancies may also be made by petition signed by 1% of the 
members with a minimum of 20 and a maximum of 500. The secretary may 
use electronic mail to notify members who have opted to receive 
notices or statements electronically.
    c. The written notice must indicate that the election will not 
be conducted by ballot and there will be no nominations from the 
floor when the number of nominees equals the number of positions to 
be filled. A brief statement of qualifications and biographical data 
in a form approved by the board of directors will be included for 
each nominee submitted by the nominating committee with the written 
notice to all eligible members. Each nominee by petition must submit 
a similar statement of qualifications and biographical data with the 
petition. The written notice must state the closing date for 
receiving nominations by petition. In all cases, the period for 
receiving nominations by petition must extend at least 30 days from 
the date of the petition requirement and the list of nominating 
committee's nominees are mailed to all members. To be effective, 
nominations by petition must be accompanied by a signed certificate 
from the nominee or nominees stating that they are agreeable to 
nomination and will serve if elected to office. Nominations by 
petition must be filed with the secretary of the credit union at 
least 40 days before the annual meeting and the secretary will 
ensure that nominations by petition along with those of the 
nominating committee are posted in a conspicuous place in each 
credit union office at least 35 days before the annual meeting.
    Section 2. Election procedures. All elections are determined by 
plurality vote. The election will be conducted by ballot boxes or 
voting machines, subject to the following conditions:
    (a) The board of directors will appoint the election tellers;
    (b) If sufficient nominations are made by the nominating 
committee or by petition to provide more nominees than positions to 
be filled, the secretary, at least 10 days before the annual 
meeting, will cause ballot boxes and printed ballots, or voting 
machines, to be placed in conspicuous locations, as determined by 
the board of directors with the names of the candidates posted near 
the boxes or voting machines. The name of each candidate will be 
followed by a brief statement of qualifications and biographical 
data in a form approved by the board of directors;
    (c) After the members have been given 24 hours to vote at 
conspicuous locations as determined by the board of directors, the 
ballot boxes or voting machines will be opened, the vote tallied by 
the tellers, the tallies placed in the ballot boxes, and the ballot 
boxes resealed. The tellers are responsible at all times for the 
ballot boxes or voting machines and the integrity of the vote. A 
record must be kept of all persons voting and the tellers must 
assure themselves that each person voting is entitled to vote; and
    (d) The tellers will take the ballot boxes to the annual 
meeting. At the annual meeting, printed ballots will be distributed 
to those in attendance who have not voted and their votes will be 
deposited in the ballot boxes placed by the tellers, before the 
beginning of the meeting, in conspicuous locations with the names of 
the candidates posted near them. After those members have been given 
an opportunity to vote at the annual meeting, balloting will be 
closed, the ballot boxes opened, the vote tallied by the tellers and 
added to the previous count, and the chair will announce the result 
of the vote.

Option A4--Election by Electronic Device (Including But Not Limited 
To Telephone and Electronic Mail) or Mail Ballot; Nominating 
Committee and Nominations by Petition

    Section 1. Nomination procedures. a. At least 120 days before 
each annual meeting, the chair will appoint a nominating committee 
of three or more members. It is the duty of the nominating committee 
to nominate at least one member for each vacancy, including any 
unexpired term vacancy, for which elections are being held, and to 
determine that the members nominated are agreeable to the placing of 
their names in nomination and will accept office if elected.
    b. The nominating committee files its nominations with the 
secretary of the credit union at least 90 days before the annual 
meeting, and the secretary notifies in writing all members eligible 
to vote at least 75 days before the annual meeting that nominations 
for vacancies may also be made by petition signed by 1% of the 
members with a minimum of 20 and a maximum of 500. The secretary may 
use electronic mail to notify members who have opted to receive 
notices or statements electronically.
    c. The notice must indicate that the election will not be 
conducted by ballot and there will be no nominations from the floor 
when the number of nominees equals the number of positions to be 
filled. A brief statement of qualifications and biographical data in 
a form approved by the board of directors will be included for each 
nominee submitted by the nominating committee with the notice to all 
eligible members. Each

[[Page 61504