Compliance Blog

A few weeks ago, we blogged about holding virtual meetings into 2021 and the limitations of guidance issued by NCUA back in March 2020 with regard to the ongoing COVID-19 pandemic. Many federal credit unions (FCUs) have asked about holding virtual meetings next year, and whether NCUA has provided any flexibility for the requirement that at least one meeting of a FCU’s board be held in person.

Specifically, while the March guidance allowed FCUs to adopt a bylaw provision that would allow the annual in person meeting to be held virtually under certain emergency situations, four requirements must be met for that amendment to be permissible to use. One of these requirements was that “NCUA has issued general or specific guidance notifying the credit union that it is appropriate to invoke this bylaw provision.” However, NCUA had only indicated the agency thought this was appropriate though December 31, 2020. FCUs that usually hold their annual meetings in the early parts of 2021 were already thinking ahead to how to conduct these meetings safely, especially since the FCU bylaws require that  members be provided notice at least 30 but no more than 75 days’ before the meeting.

Meanwhile, the FCU bylaws require that at least one board meeting be held in person, although if a quorum is present, the remaining board members can participate by audio or video teleconference. Given the continued spread of COVID-19 in many communities, many FCUs continued to have concerns about holding these meetings in person.

NAFCU advocated on this issue, and we were pleased to see that in the afternoon on Friday, November 20, 2020 NCUA issued Letter to Federal Credit Unions 20-FCU-04. In this letter, NCUA added language to the emergency bylaw provision to include reference not only to the annual member meeting, but the requirement that the board of directors meet once in person as well. Here is the new language from the letter:

“Section 6. Emergency exception to in-person quorum requirement. This credit union may hold its annual meeting of the members, the required in-person regular meeting of the board of directors under Article VI, and special member meetings for authorized purposes other than member expulsion under Article XIV of these bylaws, virtually and without an in-person quorum…

As a reminder, besides NCUA having issued guidance that it is permissible to invoke this exception, the other requirements to utilize this flexibility are:

• All or part of the community the FCU serves, or the FCU’s headquarters are located in an area where a federal, state or local authority has declared a state of emergency or major disaster;
• The FCU hast he technology to facilitate virtual meeting attendance, voting and participation; and
• Members receive at least 7 days’ advance notice that a meeting is being changed to a virtual format.

NCUA also stated that, if a FCU has adopted the bylaw amendment, “is appropriate to invoke [the emergency exception] at any point in 2021 for meetings occurring in that year, if a majority of the board of directors so resolves for each such meeting.” If the other three requirements are met, then the FCU could hold its 2021 annual meeting virtually. FCUs that have not yet adopted this amendment may want to do so to maximize their flexibility for meetings in 2021.

NCUA also reminded FCUs of a few pieces of existing guidance:

• FCUs can postpone or amend their annual meetings as described in Letter to Federal Credit Unions 20-FCU-02;
• FCUs may amend their bylaws to change to different election options, as the option A4 will permit electronic voting for virtual annual meetings; and
• The FCU bylaws do allow meeting notices to be sent electronically to members who have opted to receive statements and notices electronically.

This clarification of continued flexibility for FCU annual meetings is certainly appreciated, as is the addition of board meetings to this emergency exception. NAFCU has identified other COVID-related statutory provisions and guidance that are set to expire in this document which may be helpful to credit unions. We will update it soon so keep an eye out for adjustments.

Programming Note. NAFCU will be closed on Wednesday, Thursday and Friday in observance of the Thanksgiving holiday. Thank you for all you do for your credit union. We wish you all a safe and happy holiday, and we will be back to blogging on Monday, November 30.