Summary: NCUA Proposed Changes to its Bylaws for Federal Credit Unions (FCUs)

Prepared by NASCUS Legislative & Regulatory Affairs Department
April 2018

The NCUA Board has issued an advance notice of proposed rulemaking (ANPR) to FCUs soliciting comments on ways to streamline, clarify, and improve the standard FCU bylaws. NCUA’s bylaws DO NOT APPLY to federally insured state chartered credit unions (FISCUs). NASCUS is providing this summary for any states that wish to review their state bylaw requirements for FISCUs in light of NCUA’s initiative.

FCU Bylaw Background

NCUA used to not have formal bylaws as part of its rules and regulations. At that time, FCUs had broad discretion to craft bylaws as they saw fit so long as their governance and bylaws was consistent with the Federal Credit Union Act (FCUA).  When disputes arose between FCU members and their FCU regarding governance, NCUA allowed those disputes to be resolved thru the normal corporate governance resolution processes found in state court. In 2007, dissatisfied with some state court interpretations of the relationship between FCU members and their FCUs and feeling it lacked an ability to regulate in the area of governance, NCUA incorporated standard bylaws into its regulations for FCUs.

NCUA Request for Comments and Input

NCUA is focused on the following areas for FCU bylaw reform:

  1. Improving the process by which FCUs amend their bylaws. A FCU seeking to amend its bylaws must submit the proposed changes to NCUA for approval. Currently NCUA has not mandatory timeframes for responding to such requests. NCUA sees the need to create a faster/more efficient bylaws amendment process as essential for safety and soundness.
  2. Limitation of service or expulsion of members. FCUs may limit services or access to credit union facilities to ‘‘a member who is disruptive to credit union operations.’’ NCUA has interpreted this to mean that an FCU may limit services to an FCU member in cases where the member is abusive to FCU staff or has caused a loss to the FCU. However, for FCUs, NCUA has also identified limitations on the ability to expel a member or limit services such as notice requirements, requirements for a nexus between conduct and service limited, and limitations imposed by contractual provisions and disparate impact analysis.
  3. Improving FCU bylaws to facilitate recruitment of qualified directors. NCUA seeks ways to enhance FCU ability to recruit qualified directors. NCUA is considering adding commentary to its model bylaws that give FCUs examples of criteria to be considered when identifying candidates for vacant director seats as well as considering authorizing FCUs to create advisory committees to help recruit director candidates.
  4. Attendance at annual meeting. NCUA is interested in ways that it can improve the standard bylaws to encourage active member participation in annual and special meetings. NCUA bylaws mandate that the secretary of the FCU must provide members with at least 30 but not more than 75 days written notice before the date of any annual meeting. For a special meeting, the written notice must be at least 7 days before the date of the special meeting. NCUA seeks input on whether those time frames are adequate to ensure member attendance at meetings. NCUA also seeks input on use of new technologies such as web-based conferencing to enhance member participation. (NASCUS Note: Washington State has issued guidance to its FISCUs regarding “hybrid” virtual meetings. See
  5. Overlapping requirements. NCUA has identified a number of its regulations that overlap with the FCU bylaws addressing issues such as FCU member confidentiality, conflicts of interest, record retention, and the availability of books and records to FCU members. NCUA seeks specific input as to whether the duplication should be eliminated.