Compliance Blog

Happy November! The year 2020 is drawing to a close. That does, however, leave some burning questions for 2021. No, I’m not talking about the results of tomorrow’s Presidential election. I’m talking about virtual meetings.

As we get closer to 2021, many Federal Credit Unions (FCUs) are starting to think about their 2021 annual meetings. This is especially true for FCUs that tend to hold their annual meeting during the first few months of the calendar year. NCUA’s model bylaws require an FCU to give 30-75 days’ notice of the annual meeting to its members, which means some FCUs may be planning to send their 2021 notices in the coming weeks. Given that the COVID-19 pandemic is still with us, several FCUs have written to the NAFCU Compliance Team in recent weeks to ask about whether they can hold their 2021 Annual Meetings virtually. So, let’s review the current state of virtual meetings:

As described in this previous post, NCUA issued Letter 20-FCU-02 in March 2020. The letter provided a new bylaw amendment which FCUs could adopt by a 2/3 majority vote of their board. Once adopted, the amendment would allow FCUs to hold their annual meetings in an entirely virtual format. However, to utilize this virtual meeting amendment, the FCU’s board must adopt a resolution certifying the following:

• “At least one of the following is located in an area where a federal, state, or local authority has declared a state of emergency or major disaster:
  • all or part of a community the credit union serves; or
  • the credit union’s headquarters.
• The credit union has the technological capacity to facilitate virtual meeting attendance, voting, and participation.
• Members receive at least seven days’ advance notice of the change to a virtual meeting format and appropriate instructions for how to join, participate, and vote during the virtual meeting.
• The NCUA has issued general or specific guidance notifying the credit union that it is appropriate to invoke this bylaw provision.”

(emphasis added).

That last requirement is the one currently generating some uncertainty. Before an FCU can hold a virtual annual meeting, NCUA must issue “general or specific guidance” announcing virtual meetings are appropriate. NCUA did this for 2020 when it provided the virtual meeting bylaw amendment, stating: “…the NCUA hereby notifies all FCUs that, if they have adopted this bylaw amendment, it is appropriate to invoke its provisions at any point during the year 2020 for meetings occurring in 2020” (emphasis added).

However, as of this writing, NCUA has not issued any general guidance stating virtual meetings will be appropriate in 2021. As you might imagine, this is creating some anxiety for FCUs, as the bylaw amendment requires them to certify such guidance exists before they can hold their annual meeting virtually. NAFCU is currently working with NCUA to seek more flexibility for credit unions regarding 2021 annual meetings and will update our members when we hear more.

In the meantime, what can an FCU do if it wishes to provide notice of its 2021 meeting soon? As mentioned above, the model bylaws require an FCU to provide 30-75 days’ notice of the meeting. However, under the virtual meeting bylaw amendment, FCUs are only required to provide 7 days’ notice of the virtual format. This means FCUs can provide notice of when the meeting will take place, and can hold off on providing the notice of the virtual format – so long as that notice is eventually provided at least 7 days before the meeting is held. Additionally, NCUA regulations do not prohibit an FCU from informing members the meeting might be held virtually, so some FCUs may choose to inform their members of the possibility of a virtual format to ease member concerns about travel or social distancing.

While we’re on the topic, what about Board of Directors meetings? The Federal Credit Union Act requires the Board of Directors to meet monthly. The model bylaws state “[t]he board must conduct one regular meeting each calendar year in person” (emphasis added). The other meetings may be conducted “by audio or video teleconference.” This means 11 out of 12 board meetings each year can be held in a virtual format, but the bylaws require one board meeting per calendar year to be conducted with an in-person quorum. Interestingly, NCUA did not address board meetings in its virtual meetings bylaw amendment, opting instead to only discuss the annual meeting of the members. As of this writing, NCUA has not provided any relief for the once-per-year in-person board meeting requirement, whether for 2020 or beyond.

NAFCU will continue to advocate for flexibility for credit unions during the pandemic (and beyond!). In the meantime, NCUA will hopefully provide additional flexibility before the end of the 2020 calendar year.