NCUA OKs Virtual Annual Meetings, Postponements to Combat COVID-19

The National Credit Union Administration has given federal credit unions increased flexibility to hold virtual annual meetings or delay their annual meetings because of the COVID-19 pandemic. On March 20, NCUA issued a letter to FCUs authorizing a new “emergency exception to in-person quorum requirement” bylaw that all FCUs have the option to adopt in order to hold their 2020 annual meetings virtually. FCUs also have the option to postpone their 2020 annual meetings to as late as December 2020.

For an FCU to hold its annual meeting virtually, a two-thirds majority of its board of directors must adopt the new bylaw. No additional NCUA approval is required to adopt the bylaw. FCUs that adopt the new bylaw would be able to hold annual meetings virtually and without an in-person quorum so long as a quorum of the credit union’s directors certify that the following conditions are met:

• The credit union’s headquarters or all or part of a community that the credit union serves is located in an area where a federal, state or local authority has declared a state of emergency or major disaster;
• The credit union has the technological capacity to facilitate virtual meeting attendance, voting and participation;
• The credit unions’ members received 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; and
• That NCUA has notified the credit union that it is appropriate to use this emergency bylaw.

In 2020, any FCU can hold a virtual annual meeting under this bylaw because the federal government has already declared the United States to be in a state of emergency. NCUA Chairman Rodney Hood wrote in the letter to FCUs that “[b]ecause of President Trump’s national emergency proclamation on March 13, effective immediately, 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, 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.”

FCUs that adopt the new bylaw would also be able to conduct most types of special member meetings virtually using the same procedures. Special meetings for the purpose of expelling a member, however, would have to be postponed or held in person.

The letter to FCUs also authorizes FCUs to postpone their annual meetings until as late as December 2020. FCUs can delay their annual meetings by providing their members with notice of the rescheduled annual meeting as required by their bylaws. If the FCU’s bylaws set a timeframe for its annual meetings, such as April of each year, the letter to FCUs clarifies that the “FCU can amend the date of its annual meeting by using the fill-in-the-blank provision in its bylaws with the two-thirds vote of its board, without seeking the NCUA’s approval.” This change of the annual meeting date could be made just for 2020, or the FCU’s board could decide to change the month in which the annual meeting is held for two or more successive years or permanently.

Another possibility allowed under the standard FCU bylaws is that the FCU can adjourn its regularly scheduled annual meeting for lack of a quorum and then reconvene the annual meeting seven to 14 days later. This could allow FCUs enough time to hold the reconvened annual meeting virtually because the credit union would only be required to give its members seven days’ notice of an emergency virtual meeting if it adopts and uses the new virtual annual meeting bylaw.

FCUs may also need to amend their bylaw on voting if they want to hold their annual meeting virtually. The standard FCU bylaws give FCUs four options for conducting elections, including the option to conduct elections using “electronic devices” or mail ballots. Permissible electronic devices for conducting FCU elections include telephones, email and other computer programs.

If the FCU has not already adopted this option, the FCU’s board of directors can adopt it by a two-thirds vote without NCUA approval because it is a standard bylaw. Under this option, however, the FCU would have to give any member “without the requisite electronic device necessary to vote on the system” the option to vote by mail ballot by sending paper notices and ballots by postal mail to members who have not opted to receive notices or statements electronically.

NCUA has also issued Frequently Asked Questions Regarding COVID-19, NCUA and Credit Union Operations that address a wide range of COVID-19-related matters. These FAQs clarify that FCU board members’ tenures continue if the FCU’s annual meeting is delayed and that FCUs can hold board meetings by phone or by videoconference so long as the FCU holds at least one in-person board meeting per year.

Michael S. Edwards is an attorney-at-law with extensive experience representing credit unions, community banks and credit union organizations in the United States and around the world on a wide range of regulatory, compliance and other legal matters. Now with his own law firm based in the Washington, D.C., area, Edwards previously served as SVP/advocacy and general counsel of the World Council of Credit Unions and was senior assistant general counsel in the regulatory advocacy section of the Credit Union National Association.