Conducting Your Annual Meeting When No One Wants to Attend

Farleigh Wada Witt offers guidance for credit unions on conducting their annual meetings amid the coronavirus outbreak.

3/10/2020coronavirus

Editor’s Note: The following is a contributed piece from Farleigh Wada Witt, the premier credit union law firm in the Northwest. Here, the firm outlines credit union annual meeting requirements and the steps they can take to keep members and staff safe during the COVID-19 outbreak. 

Visit NWCUA’s Coronavirus Preparation & Response Resources online for more information. Updates are being added regularly. 

Your credit union annual meeting is important, but not as important as the health and lives of your members. The current coronavirus pandemic is forcing everyone to consider the need and logistics of large public gatherings. Credit unions can still conduct their annual meetings but may need to make adjustments to do so. Each credit union will need to act based on its particular circumstances, including whether state or federally chartered, whether there is a contested election or other member voting, and what its bylaws require.

Annual Meeting Requirements (Idaho, Oregon, Washington, Federal)

The following is a brief summary of the applicable rules regarding credit union annual meetings under state and federal law:

Idaho (IC 26-2113 & 2113A)

The annual meeting of members shall be held in the community of the credit union’s principal office at the time prescribed by the bylaws. Also, the meeting shall be conducted according to rules of procedure approved by the Board. A credit union can permit voting by mail, absentee, or other methods, such as electronic ballots. Members must be notified of the meeting as provided in the credit union’s bylaws. There are no statutory or administrative rules that provide for or permit an electronic or virtual meeting in lieu of or in conjunction with the annual meeting to be held in the community where the credit union is located.

Oregon (ORS 723.196)

The annual meeting of members must be held at the time and in the manner provided in a credit union’s bylaws. To the extent any voting is necessary for the meeting, such as a contested election of the board, ballots may be distributed and collected in electronic, mail, or in-person forms. There are no statutory or administrative rules that expressly provide for conducting a purely electronic or virtual meeting. Members must be notified of the time and place of the annual meeting.

Washington (RCW 31.12.185)

The annual meeting of members shall be held at such time and in the manner provided in the credit union’s bylaws. Also, the meeting shall be conducted according to rules of procedure approved by the board. The board meeting procedure allows the credit union to establish the notice requirements to members, as well as any ballot (mail, electronic, etc.) requirements. There are no statutory or administrative rules that provide for an electronic or virtual meeting, but the credit union’s meeting procedure could provide for such a concept.

Federal (FCU Bylaws, 12 C.F.R. 701, Appendix A)

For federal credit unions, the NCUA’s FCU Bylaws require an in-person meeting to be held in a county where an office of the credit union is located, or within a radius of 100 miles of an office, as determined by the board and announced in the notice to members.

In its updates to the FCU Bylaws last year, the NCUA provided for credit unions to permit virtual attendance and participation in an annual meeting but only as a supplement to the in-person meeting that must be held. The secretary must give written notice to each member 30-75 days before the date of any annual meeting. The secretary must give notice of the annual meeting by posting the notice in a conspicuous place in the office of this credit union where members may read it at least 30 days before the meeting.

The suggested order of business at annual meetings of members is outlined in the FCU Bylaws. However, the order of business for the annual meeting may vary from the suggested order, provided it includes all required items (quorum, Supervisory Committee report, and election) and complies with the rules of procedure adopted by the credit union. Two recent NCUA Bylaws additions affecting the annual meeting apply only if the FCU adopts such provisions. These include:

    (i) the secretary must also prominently display the notice on the credit union’s website if such credit union maintains a website

   (ii) the credit union may permit virtual attendance and participation in the annual meeting, provided that an in-person meeting complying with the geographic requirements of this paragraph is also held.

Adjustments for This Year

Many credit unions have annual meetings scheduled for the spring of this year with notices of meetings already issued or posted. In order to fulfill the annual meeting requirement while providing for the safety and health of your members, we have outlined below a number of issues and considerations for conducting your credit union’s annual meeting. Before adopting a course of action, the credit union should assess its specific circumstances, including: 

  • Will the meeting include voting on a contested election or other issue? 
  • What do the credit union’s bylaws specify for meeting requirements and procedures? 
  • Has notice of the meeting already been provided to members?
  • What capability (or desire) does the credit union have to permit electronic participation or communication?

Conducting Your Annual Meeting While Avoiding Member Attendance 
The credit union can and should conduct its annual meeting if possible. At the same time, the credit union can avoid or not encourage attendance (this year) by suspending plans for door prizes, meals, drawings, or similar attendance incentives. Notify the members of the special circumstances of the meeting for this year. Here are some of the typical meeting requirements or elements for your meeting, including those that can be adjusted:

  • Distribution of Meeting Materials
    Last year’s meeting minutes, Supervisory Committee report, and annual audit report can be distributed to members by posting to the credit union’s website or being mailed or distributed to members via email.
  • Quorum
    Do not overlook your member quorum requirements to conduct the meeting. Therefore, some minimal number of members (i.e., Board and staff) must attend. This can usually be accomplished with a small in-person meeting even if communication with members is done electronically.
  • Communicating with Members
    The credit union can still conduct some interactive communication with members (i.e. live video stream, Facebook Live, etc.) to permit communication and live reports with members. However, such communication is not required unless some member action is scheduled, such as an election. Such communications sound attractive, but once you factor in the cost, the technological logistics and actual participation, the cost of these options may outweigh any benefits. Also consider a public forum later in the year when it is safer and members want to attend.

Canceling or Postponing the Meeting 
Canceling the annual meeting is not a good option — the annual meeting is a required event. If it is not feasible to conduct a meeting with scaled-back physical attendance, consider a meeting postponement instead. The credit union can choose to postpone the meeting to a later date this summer or fall. Members need to be notified of the postponement and the new meeting date and time. Even if a contested election will occur, the meeting and election can still be postponed and held later.

Elections
If a contested election is planned for your annual meeting this year, absent a postponement, the election can still be conducted with full member participation. Electronic ballots should pose no issues for disruption or delay. Also providing absentee paper ballots that can be mailed or dropped off at the branches are a great option to avoid attendance at the meeting. Use of absentee ballots with a postponed meeting or extended voting period will also give all members the opportunity to vote. Remember, an election where there are three nominees and only three positions to fill is not a real election. In such cases, no ballots or member action is required. Rather the Board Chair can declare the nominees elected by acclamation at the annual meeting.

Electronic or Virtual Meetings
Electronic meetings have been tried by large public companies with varied success and at a high cost. Even some high tech companies have bungled the logistics of their virtual meetings to the point of needing a new non-tech meeting. The credit union annual meeting, especially with a contested election or scheduled member action, is hardly time to experiment with the logistics of an electronic meeting. If member voting is required, do not consider it until you have a tested process for member identification and verification; secure means to distribute, collect, and count ballots; a reliable communication platform; and ability to establish records of each step and requirement.

On the other hand, if there is no contested election, the bulk of the meeting may consist of presentations to the members (Supervisory Committee report, Board Chair report, CEO report, financials, etc.). In such cases, if permitted by the applicable rules, and if the credit union can adequately provide for verification of a quorum (in person or through verified member electronic attendance), an electronic form of presentation may be satisfactory. A credit union that chooses this route must be sure to satisfy the applicable notice requirements in its bylaws; if notice of a physical meeting has already been provided, new notice would be required. In addition, a credit union would need to provide an alternative for persons who may not have ready internet or electronic access; thus, for example, the credit union could make branch facilities available for members to electronically attend.

Communicate Now
Your credit union should make a plan and communicate with the members as soon as possible. Members will be grateful that their best interests (personal and credit union) are protected.