12 CFR 701, Appendix A

National Credit Union Administration

Pt. 701, App. A

of the board of directors, of which the
member is given notice.
(d) Enforcing a statutory lien—(1) Application of funds. Except as otherwise
provided by federal law, a federal credit union may enforce its statutory lien
against a member’s account(s) by debiting funds in the account and applying
them to the extent of any of the member’s outstanding financial obligations
to the credit union.
(2) Default required. A federal credit
union may enforce its statutory lien
against a member’s account(s) only
when the member fails to satisfy an
outstanding financial obligation due
and payable to the credit union.
(3) Neither judgment nor set-off required. A federal credit union need not
obtain a court judgment on the member’s debt, nor exercise the equitable
right of set-off, prior to enforcing its
statutory lien against the member’s
account.
[64 FR 56956, Oct. 22, 1999]

APPENDIX A TO PART 701—FEDERAL
CREDIT UNION BYLAWS
INTRODUCTION
A. Effective date. After consideration of
public comment, the National Credit Union
Administration (NCUA) Board adopted these
Bylaws and incorporated them as appendix A
to Part 701 of NCUA’s regulations on November 30, 2007. Unless a federal credit union has
adopted bylaws before November 30, 2007, it
must adopt these revised bylaws.
B. Adoption of all or part of these bylaws. Although federal credit unions may retain any
previously approved version of the bylaws,
the NCUA Board encourages federal credit
unions to adopt the revised bylaws because it
believes they provide greater clarity and
flexibility for credit unions and their officials and members. Federal credit unions
may also adopt portions of the revised bylaws and retain the remainder of previously
approved bylaws, but the NCUA Board cautions federal credit unions to be extremely
careful. Federal credit unions must be careful because they run the risk of having inconsistent or conflicting provisions because
of the various options the revised bylaws
provide as well as other revisions in the text.
C. Bylaw amendments. 1. The FCU Bylaws
contain several provisions allowing FCU
boards to select from an option or range of
options and fill in a blank. Changes to ‘‘fillin-the-blank’’ provisions are, in fact, changes
to the FCU’s bylaws and require a two-thirds
vote of the board. As long as the FCU selects
from the permissible options for completing

the blank, the FCU need not submit the
change for NCUA approval using the process
outlined below.
2. Federal credit unions continue to have
the flexibility to request other bylaw amendments if the need arises. NCUA must approve
any bylaw amendments; federal credit
unions may no longer adopt amendments
from the ‘‘Standard Bylaw Amendments’’
booklet because the 1999 revisions to the bylaws included sufficient flexibility to make
the separate list of standard bylaw amendments superfluous. Thus, NCUA no longer
differentiates between ‘‘standard’’ and ‘‘nonstandard’’ bylaw amendments.
3. The procedure for approval of bylaw
amendments is as follows:
a. The federal credit union wishing to
adopt a bylaw amendment must file a request with its regional director.
b. The request must include the section of
the bylaws to be amended; the reason for or
purpose of the amendment, including an explanation of why the amendment is desirable
and what it will accomplish for the credit
union; and the specific, proposed wording of
the amendment.
c. After review by the regional director and
consultation within the agency, the regional
director will advise the credit union if a proposed amendment is approved.
4. Federal credit unions considering an
amendment may find it useful to review the
bylaws section of the agency Web site, which
includes Office of General Counsel opinions
about proposed bylaw amendments. Opinions
issued after April 2006 will include the language of approved amendments. Even if an
amendment has been previously approved,
the credit union must submit a proposed
amendment to NCUA for review under the
procedure listed above to ensure the amendment is identical. Credit unions requesting
previously approved amendments will receive notice of the regional office’s decision
within 15 business days of the receipt of the
request.
D. The nature of the bylaws. 1. The Federal
Credit Union Act requires the NCUA Board
to prepare bylaws for federal credit unions.
12 U.S.C. 1758. The bylaws address a broad
range of matters concerning a credit union’s
organization and governance, the relationship of the credit union to its members, and
the procedures and rules a credit union follows. The bylaws supplement the broad provisions of: A federal credit union’s charter,
which establishes the existence of a federal
credit union; the Federal Credit Union Act,
which establishes the powers of federal credit unions; and NCUA regulations, which implement the Federal Credit Union Act. As a
legal matter, a federal credit union’s bylaws
must conform to and cannot be inconsistent
with any provision of its charter, the Federal
Credit Union Act, NCUA regulations or other

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Pt. 701, App. A

12 CFR Ch. VII (1–1–12 Edition)

laws or regulations applicable to its operations.
2. NCUA expects federal credit unions and
their members will make every effort to resolve bylaw disputes using the credit union’s
internal member complaint resolution process. If a bylaw dispute cannot be resolved internally, however, credit union officials or
members should contact the regional office
with jurisdiction for the credit union for assistance in resolving the dispute.
3. NCUA has discretion to take administrative actions when a credit union is not in
compliance with its bylaws. If a potential
violation is identified, NCUA will carefully
consider all of the facts and circumstances in
deciding whether to take enforcement action. NCUA will not take action against
minor or technical violations, but emphasizes that it retains discretion to enforce the
bylaws in appropriate cases, such as safety
and soundness concerns or threats to fundamental, material credit union member
rights.
TABLE OF CONTENTS
Page
Article I. Name—Purposes
Article II. Qualifications for Membership
Article III. Shares of Members
Article IV. Meetings of Members
Article V. Elections
Article VI. Board of Directors
Article VII. Board Officers, Management Officials and Executive Committee
Article VIII. Credit Committee or Loan Officers
Article IX. Supervisory Committee
Article X. Organization Meeting
Article XI. Loans and Lines of Credit to
Members
Article XII. Dividends
Article XIII. Reserved
Article XIV. Expulsion and Withdrawal
Article XV. Minors
Article XVI. General
Article XVII. Amendments of Bylaws and
Charter
Article XVIII. Definitions
BYLAWS
FEDERAL CREDIT UNION, CHARTER
NO.llllll
(A corporation chartered under the laws of
the United States)
ARTICLE I. NAME—PURPOSES
Section 1. Name. The name of this credit
union is as stated in Section 1 of the charter
(approved organization certificate) of this
credit union.
Section 2. Purposes. This credit union is a
member-owned, democratically operated,
not-for-profit organization managed by a

volunteer board of directors, with the specified mission of meeting the credit and savings needs of consumers, especially persons
of modest means. The purpose of this credit
union is to promote thrift among its members by affording them an opportunity to accumulate their savings and to create for
them a source of credit for provident or productive purposes. The credit union may add
business as one of its purposes by placing a
comma after ‘‘provident’’ and inserting ‘‘business.’’
ARTICLE II. QUALIFICATIONS FOR MEMBERSHIP
Section 1. Field of membership. The field of
membership of this credit union is limited to
that stated in Section 5 of its charter.
Section 2. Membership application procedures. Applications for membership from persons eligible for membership under Section 5
of the charter must be signed by the applicant on forms approved by the board. The applicant is admitted to membership after approval of an application by a majority of the
directors, a majority of the members of a
duly authorized executive committee, or by
a membership officer, and after subscription
to at least one share of this credit union and
the payment of the initial installment, and
the payment of a uniform entrance fee if required by the board. If a person whose membership application is denied makes a written request, the credit union must explain
the reasons for the denial in writing.
Section 3. Maintenance of membership share
required. A member who withdraws all
shareholdings or fails to comply with the
time requirements for restoring his or her
account balance to par value in Article III,
Section 3, ceases to be a member. By resolution, the board may require persons readmitted to membership to pay another entrance fee.
Section 4. Continuation of membership. Once
a member becomes a member that person
may remain a member until the person or organization chooses to withdraw or is expelled
in accordance with the Act and Article XIV
of these bylaws. A member who is disruptive
to credit union operations may be subject to
limitations on services and access to credit
union facilities. A credit union that wishes to
restrict services to members no longer within the
field of membership should specify the restrictions in this section.
Staff commentary on qualifications for
membership:
Entrance fee—FCUs may not vary the entrance fee among different classes of members because the Act requires a uniform fee.
FCUs may, however, eliminate the entrance
fee for all applicants.
ARTICLE III. SHARES OF MEMBERS
Section 1. Par value. The par value of each
share will be $lll. Subscriptions to shares

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National Credit Union Administration

Pt. 701, App. A

are payable at the time of subscription, or in
installments of at least $lll per month.
Section 2. Cap on shares held by one person.
The board may establish, by resolution, the
maximum amount of shares that any one
member may hold.
Section 3. Time periods for payment and
maintenance of membership share. A member
who fails to complete payment of one share
within lll of admission to membership, or
within lll from the increase in the par
value of shares, or a member who reduces the
share balance below the par value of one
share and does not increase the balance to at
least the par value of one share within lll
of the reduction will be terminated from
membership.
Section 4. Transferability. Shares may only
be transferred from one member to another
by an instrument in a form as the board may
prescribe. Shares that accrue credits for unpaid dividends retain those credits when
transferred.
Section 5. Withdrawals. Money paid in on
shares or installments of shares may be
withdrawn as provided in these bylaws or
regulation on any day when payment on
shares may be made, provided, however,
that;
(a) The board has the right, at any time, to
require members to give up to 60 days written notice of intention to withdraw the
whole or any part of the amounts paid in by
them.
(b) Reserved.
(c) No member may withdraw any
shareholdings below the amount of the member’s primary or contingent liability to the
credit union if the member is delinquent as
a borrower, or if borrowers for whom the
member is comaker, endorser, or guarantor
are delinquent, without the written approval
of the credit committee or loan officer. Coverage of overdrafts under an overdraft protection policy does not constitute delinquency for purposes of this paragraph.
Shares issued in an irrevocable trust as provided in Section 6 of this article are not subject to withdrawal restrictions except as
stated in the trust agreement.
(d) The share account of a deceased member (other than one held in joint tenancy
with another member) may be continued
until the close of the dividend period in
which the administration of the deceased’s
estate is completed.
(e) The board will have the right, at any
time, to impose a fee for excessive share
withdrawals from regular share accounts.
The number of withdrawals not subject to a
fee and the amount of the fee will be established by board resolution and will be subject
to regulations applicable to the advertising
and disclosure of terms and conditions on
member accounts.

Section 6. Trusts. Shares may be issued in
a revocable or irrevocable trust, subject to
the following:
When shares are issued in a revocable
trust, the settlor must be a member of this
credit union in his or her own right. When
shares are issued in an irrevocable trust, either the settlor or the beneficiary must be a
member of this credit union. The name of
the beneficiary must be stated in both a revocable and irrevocable trust. For purposes of
this section, shares issued pursuant to a pension plan authorized by the rules and regulations will be treated as an irrevocable trust
unless otherwise indicated in the rules and
regulations.
Section 7. Joint accounts and membership requirements. Select one option and check the box
corresponding to that option.
l Option A—Separate account not required
to establish membership
Owners of a joint account may both be
members of the credit union without opening
separate accounts. For joint membership,
both owners are required to fulfill all of the
membership requirements including each
member purchasing and maintaining at least
one share in the account.
l Option B—Separate account required to establish membership
Each member must purchase and maintain
at least one share in a share account that
names the member as the sole or primary
owner. Being named as a joint owner of a
joint account is insufficient to establish
membership.
Staff commentary on shares:
i. Installments—FCUs may insert zero for
the number of installments. The FCU Act allows membership upon the payment of the
initial installment of a membership share,
but NCUA no longer views this provision as
requiring FCUs to offer the option of paying
for the membership share in installments.
ii. Par value—FCUs may establish differing
par values for different classes of members
or types of accounts, provided this action
does not violate any federal, state or local
antidiscrimination laws. For example, an
FCU may want to establish a higher par
value for recent credit union members, without requiring long-time members to bring
their accounts up to the new par value. A
differing par value may also be permissible
for different types of accounts, such as requiring a higher par value for a member with
only a share draft account. If a credit union
adopts differing par values, all of the possible par values should be stated in Section
1.
iii. Reduction in share balance below par
value—When a member’s account balance
falls below the par value, Section 3 requires
FCUs to allow members a minimum time period to restore their account balance to the
par value before membership is terminated.

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12 CFR Ch. VII (1–1–12 Edition)

FCUs may not delete this requirement or delete references to this requirement in Article
II, Section 3.
ARTICLE IV. MEETINGS OF MEMBERS
Section 1. Annual meeting. The annual
meeting of the members must be held [insert
time for annual meeting, for example, ‘‘during the month of March/on the third Saturday of April/ no later than March 31’’], in the
county in which any office of the credit
union is located or within a radius of 100
miles of an office, at the time and place as
the board determines and announces in the
notice of the annual meeting.
Section 2. Notice of meetings required. a. At
least 30 but no more than 75 days before the
date of any annual meeting or at least 7 days
before the date of any special meeting of the
members, the secretary must give written
notice to each member. Notice may be by
written notice delivered in person or by mail
to the member’s address, or, for members
who have opted to receive statements and
notices electronically, by electronic mail.
Notice of the annual meeting may be given
by posting the notice in a conspicuous place
in the office of this credit union where it
may be read by the members, at least 30 days
before the meeting, if the annual meeting is
to be held during the same month as that of
the previous annual meeting and if this credit union maintains an office that is readily
accessible to members where regular business hours are maintained. Any meeting of
the members, whether annual or special,
may be held without prior notice, at any
place or time, if all the members entitled to
vote, who are not present at the meeting,
waive notice in writing, before, during, or
after the meeting.
b. Notice of any special meeting must state
the purpose for which it is to be held, and no
business other than that related to this purpose may be transacted at the meeting.
Section 3. Special meetings. a. Special meetings of the members may be called by the
chair or the board of directors upon a majority vote, or by the supervisory committee as
provided in these bylaws. The chair must
call a special meeting, meaning the meeting
must be held, within 30 days of the receipt of
a written request of 25 members or 5% of the
members as of the date of the request,
whichever number is larger. However, a request of no more than 750 members may be
required to call a special meeting.
b. The notice of a special meeting must be
given as provided in Section 2 of this article.
Special meetings may be held at any location permitted for the annual meeting.
Section 4. Items of business for annual meeting and rules of order for annual and special
meetings. The suggested order of business at
annual meetings of members is—
(a) Ascertainment that a quorum is
present.

(b) Reading and approval or correction of
the minutes of the last meeting.
(c) Report of directors, if there is one. For
credit unions participating in the Community Development Revolving Loan Program,
the directors must report on the credit
union’s progress on providing needed community services, if required by NCUA Regulations.
(d) Report of the financial officer or the
chief management official.
(e) Report of the credit committee, if there
is one.
(f) Report of the supervisory committee, as
required by Section 115 of the Act.
(g) Unfinished business.
(h) New business other than elections.
(i) Elections, as required by Section 111 of
the Act.
(j) Adjournment.
(k) To the extent consistent with these bylaws, all meetings of the members will be
conducted according to llllll. The
order of business for the annual meeting may
vary from the suggested order, provided it
includes all required items and complies
with the rules of procedure adopted by the
credit union.
The credit union must fill in the blank with
one of the following authorities, noting the edition to be used: Democratic Rules of Order, The
Modern Rules of Order, Robert’s Rules of Order,
or Sturgis’ Standard Code of Parliamentary
Procedure.
Section 5. Quorum. Except as otherwise
provided, 15 members constitute a quorum at
annual or special meetings. If no quorum is
present, an adjournment may be taken to a
date at least 7 but not more than 14 days
thereafter. The members present at any adjourned meeting will constitute a quorum,
regardless of the number of members
present. The same notice must be given for
the adjourned meeting as is prescribed in
Section 2 of this article for the original
meeting, except that the notice must be
given at least 5 days before the date of the
meeting as fixed in the adjournment.
ARTICLE V. ELECTIONS
The Credit Union must select one of the four
voting options. This may be done by printing
the credit union’s bylaws with the option selected or retaining this copy and checking the
box of the option selected. All options continue
with Section 3 of this article.
Option A1—In-Person Elections; Nominating
Committee and Nominations From Floor
Section 1. Nomination procedures. At least
30 days before each annual meeting, the
chair will appoint a nominating committee
of three or more members. It is the duty of
the nominating committee to nominate at
least one member for each vacancy, including any unexpired term vacancy, for which

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elections are being held, and to determine
that the members nominated are agreeable
to the placing of their names in nomination
and will accept office if elected.
Section 2. Election procedures. After the
nominations of the nominating committee
have been placed before the members, the
chair calls for nominations from the floor.
When nominations are closed, the chair appoints the tellers, ballots are distributed, the
vote is taken and tallied by the tellers, and
the results announced. All elections are determined by plurality vote and will be by
ballot except where there is only one nominee for the office.
Option A2—In-Person Elections; Nominating
Committee and Nominations by Petition
Section 1. Nomination procedures. a. At
least 120 days before each annual meeting
the chair will appoint a nominating committee of three or more members. It is the
duty of the nominating committee to nominate at least one member for each vacancy,
including any unexpired term vacancy, for
which elections are being held, and to determine that the members nominated are agreeable to the placing of their names in nomination and will accept office if elected.
b. The nominating committee files its
nominations with the secretary of the credit
union at least 90 days before the annual
meeting, and the secretary notifies in writing all members eligible to vote at least 75
days before the annual meeting that nominations for vacancies may also be made by petition signed by 1% of the members with a
minimum of 20 and a maximum of 500. The
secretary may use electronic mail to notify
members who have opted to receive notices
or statements electronically.
c. The written notice must indicate that
the election will not be conducted by ballot
and there will be no nominations from the
floor when the number of nominees equals
the number of positions to be filled. A brief
statement of qualifications and biographical
data in a form approved by the board of directors will be included for each nominee
submitted by the nominating committee
with the written notice to all eligible members. Each nominee by petition must submit
a similar statement of qualifications and biographical data with the petition. The written notice must state the closing date for receiving nominations by petition. In all cases,
the period for receiving nominations by petition must extend at least 30 days from the
date that the petition requirement and the
list of nominating committee’s nominees are
mailed to all members. To be effective,
nominations by petition must be accompanied by a signed certificate from the nominee or nominees stating that they are agreeable to nomination and will serve if elected
to office. Nominations by petition must be
filed with the secretary of the credit union

at least 40 days before the annual meeting
and the secretary will ensure that nominations by petition, along with those of the
nominating committee, are posted in a conspicuous place in each credit union office at
least 35 days before the annual meeting.
Section 2. Election procedures. a. All persons nominated by either the nominating
committee or by petition must be placed before the members. When nominations are
closed, the chair appoints the tellers, ballots
are distributed, the vote is taken and tallied
by the tellers, and the results announced. All
elections are determined by plurality vote
and will be by ballot except where there is
only one nominee for each position to be
filled.
b. If sufficient nominations are made by
the nominating committee or by petition to
provide at least as many nominees as positions to be filled, nominations cannot be
made from the floor. In the event nominations from the floor are permitted and result
in more nominees than positions to be filled,
when nominations have been closed, the
chair appoints the tellers, ballots are distributed, the vote is taken and tallied by the
tellers, and the results announced. When the
number of nominees equals the number of
positions to be filled, the chair may take a
voice vote or declare each nominee elected
by general consent or acclamation at the annual meeting.
Option A3—Election by Ballot Boxes or Voting
Machine; Nominating Committee and Nomination by Petition
Section 1. Nomination procedures. a. At
least 120 days before each annual meeting,
the chair will appoint a nominating committee of three or more members. It is the
duty of the nominating committee to nominate at least one member for each vacancy,
including any unexpired term vacancy, for
which elections are being held, and to determine that the members nominated are agreeable to the placing of their names in nomination and will accept office if elected.
b. The nominating committee files its
nominations with the secretary of the credit
union at least 90 days before the annual
meeting, and the secretary notifies in writing all members eligible to vote at least 75
days before the annual meeting that nominations for vacancies may also be made by petition signed by 1% of the members with a
minimum of 20 and a maximum of 500. The
secretary may use electronic mail to notify
members who have opted to receive notices
or statements electronically.
c. The written notice must indicate that
the election will not be conducted by ballot
and there will be no nominations from the
floor when the number of nominees equals
the number of positions to be filled. A brief
statement of qualifications and biographical

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Pt. 701, App. A

12 CFR Ch. VII (1–1–12 Edition)

data in a form approved by the board of directors will be included for each nominee
submitted by the nominating committee
with the written notice to all eligible members. Each nominee by petition must submit
a similar statement of qualifications and biographical data with the petition. The written notice must state the closing date for receiving nominations by petition. In all cases,
the period for receiving nominations by petition must extend at least 30 days from the
date of the petition requirement and the list
of nominating committee’s nominees are
mailed to all members. To be effective,
nominations by petition must be accompanied by a signed certificate from the nominee or nominees stating that they are agreeable to nomination and will serve if elected
to office. Nominations by petition must be
filed with the secretary of the credit union
at least 40 days before the annual meeting
and the secretary will ensure that nominations by petition along with those of the
nominating committee are posted in a conspicuous place in each credit union office at
least 35 days before the annual meeting.
Section 2. Election procedures. All elections
are determined by plurality vote. The election will be conducted by ballot boxes or voting machines, subject to the following conditions:
(a) The board of directors will appoint the
election tellers;
(b) If sufficient nominations are made by
the nominating committee or by petition to
provide more nominees than positions to be
filled, the secretary, at least 10 days before
the annual meeting, will cause ballot boxes
and printed ballots, or voting machines, to
be placed in conspicuous locations, as determined by the board of directors with the
names of the candidates posted near the
boxes or voting machines. The name of each
candidate will be followed by a brief statement of qualifications and biographical data
in a form approved by the board of directors;
(c) After the members have been given 24
hours to vote at conspicuous locations as determined by the board of directors, the ballot boxes or voting machines will be opened,
the vote tallied by the tellers, the tallies
placed in the ballot boxes, and the ballot
boxes resealed. The tellers are responsible at
all times for the ballot boxes or voting machines and the integrity of the vote. A record
must be kept of all persons voting and the
tellers must assure themselves that each
person voting is entitled to vote; and
(d) The tellers will take the ballot boxes to
the annual meeting. At the annual meeting,
printed ballots will be distributed to those in
attendance who have not voted and their
votes will be deposited in the ballot boxes
placed by the tellers, before the beginning of
the meeting, in conspicuous locations with
the names of the candidates posted near
them. After those members have been given

an opportunity to vote at the annual meeting, balloting will be closed, the ballot boxes
opened, the vote tallied by the tellers and
added to the previous count, and the chair
will announce the result of the vote.
Option A4—Election by Electronic Device (Including But Not Limited To Telephone and
Electronic Mail) or Mail Ballot; Nominating
Committee and Nominations by Petition
Section 1. Nomination procedures. a. At
least 120 days before each annual meeting,
the chair will appoint a nominating committee of three or more members. It is the
duty of the nominating committee to nominate at least one member for each vacancy,
including any unexpired term vacancy, for
which elections are being held, and to determine that the members nominated are agreeable to the placing of their names in nomination and will accept office if elected.
b. The nominating committee files its
nominations with the secretary of the credit
union at least 90 days before the annual
meeting, and the secretary notifies in writing all members eligible to vote at least 75
days before the annual meeting that nominations for vacancies may also be made by petition signed by 1% of the members with a
minimum of 20 and a maximum of 500. The
secretary may use electronic mail to notify
members who have opted to receive notices
or statements electronically.
c. The notice must indicate that the election will not be conducted by ballot and
there will be no nominations from the floor
when the number of nominees equals the
number of positions to be filled. A brief
statement of qualifications and biographical
data in a form approved by the board of directors will be included for each nominee
submitted by the nominating committee
with the notice to all eligible members. Each
nominee by petition must submit a similar
statement of qualifications and biographical
data with the petition. The notice must
state the closing date for receiving nominations by petition. In all cases, the period for
receiving nominations by petition must extend at least 30 days from the date of the petition requirement and the list of nominating committee’s nominees are mailed to
all members. To be effective, nominations by
petition must be accompanied by a signed
certificate from the nominee or nominees
stating that they are agreeable to nomination and will serve if elected to office. Nominations by petition must be filed with the
secretary of the credit union at least 40 days
before the annual meeting and the secretary
will ensure that nominations by petition,
along with those of the nominating committee, are posted in a conspicuous place in
each credit union office at least 35 days before the annual meeting.

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Section 2. Election procedures. All elections
are determined by plurality vote. All elections will be by electronic device or mail ballot, subject to the following conditions:
(a) The board of directors will appoint the
election tellers;
(b) If sufficient nominations are made by
the nominating committee or by petition to
provide more nominees than positions to be
filled, the secretary, at least 30 days before
the annual meeting, will cause either a
printed ballot or notice of ballot to be
mailed to all members eligible to vote. Electronic mail may be used to provide the notice of ballot to members who have opted to
receive notices or statements electronically;
(c) If the credit union is conducting its
elections electronically, the secretary will
cause the following materials to be transmitted to each eligible voter and the following procedures will be followed:
(1) One notice of balloting stating the
names of the candidates for the board of directors and the candidates for other separately identified offices or committees. The
name of each candidate must be followed by
a brief statement of qualifications and biographical data in a form approved by the
board of directors. Electronic mail may be
used to provide the notice of ballot to members who have opted to receive notices or
statements electronically.
(2) One mail ballot that conforms to Section 2(d) of this article and one instruction
sheet stating specific instructions for the
electronic election procedure, including how
to access and use the system, and the period
of time in which votes will be taken. The instruction will state that members without
the requisite electronic device necessary to
vote on the system may vote by submitting
the enclosed mail ballot and specify the date
the mail ballot must be received by the credit union. For members who have opted to receive notices or statements electronically,
the mail ballot is not required and electronic
mail may be used to provide the instructions
for the electronic election procedure.
(3) It is the duty of the tellers of election
to verify, or cause to be verified the name of
the voter and the credit union account number as they are registered in the electronic
balloting system. It is the duty of the teller
to test the integrity of the balloting system
at regular intervals during the election period.
(4) Ballots must be received no later than
midnight, 5 calendar days before the annual
meeting.
(5) The vote will be tallied by the tellers.
The result must be verified at the annual
meeting and the chair will make the result
of the vote public at the annual meeting.
(6) In the event of malfunction of the electronic balloting system, the board of directors may in its discretion order elections be
held by mail ballot only. The mail ballots

must conform to Section 2(d) of this article
and must be mailed once more to all eligible
members 30 days before the annual meeting.
The board may make reasonable adjustments
to the voting time frames above, or postpone
the annual meeting when necessary, to complete the elections before the annual meeting.
(d) If the credit union is conducting its
election by mail ballot, the secretary will
cause the following materials to be mailed to
each member and the following procedures
will be followed:
(1) One ballot, clearly identified as the ballot on which the names of the candidates for
the board of directors and the candidates for
other separately identified offices or committees are printed in random order. The
name of each candidate will be followed by a
brief statement of qualifications and biographical data in a form approved by the
board of directors;
(2) One ballot envelope clearly marked
with instructions that the completed ballot
must be placed in that envelope and sealed;
(3) One identification form to be completed
so as to include the name, address, signature
and credit union account number of the
voter;
(4) One mailing envelope in which the
voter, following instructions provided with
the mailing envelope, must insert the sealed
ballot envelope and the identification form,
and which must have postage prepaid and be
preaddressed for return to the tellers;
(5) When properly designed with features
that preserve the secrecy of the ballot, one
form can be printed that represents a combined ballot and identification form, and
postage prepaid and preaddressed return envelope;
(6) It is the duty of the tellers to verify, or
cause to be verified, the name and credit
union account number of the voter as appearing on the identification form; to place
the verified identification form and the
sealed ballot envelope in a place of safekeeping pending the count of the vote; in the
case of a questionable or challenged identification form, to retain the identification
form and sealed ballot envelope together
until the verification or challenge has been
resolved;
(7) Ballots mailed to the tellers must be received by the tellers no later than midnight
5 days before the date of the annual meeting;
(8) The vote will be tallied by the tellers.
The result will be verified at the annual
meeting and the chair will make the result
of the vote public at the annual meeting.
All Options Continue Here
Section 3. Order of nominations. Nominations may be in the following order:
(a) Nominations for directors.
(b) Nominations for credit committee
members, if applicable. Elections may be by

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Pt. 701, App. A

12 CFR Ch. VII (1–1–12 Edition)

separate ballots following the same order as
the above nominations or, if preferred, may
be by one ballot for all offices.
Section 4. Proxy and agent voting. Members
cannot vote by proxy. A member other than
a natural person may vote through an agent
designated in writing for the purpose.
Section 5. One vote per member. Irrespective
of the number of shares, no member has
more than one vote.
Section 6. Submission of information regarding credit union officials to NCUA. The names
and addresses of members of the board, board
officers, executive committee, and members
of the credit committee, if applicable, and
supervisory committees must be forwarded
to the Administration in accordance with
the Act and regulations in the manner as
may be required by the Administration.
Section 7. Minimum age requirement. Members must be at least l years of age by the
date of the meeting (or for appointed offices,
the date of appointment) in order to vote at
meetings of the members, hold elective or
appointive office, sign nominating petitions,
or sign petitions requesting special meetings.
The Credit Union’s board should adopt a resolution inserting an age no greater than 18, or
the age of majority under the state law applicable to the credit union, in the blank space.
The Credit Union may select the absentee ballot provision in conjunction with the voting procedure it has selected. This may be done by
printing the credit union’s bylaws with this provision or by retaining this copy and checking
the box.
l Section 8. Absentee ballots. The board of
directors may authorize the use of absentee
ballots in conjunction with the other procedures authorized in this article, subject to
the following conditions:
(a) The board of directors will appoint the
election tellers;
(b) If sufficient nominations are made by
the nominating committee or by petition to
provide more than one nominee for any position to be filled, the secretary, at least 30
days before the annual meeting, will cause
printed ballots to be mailed to all members
of the credit union who are eligible to vote
and who have submitted a written or electronic request for an absentee ballot;
(c) The secretary will cause the following
materials to be mailed to each eligible voter
who has submitted a written or electronic
request for an absentee ballot:
(1) One ballot, clearly identified as the ballot on which the names of the candidates for
the board of directors and the candidates for
other separately identified offices or committees are printed in random order. The
name of each candidate will be followed by a
brief statement of qualifications and biographical data in a form approved by the
board of directors;

(2) One ballot envelope clearly marked
with instructions that the completed ballot
must be placed in that envelope and sealed;
(3) One identification form to be completed
so as to include the name, address, signature
and credit union account number of the
voter;
(4) One mailing envelope in which the
voter, pursuant to instructions provided
with the envelope, must insert the sealed
ballot envelope and the identification form,
and which must have postage prepaid and be
preaddressed for return to the tellers;
(5) When properly designed with features
that preserve the secrecy of the ballot, one
form can be printed that represents a combined ballot and identification form, and
postage prepaid and preaddressed return envelope;
(d) It is the duty of the election tellers to
verify, or cause to be verified, the name and
credit union account number of the voter as
appearing on the identification form; to
place the verified identification and the
sealed ballot envelope in a place of safekeeping pending the count of the vote; in the
case of a questionable or challenged identification form, to retain the identification
form and the sealed ballot envelope together
until the verification or challenge has been
resolved; and in the event that more than
one voting procedure is used, to verify that
no eligible voter has voted more than one
time;
(e) Ballots mailed to the tellers must be received by the tellers no later than midnight
5 days before the date of the annual meeting;
(f) Absentee ballots will be deposited in the
ballot boxes to be taken to the annual meeting or included in a precount in accordance
with procedures specified in Article V, Section 2; and
(g) If a member has chosen to receive
statements and notices electronically, the
credit union may provide notices required in
this section by email and provide instructions for voting via electronic means instead
of mail ballots.
Staff commentary on the election process:
i. Eligibility Requirements: The Act and the
FCU Bylaws contain the only eligibility requirements for membership on an FCU’s
board of directors, which are as follows:
(a) The individual must be a member of the
FCU before distribution of ballots;
(b) the individual cannot have been convicted of a crime involving dishonesty or
breach of trust unless the NCUA Board has
waived the prohibition for the conviction;
and
(c) the individual meets the minimum age
requirement established under Article V,
Section 7 of the FCU Bylaws.
Anyone meeting the three eligibility requirements may run for a seat on the board
of directors if properly nominated. It is the
nominating committee’s duty to ascertain

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National Credit Union Administration

Pt. 701, App. A

that all nominated candidates, including
those nominated by petition, meet the eligibility requirements.
ii. Nomination Criteria for Nominating Committee: The FCU Act and the FCU Bylaws do
not prohibit a board of directors from establishing reasonable criteria, in addition to the
eligibility requirements, for a nominating
committee to follow in making its nominations, such as financial experience, years of
membership, or conflict of interest provisions. The board’s nomination criteria, however, applies only to individuals nominated
by the nominating committee; they cannot
be imposed on individuals who meet the eligibility requirements and are properly nominated from the floor or by petition.
iii. Candidates’ Names on Ballots: When producing an election ballot, the FCU’s secretary may order the names of the candidates on the ballot using any method for
selection provided it is random and used consistently from year to year so as to avoid
manipulation or favoritism.
iv. Secret Ballots: An FCU must establish an
election process that assures members their
votes remain confidential and secret from all
interested parties. If the election process
does not separate the member’s identity
from the ballot, FCUs should use a thirdparty teller that has sole control over completed ballots. If the ballots are designed so
that members’ identities remain secret and
are not disclosed on the ballot, FCUs may
use election tellers from the FCU. In any
case, FCU employees, officials, and members
must not have access to ballots identifying
members or to information that links members’ votes to their identities.
v. Plurality Voting: At least one nominee
must be nominated for each vacant seat.
When there are more nominees than seats
open for election, the nominees who receive
the greatest number of votes are elected to
the vacant seats.
vi. Minimum Age Requirement: The age the
board selects may not be greater than the
age of majority under the state law applicable to the credit union.
ARTICLE VI. BOARD OF DIRECTORS
Section 1. Number of members. The board
consists of lllmembers, all of whom must
be members of this credit union. The number
of directors may be changed to an odd number not fewer than 5 nor more than 15 by resolution of the board. No reduction in the
number of directors may be made unless corresponding vacancies exist as a result of
deaths, resignations, expiration of terms of
office, or other actions provided by these bylaws. A copy of the resolution of the board
covering any increase or decrease in the
number of directors must be filed with the
official copy of the bylaws of this credit
union.

Section 2. Composition of board. lll(Fill
in the number, which may be zero) directors
or committee members may be a paid employee of the credit union. lll(Fill in the
number, which may be zero) immediate family members of a director or committee
member may be a paid employee of the credit union. In no case may employees, family
members, or employees and family members
constitute a majority of the board. The
board may appoint a management official
who lll(may or may not) be a member of
the board and one or more assistant management officials who lll(may or may not) be
a member of the board. If the management
official or assistant management official is
permitted to serve on the board, he or she
may not serve as the chair.
Section 3. Terms of office. Regular terms of
office for directors must be for periods of either 2 or 3 years as the board determines. All
regular terms must be for the same number
of years and until the election and qualification of successors. Regular terms must be
fixed at the first meeting, or upon any increase or decrease in the number of directors, so that approximately an equal number
of regular terms must expire at each annual
meeting.
Section 4. Vacancies. Any vacancy on the
board, credit committee, if applicable, or supervisory committee will be filled as soon as
possible by vote of a majority of the directors then holding office. If all director positions become vacant simultaneously, the supervisory committee immediately becomes
the temporary board of directors and must
follow the procedures in Article IX, Section
3. Directors and credit committee members
appointed to fill a vacancy will hold office
only until the next annual meeting, at which
any unexpired terms will be filled by vote of
the members, and until the qualification of
their successors. Members of the supervisory
committee appointed to fill a vacancy will
hold office until the first regular meeting of
the board following the next annual meeting
of members, at which the regular term expires, and until the appointment and qualification of their successors.
Section 5. Regular and special meetings. A
regular meeting of the board must be held
each month at the time and place fixed by
resolution of the board. One regular meeting
each calendar year must be conducted in person. If a quorum is present in person for the
annual in person meeting, the remaining
board members may participate using audio
or video teleconference methods. The other
regular meetings may be conducted using
audio or video teleconference methods. The
chair, or in the chair’s absence the ranking
vice chair, may call a special meeting of the
board at any time and must do so upon written request of a majority of the directors
then holding office. Unless the board prescribes otherwise, the chair, or in the chair’s

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Pt. 701, App. A

12 CFR Ch. VII (1–1–12 Edition)

absence the ranking vice chair, will fix the
time and place of special meetings. Notice of
all meetings will be given in the manner the
board may from time to time by resolution
prescribe. Special meetings may be conducted using audio or video teleconference
methods.
Section 6. Board responsibilities. The board
has the general direction and control of the
affairs of this credit union and is responsible
for performing all the duties customarily
performed by boards of directors. This includes but is not limited to the following:
(a) Directing the affairs of the credit union
in accordance with the Act, these bylaws,
the rules and regulations and sound business
practices.
(b) Establishing programs to achieve the
purposes of this credit union as stated in Article I, Section 2, of these bylaws.
(c) Establishing a loan collection program
and
authorizing
the
chargeoff
of
uncollectible loans.
(d) Establishing a policy to address training for newly elected and incumbent directors and volunteer officials, in areas such as
ethics and fiduciary responsibility, regulatory compliance, and accounting and determining that all persons appointed or
elected by this credit union to any position
requiring the receipt, payment or custody of
money or other property of this credit union,
or in its custody or control as collateral or
otherwise, are properly bonded in accordance
with the Act and regulations.
(e) Performing additional acts and exercising additional powers as may be required
or authorized by applicable law.
If the credit union has an elected credit committee, you do not need to check a box. If the
credit union has no credit committee check Option 1 and if it has an appointed credit committee check Option 2.
l Option 1 No Credit Committee.
(f) Reviewing denied loan applications of
members who file written requests for review.
(g) Appointing one or more loan officers
and delegating to those officers the power to
approve or disapprove loans, lines of credit
or advances from lines of credit.
(h) In its discretion, appointing a loan review committee to review loan denials and
delegating to the committee the power to
overturn denials of loan applications. The
committee will function as a mid-level appeal committee for the board. Any denial of
a loan by the committee must be reviewed
by the board upon written request of the
member. The committee must consist of
three members and the regular term of office
of the committee member will be for two
years. Not more than one member of the
committee may be appointed as a loan officer.
l Option 2. Appointed Credit Committee.

(f) Appointing an odd number of credit
committee members as provided in Article
VIII of these bylaws.
Section 7. Quorum. A majority of the number of directors, including any vacant positions, constitutes a quorum for the transaction of business at any meeting, except
that vacancies may be filled by a quorum
consisting of a majority of the directors
holding office as provided in Section 4 of this
article. Fewer than a quorum may adjourn
from time to time until a quorum is in attendance.
Section 8. Attendance and removal. a. If a
director or a credit committee member, if
applicable, fails to attend regular meetings
of the board or credit committee, respectively, for 3 consecutive months, or 4 meetings within a calendar year, or otherwise
fails to perform any of the duties as a director or a credit committee member, the office
may be declared vacant by the board and the
vacancy filled as provided in the bylaws.
b. The board may remove any board officer
from office for failure to perform the duties
thereof, after giving the officer reasonable
notice and opportunity to be heard.
When any board officer, membership officer, executive committee member or investment committee member is absent, disqualified, or otherwise unable to perform the duties of the office, the board may by resolution designate another member of this credit
union to fill the position temporarily. The
board may also, by resolution, designate another member or members of this credit
union to act on the credit committee when
necessary in order to obtain a quorum.
Section 9. Suspension of supervisory committee members. Any member of the supervisory committee may be suspended by a majority vote of the board of directors. The
members of this credit union will decide, at
a special meeting held not fewer than 7 nor
more than 14 days after any suspension,
whether the suspended committee member
will be removed from or restored to the supervisory committee.
ARTICLE VII. BOARD OFFICERS, MANAGEMENT
OFFICIALS AND EXECUTIVE COMMITTEE
Section 1. Board officers. The board officers
of this credit union are comprised of a chair,
one or more vice chairs, a financial officer,
and a secretary, all of whom are elected by
the board and from their number. The board
determines the title and rank of each board
officer and records them in the addendum to
this
article.
One
board
officer,
the
llllll, may be compensated for services
as determined by the board. If more than one
vice chair is elected, the board determines
their rank as first vice chair, second vice
chair, and so on. The offices of the financial
officer and secretary may be held by the
same person. If a management official or assistant management official is permitted to

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National Credit Union Administration

Pt. 701, App. A

serve on the board, he or she may not serve
as the chair. Unless removed as provided in
these bylaws, the board officers elected at
the first meeting of the board hold office
until the first meeting of the board following
the first annual meeting of the members and
until the election and qualification of their
respective successors.
Section 2. Election and term of office. Board
officers elected at the meeting of the board
next following the annual meeting of the
members, which must be held not later than
7 days after the annual meeting, hold office
for a term of 1 year and until the election
and qualification of their respective successors: provided, however, that any person
elected to fill a vacancy caused by the death,
resignation, or removal of an officer is elected by the board to serve only for the unexpired term of that officer and until a successor is duly elected and qualified.
Section 3. Duties of Chair. The chair presides at all meetings of the members and at
all meetings of the board, unless disqualified
through suspension by the supervisory committee. The chair also performs other duties
customarily assigned to the office of the
chair or duties he or she is directed to perform by resolution of the board not inconsistent with the Act and regulations and
these bylaws.
Section 4. Approval required. The board
must approve all individuals who are authorized to sign all notes of this credit union and
all checks, drafts and other orders for disbursement of credit union funds.
Section 5. Vice chair. The ranking vice
chair has and may exercise all the powers,
authority, and duties of the chair during the
chair’s absence or inability to act.
Section 6. Duties of financial officer. i. The
financial officer manages this credit union
under the control and direction of the board
unless the board has appointed a management official to act as general manager. Subject to limitations, controls and delegations
the board may impose, the financial officer
will:
(a) Have custody of all funds, securities,
valuable papers and other assets of this credit union.
(b) Provide and maintain full and complete
records of all the assets and liabilities of this
credit union in accordance with forms and
procedures prescribed in regulations and
other guidance approved by the Administration, including, for small credit unions, the
Accounting Manual for Federal Credit
Unions.
(c) Within 20 days after the close of each
month, ensure that a financial statement
showing the condition of this credit union as
of the end of the month, including a summary of delinquent loans is prepared and
submitted to the board and post a copy of
the statement in a conspicuous place in the
office of the credit union where it will re-

main until replaced by the financial statement for the next succeeding month.
(d) Ensure that financial and other reports
the Administration may require are prepared
and sent.
(e) Within standards and limitations prescribed by the board, employ tellers, clerks,
bookkeepers, and other office employees, and
have the power to remove these employees.
(f) Perform other duties customarily assigned to the office of the financial officer or
duties he or she is directed to perform by
resolution of the board not inconsistent with
the Act, regulations and these bylaws.
ii. The board may employ one or more assistant financial officers, none of whom may
also hold office as chair or vice chair, and
may authorize them, under the direction of
the financial officer, to perform any of the
duties devolving on the financial officer, including the signing of checks. When designated by the board, any assistant financial
officer may also act as financial officer during the financial officer’s temporary absence
or temporary inability to act.
Section 7. Duties of management official and
assistant management official. The board may
appoint a management official who is under
the direction and control of the board or of
the financial officer as determined by the
board. The management official may be assigned any or all of the responsibilities of
the financial officer described in Section 6 of
this article. The board will determine the
title and rank of each management official
and record them in the addendum to this article. The board may employ one or more assistant management officials. The board
may authorize assistant management officials under the direction of the management
official, to perform any of the duties devolving on the management official, including
the signing of checks. When designated by
the board, any assistant management official
may also act as management official during
the management official’s temporary absence or temporary inability to act.
Section 8. Board powers regarding employees.
The board employs, fixes the compensation,
and prescribes the duties of employees as
necessary, and has the power to remove employees, unless it has delegated these powers
to the financial officer or management official. Neither the board, the financial officer,
nor the management official has the power
or duty to employ, prescribe the duties of, or
remove necessary clerical and auditing assistance employed or used by the supervisory
committee and, if there is a credit committee, the power or duty to employ, prescribe the duties of, or remove any loan officer appointed by the credit committee.
Section 9. Duties of secretary. The secretary
prepares and maintains full and correct
records of all meetings of the members and
of the board, which records will be prepared
within 7 days after the respective meetings.

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Pt. 701, App. A

12 CFR Ch. VII (1–1–12 Edition)

The secretary must promptly inform the Administration in writing of any change in the
address of the office of this credit union or
the location of its principal records. The secretary will give or cause to be given, in the
manner prescribed in these bylaws, proper
notice of all meetings of the members, and
perform other duties he or she may be directed to perform by resolution of the board
not inconsistent with the Act, regulations
and these bylaws. The board may employ one
or more assistant secretaries, none of whom
may also hold office as chair, vice chair, or
financial officer, and may authorize them
under direction of the secretary to perform
any of the duties assigned to the secretary.
Section 10. Executive committee. As authorized by the Act, the board may appoint an
executive committee of not fewer than three
directors to serve at its pleasure, to act for
it with respect to the board’s specifically
delegated functions. When making delegations to the executive committee, the board
must be specific with regard to the committee’s authority and limitations related to
the particular delegation. The board may
also authorize any of the following to approve membership applications under conditions the board and these bylaws may prescribe: an executive committee; a membership officer(s) appointed by the board from
the membership, other than a board member
paid as an officer; the financial officer; any
assistant to the paid officer of the board or
to the financial officer; or any loan officer.
No executive committee member or membership officer may be compensated as such.
Section 11. Investment committee. The board
may appoint an investment committee composed of not less than two, to serve at its
pleasure to have charge of making investments under rules and procedures established by the board. No member of the investment committee may be compensated as
such. Addendum: The board must list the positions of the board officers and management
officials of this credit union. They are as follows:
Select Option 1 if the credit union has a credit
committee and Option 2 if it does not have a
credit committee.
ARTICLE VIII. OPTION 1 CREDIT COMMITTEE
Section 1. Credit committee members. The
credit committee consists of lll members.
All the members of the credit committee
must be members of this credit union. The
number of members of the credit committee
must be an odd number and may be changed
to not fewer than 3 nor more than 7 by resolution of the board. No reduction in the number of members may be made unless corresponding vacancies exist as a result of
deaths, resignations, expiration of terms of
office, or other actions provided by these bylaws. A copy of the resolution of the board
covering any increase or decrease in the

number of committee members must be filed
with the official copy of the bylaws of this
credit union.
Section 2. Terms of office. Regular terms of
office for elected credit committee members
are for periods of either 2 or 3 years as the
board determines: provided, however, that
all regular terms are for the same number of
years and until the election and qualification of successors. The regular terms are
fixed at the beginning, or upon any increase
or decrease in the number of committee
members, that approximately an equal number of regular terms expire at each annual
meeting. Regular terms of office for appointed credit committee members are for
periods as determined by the board and as
noted in the board’s minutes.
Section 3. Officers of credit committee. The
credit committee chooses from their number
a chair and a secretary. The secretary of the
committee prepares and maintains full and
correct records of all actions taken by it,
and those records must be prepared within 3
days after the action. The offices of the chair
and secretary may be held by the same person.
Section 4. Credit committee powers. The
credit committee may, by majority vote of
its members, appoint one or more loan officers to serve at its pleasure, and delegate to
them the power to approve application for
loans or lines of credit, share withdrawals,
releases and substitutions of security, within
limits specified by the committee and within
limits of applicable law and regulations. Not
more than one member of the committee
may be appointed as a loan officer. Each loan
officer must furnish to the committee a
record of each approved or not approved
transaction within 7 days of the date of the
filing of the application or request, and this
record becomes a part of the records of the
committee. All applications or requests not
approved by a loan officer must be acted
upon by the committee. No individual may
disburse funds of this credit union for any
application or share withdrawal which the
individual has approved as a loan officer.
Section 5. Credit committee meetings. The
credit committee holds meetings as the business of this credit union may require, and
not less frequently than once a month. Notice of meetings will be given to members of
the committee in a manner as the committee may from time to time, by resolution, prescribe.
Section 6. Credit committee duties. For each
loan or line of credit, the credit committee
or loan officer must inquire into the character and financial condition of the applicant and the applicant’s sureties, if any, to
ascertain their ability to repay fully and
promptly the obligations incurred by them
and to determine whether the loan or line of

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National Credit Union Administration

Pt. 701, App. A

credit will be of probable benefit to the borrower. The credit committee and its appointed loan officers should endeavor diligently to assist applicants in solving their financial problems.
Section 7. Unapproved loans prohibited. No
loan or line of credit may be made unless approved by the committee or a loan officer in
accordance with applicable law and regulations.
Section 8. Lending procedures. Subject to
the limits imposed by applicable law and
regulations, these bylaws, and the general
policies of the board, the credit committee,
or a loan officer, determines the security, if
any, required for each application and the
terms of repayment. The security furnished
must be adequate in quality and character
and consistent with sound lending practices.
When funds are not available to make all the
loans and lines of credit for which there are
applications, preference should be given, in
all cases, to the smaller applications if the
need and credit factors are nearly equal.
ARTICLE VIII. OPTION 2 LOAN OFFICERS (NO
CREDIT COMMITTEE)
Section 1. Records of loan officer; prohibition
on loan officer disbursing funds. Each loan officer must maintain a record of each approved or not approved transaction within 7
days of the filing of the application or request, and that record becomes a part of the
records of the credit union. No individual
may disburse funds of this credit union for
any application or share withdrawal which
the individual has approved as a loan officer.
Section 2. Duties of loan officer. For each
loan or line of credit, the loan officer must
inquire into the character and financial condition of the applicant and the applicant’s
sureties, if any, to ascertain their ability to
repay fully and promptly the obligations incurred by them and to determine whether
the loan or line of credit will be of probable
benefit to the borrower. The loan officers
should endeavor diligently to assist applicants in solving their financial problems.
Section 3. Unapproved loans prohibited. No
loan or line of credit may be made unless approved by a loan officer in accordance with
applicable law and regulations.
Section 4. Lending procedures. Subject to
the limits imposed by law and regulations,
these bylaws, and the general policies of the
board, a loan officer determines the security
if any required for each application and the
terms of repayment. The security furnished
must be adequate in quality and character
and consistent with sound lending practices.
When funds are not available to make all the
loans and lines of credit for which there are
applications, preference should be given, in
all cases, to the applications for lesser
amounts if the need and credit factors are
nearly equal.

ARTICLE IX. SUPERVISORY COMMITTEE
Section 1. Appointment and membership. The
supervisory committee is appointed by the
board from among the members of this credit
union, one of whom may be a director other
than the financial officer or the compensated
officer of the board. The board determines
the number of members on the committee,
which may not be fewer than 3 nor more
than 5. No member of the credit committee,
if applicable, or any employee of this credit
union may be appointed to the committee.
Regular terms of committee members are for
periods of 1, 2, or 3 years as the board determines: Provided, however, that all regular
terms are for the same number of years and
until the appointment and qualification of
successors. The regular terms are fixed at
the beginning, or upon any increase or decrease in the number of committee members,
so that approximately an equal number of
regular terms expires at each annual meeting.
Section 2. Officers of supervisory committee.
The supervisory committee members choose
from among their number a chair and a secretary. The secretary of the supervisory
committee prepares, maintains, and has custody of full and correct records of all actions
taken by it. The offices of chair and secretary may be held by the same person.
Section 3. Duties of supervisory committee. a.
The supervisory committee makes, or causes
to be made, the audits, and prepares and submits the written reports required by the Act
and regulations. The committee may employ
and use clerical and auditing assistance required to carry out its responsibilities prescribed by this article, and may request the
board to provide compensation for this assistance. It will prepare and forward to the
Administration required reports.
b. If all director positions become vacant
simultaneously, the supervisory committee
immediately assumes the role of the board of
directors. The supervisory committee acting
as the board must generally call and hold a
special meeting to elect a board that will
serve until the next annual meeting. The
special meeting must occur at least 7 but no
more than 14 days after all director positions
became vacant, and candidates for the board
at the special meeting may be nominated by
petition or from the floor. However, if the
next annual meeting has been scheduled and
will occur within 45 days after all the director positions become vacant, the supervisory
committee may decide to forego the special
meeting and continue serving as the board
until the election of new directors at the annual meeting.
c. If the next annual meeting has not been
scheduled, but the month and day of the previous year’s meeting plus 7 days falls within

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Pt. 701, App. A

12 CFR Ch. VII (1–1–12 Edition)

45 days after all the director positions become vacant, the supervisory committee acting as the board may decide to forego the
special meeting to elect new directors. In
this case, the supervisory committee must
schedule the annual meeting within 7 days
before or after the month and day of the previous annual meeting and continue to serve
as the board until directors are elected at
the annual meeting.
d. The supervisory committee acting as the
board may not act on policy matters. However, directors elected at a special meeting
have the same powers as directors elected at
the annual meeting.
Section 4. Verification of accounts. The supervisory
committee
will
cause
the
verification of the accounts of members with
the records of the financial officer from time
to time and not less frequently than as required by the Act and regulations. The committee must maintain a record of this
verification.
Section 5. Powers of supervisory committee—
removal of directors and credit committee members. By unanimous vote, the supervisory
committee may suspend until the next meeting of the members any director, board officer, or member of the credit committee. In
the event of any suspension, the supervisory
committee must call a special meeting of the
members to act on the suspension, which
meeting must be held not fewer than 7 nor
more than 14 days after the suspension. The
chair of the committee acts as chair of the
meeting unless the members select another
person to act as chair.
Section 6. Powers of supervisory committee—
special meetings. By the affirmative vote of a
majority of its members, the supervisory
committee may call a special meeting of the
members to consider any violation of the
provisions of the Act, the regulations, or of
the charter or the bylaws of this credit
union, or to consider any practice of this
credit union which the committee deems to
be unsafe or unauthorized.
ARTICLE X. ORGANIZATION MEETING
Section 1. Initial meeting. When application
is made for a federal credit union charter,
the subscribers to the organization certificate must meet for the purpose of electing a
board of directors and a credit committee, if
applicable. Failure to commence operations
within 60 days following receipt of the approved organization certificate is cause for
revocation of the charter unless a request for
an extension of time has been submitted to
and approved by the Regional Director.
Section 2. Election of directors and credit
committee. The subscribers elect a chair and a
secretary for the meeting. The subscribers
then elect from their number, or from those
eligible to become members of this credit
union, a board of directors and a credit committee, if applicable, all to hold office until

the first annual meeting of the members and
until the election and qualification of their
respective successors. If not already a member, every person elected under this section
or appointed under Section 3 of this article,
must qualify within 30 days by becoming a
member. If any person elected as a director
or committee member or appointed as a supervisory committee member does not qualify as a member within 30 days of election or
appointment, the office will automatically
become vacant and be filled by the board.
Section 3. Election of board officers. Promptly following the elections held under the provisions of Section 2 of this article, the board
must meet and elect the board officers who
will hold office until the first meeting of the
board of directors following the first annual
meeting of the members and until the election and qualification of their respective
successors. The board also appoints a supervisory committee at this meeting as provided in Article IX, Section 1, of these bylaws and a credit committee, if applicable.
The members so appointed hold office until
the first regular meeting of the board following the first annual meeting of the members and until the appointment and qualification of their respective successors.
ARTICLE XI. LOANS AND LINES OF CREDIT TO
MEMBERS
Section 1. Loan purposes. Loans may only
be made to members and for provident or
productive purposes in accordance with applicable law and regulations.
The credit union may add business as one of
its purposes by placing a comma after ‘‘provident’’ and inserting ‘‘business.’’
Section 2. Delinquency. Any member whose
loan is delinquent may be required to pay a
late charge as determined by the board of directors.
ARTICLE XII. DIVIDENDS
Section 1. Power of board to declare dividends. The board establishes dividend periods
and declares dividends as permitted by the
Act and applicable regulations.
ARTICLE XIII. RESERVED
ARTICLE XIV. EXPULSION AND WITHDRAWAL
Section 1. Expulsion procedure; expulsion or
withdrawal does not affect members’ liability or
shares. A member may be expelled by a twothirds vote of the members present at special
meeting called for that purpose, but only
after the member has been given the opportunity to be heard. A member also may be
expelled under a nonparticipation policy
adopted by the board of directors and provided to each member in accordance with the
Act. Expulsion or withdrawal will not operate to relieve a member of any liability to
this credit union. All amounts paid in on

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National Credit Union Administration

Pt. 701, App. A

shares by expelled or withdrawing members,
before their expulsion or withdrawal, will be
paid to them in the order of their withdrawal
or expulsion, but only as funds become available and only after deducting any amounts
due to this credit union.
ARTICLE XV. MINORS
Section 1. Minors permitted to own shares.
Shares may be issued in the name of a
minor. State law governs the rights of minors to transact business with this credit
union.
ARTICLE XVI. GENERAL
Section 1. Compliance with law and regulation. All power, authority, duties, and functions of the members, directors, officers, and
employees of this credit union, pursuant to
the provisions of these bylaws, must be exercised in strict conformity with the provisions of applicable law and regulations, and
of the charter and the bylaws of this credit
union.
Section 2. Confidentiality. The officers, directors, members of committees and employees of this credit union must hold in confidence all transactions of this credit union
with its members and all information respecting their personal affairs, except when
permitted by state or federal law.
Section 3. Removal of directors and committee
members. Notwithstanding any other provisions in these bylaws, any director or committee member of this credit union may be
removed from office by the affirmative vote
of a majority of the members present at a
special meeting called for the purpose, but
only after an opportunity has been given to
be heard. If member votes at a special meeting result in the removal of all directors, the
supervisory committee immediately becomes
the temporary board of directors and must
follow the procedures in Article IX, Section
3.
Section 4. Conflicts of interest prohibited. No
director, committee member, officer, agent,
or employee of this credit union may participate in any manner, directly or indirectly, in
the deliberation upon or the determination
of any question affecting his or her pecuniary or personal interest or the pecuniary
interest of any corporation, partnership, or
association (other than this credit union) in
which he or she is directly or indirectly interested. In the event of the disqualification
of any director respecting any matter presented to the board for deliberation or determination, that director must withdraw from
the deliberation or determination; and if the
remaining qualified directors present at the
meeting plus the disqualified director or directors constitute a quorum, the remaining
qualified directors may exercise with respect
to this matter, by majority vote, all the
powers of the board. In the event of the dis-

qualification of any member of the credit
committee, if applicable, or the supervisory
committee, that committee member must
withdraw from the deliberation or determination.
Section 5. Records. Copies of the organization certificate of this credit union, its bylaws and any amendments to the bylaws, and
any special authorizations by the Administration must be preserved in a place of safekeeping. Copies of the organization certificate and field of membership amendments
should be attached as an appendix to these
bylaws. Returns of nominations and elections and proceedings of all regular and special meetings of the members and directors
must be recorded in the minute books of this
credit union. The minutes of the meetings of
the members, the board, and the committees
must be signed by their respective chairmen
or presiding officers and by the persons who
serve as secretaries of those meetings.
Section 6. Availability of credit union
records. All books of account and other
records of this credit union must be available at all times to the directors and committee members of this credit union provided they have a proper purpose for obtaining the records. The charter and bylaws of
this credit union must be made available for
inspection by any member and, if the member requests a copy, it will be provided for a
reasonable fee.
Section 7. Member contact information.
Members must keep the credit union informed of their current address.
Section 8. Indemnification. (a) Subject to
the limitations in § 701.33(c)(5) through (c)(7)
of the regulations, the credit union may
elect to indemnify to the extent authorized
by (check one)
[ ] Law of the State of llll:
[ ] Model Business Corporation Act:
the following individuals from any liability
asserted against them and expenses reasonably incurred by them in connection with judicial or administrative proceedings to
which they are or may become parties by
reason of the performance of their official
duties (check as appropriate).
[
[
[
[

]
]
]
]

Current officials
Former officials
Current employees
Former employees

(b) The credit union may purchase and
maintain insurance on behalf of the individuals indicated in (a) above against any liability asserted against them and expenses reasonably incurred by them in their official capacities and arising out of the performance
of their official duties to the extent such insurance is permitted by the applicable State
law or the Model Business Corporation Act.

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Pt. 701, App. B

12 CFR Ch. VII (1–1–12 Edition)

(c) The term ‘‘official’’ in this bylaw means
a person who is a member of the board of directors, credit committee, supervisory committee, other volunteer committee (including elected or appointed loan officers or
membership officers), established by the
board of directors.
ARTICLE XVII. AMENDMENTS OF BYLAWS AND
CHARTER
Section 1. Amendment procedures. Amendments of these bylaws may be adopted and
amendments of the charter requested by the
affirmative vote of two-thirds of the authorized number of members of the board at any
duly held meeting of the board if the members of the board have been given prior written notice of the meeting and the notice has
contained a copy of the proposed amendment
or amendments. No amendment of these bylaws or of the charter may become effective,
however, until approved in writing by the
NCUA Board.
ARTICLE XVIII. DEFINITIONS
Section 1. General definitions. When used in
these bylaws the terms:
‘‘Act’’ means the Federal Credit Union
Act, as amended.
‘‘Administration’’ means the National
Credit Union Administration.
‘‘Applicable law and regulations’’ means
the Federal Credit Union Act and rules and
regulations issued thereunder or other applicable federal and state statutes and rules
and regulations issued thereunder as the
context indicates (such as The Higher Education Act of 1965).
‘‘Board’’ means board of directors of the
federal credit union.
‘‘Immediate
family
member’’
means
spouse, child, sibling, parent, grandparent,
grandchild,
stepparents,
stepchildren,
stepsiblings, and adoptive relationships.
‘‘NCUA Board’’ means the Board of the National Credit Union Administration.
‘‘Regulation’’ or ‘‘regulations’’ means rules
and regulations issued by the NCUA Board.
‘‘Share’’ or ‘‘shares’’ means all classes of
shares and share certificates that may be
held in accordance with applicable law and
regulations.
[72 FR 61500, Oct. 31, 2007, as amended at 75
FR 34620, June 18, 2010; 75 FR 81386, Dec. 28,
2010]

APPENDIX B TO PART 701—CHARTERING
AND FIELD OF MEMBERSHIP MANUAL

bership policies are directed toward achieving the following goals:
• To encourage the formation of credit
unions;
• To uphold the provisions of the Federal
Credit Union Act;
• To promote thrift and credit extension;
• To promote credit union safety and
soundness; and
• To make quality credit union service
available to all eligible persons.
NCUA may grant a charter to single occupational/associational
groups,
multiple
groups, or communities if:
• The occupational, associational, or multiple groups possess an appropriate common
bond or the community represents a well-defined local community, neighborhood, or
rural district;
• The subscribers are of good character and
are fit to represent the proposed credit
union; and
• The establishment of the credit union is
economically advisable.
Generally, these are the primary criteria
that NCUA will consider. In unusual circumstances, however, NCUA may examine
other factors, such as other federal law or
public policy, in deciding if a charter should
be approved.
Unless otherwise noted, the policies outlined in this manual apply only to federal
credit unions.
II—TYPES OF CHARTERS
The Federal Credit Union Act recognizes
three types of federal credit union charters—
single common bond (occupational and
associational), multiple common bond (more
than one group each having a common bond
of occupation or association), and community.
The requirements that must be met to
charter a federal credit union are described
in Chapter 2. Special rules for credit unions
serving low-income groups are described in
Chapter 3.
If a federal credit union charter is granted,
Section 5 of the charter will describe the
credit union’s field of membership, which defines those persons and entities eligible for
membership. Generally, federal credit unions
are only able to grant loans and provide
services to persons within the field of membership who have become members of the
credit union.
III—SUBSCRIBERS

CHAPTER 1
FEDERAL CREDIT UNION CHARTERING
I—GOALS OF NCUA CHARTERING POLICY
The National Credit Union Administration’s (NCUA) chartering and field of mem-

Federal credit unions are generally organized by persons who volunteer their time
and resources and are responsible for determining the interest, commitment, and economic advisability of forming a federal credit union. The organization of a successful
federal credit union takes considerable planning and dedication.

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