NCUA Extends Federal Credit Unions’ Meeting Flexibility
November 30, 2021
The National Credit Union Administration issued Letter to Federal Credit Unions 21-FCU-06 which extends the flexibility for federal credit unions to conduct meetings virtually in 2022.
As previously provided, a federal credit union may adopt at any time, by a two-thirds vote of its board of directors, the following bylaw amendment to Article IV without additional approvals by the NCUA:
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 if all of the following conditions apply and are certified in meeting minutes by a resolution of the majority of a quorum of the board of directors:
- 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 of a member meeting 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.
A federal credit union may choose to adopt the amendment with or without the underlined language related to meetings of the board of directors.
Federal credit unions choosing to adopt the amendment (with or without the language related to board of directors’ meetings) should ensure that the cross-citations conform to their version of the bylaws.
The NCUA hereby notifies all federal credit unions that, if they have adopted this bylaw amendment, it is appropriate to invoke its provisions at any point in 2022 for meetings occurring in that year if a majority of the board of directors so resolves for each such meeting. General quorum requirements must still be met for all-virtual meetings.
Question of the Week
Q. Can a federally chartered credit union recoup settlement costs and fees it waived in relation to a Member Business Loan (MBL) without those costs being considered a prohibited prepayment penalty?
A. Yes, as long as the recoupment period is reasonable in terms of the size and type of fees being waived. In NCUA’s Opinion Letter 08-0731, the NCUA addressed this issue by first noting that the Federal Credit Union Act allows borrowers to repay a loan before maturity without penalty. Therefore, an FCU is prohibited from charging a borrower a prepayment penalty if she were to pay off the loan before it is due. However, in another analysis of non-member business loan waiver of appraisal and title fees, it was determined that these were not prohibited penalties since they were disclosed and agreed to by the borrower, and the recoupment period was a reasonable one or two years.
National Credit Union Administration
The NCUA issued Letter to Federal Credit Unions 21-FCU-06 which extends the flexibility for federal credit unions to conduct meeting virtually for 2022.
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Questions? Contact the Compliance Hotline: 1.800.546.4465; firstname.lastname@example.org.