Vacancies after the nominating process closes
The bylaws are generally clear on what to do in the event of a board of director vacancy before the annual meeting occurs. Under the current model bylaws and the Federal Credit Union Act, the board of directors appoints a replacement and the vacancy is filled at the next annual meeting through the “normal membership voting process.” What happens when the vacancy occurs outside the general process? What does a federal credit union do if the vacancy occurs after the nominating process is closed, but before the annual meeting? If there is no time to nominate a candidate under the bylaws, what is a federal credit union supposed to do? A federal credit union may have several options based on NCUA’s own guidance and a federal credit union’s own bylaws. I review both options below.
NCUA Legal Opinion Letter
NCUA addressed this issue in NCUA Legal Opinion Letter 91-0118 (letter). In the letter, NCUA rejected a proposed bylaw amendment that would “provide that an individual appointed by the board of directors to fill a vacancy on the board within one hundred days before the next annual meeting will serve until the second annual meeting after his appointment.” In essence, a federal credit union proposed a fix to the vacancy question by adopting a bylaw amendment that would allow the current board to fill the vacancy and the person chosen would then serve until the second annual meeting after their appointment, as in the next annual meeting for which the nominating process had not already been completed. NCUA rejected this proposed fix, noting the Federal Credit Union Act says a vacancy “shall be filled until the next annual election.” Here is an excerpt of NCUA’s analysis:
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