Tie Breakers: BOD Elections
I’m sure you’re happy that tv commercials are not sponsored by candidates running for public office this month. Instead, we get to sift through millions of emails from that one department store which never has our sizes. Joy to the world!!
While you are recovering from election fatigue, preparing spicy comebacks for family holiday arguments, and sipping on eggnog, you may find it interesting to read how to break ties in a federal credit union’s board of directors’ election. Perchance you don’t find this subject interesting, read it anyway. Discuss this blog when your great Aunt Beatrice wants to discuss your ever-changing relationship status at the dinner table. I am always here to help!
Federal credit unions choose one of four election styles found within Article V of the model bylaws. Each election style lists out the procedure by which the credit union will nominate candidates and carry out an election. There are instances where a credit union election may result in a tie, but Aunt Beatrice’s advice on which eligible candidate is best for the credit union, just won’t do. So where do we turn?
First things first, the model bylaws do not include a section on how to resolve tied elections; however, NCUA addressed this topic in an opinion letter. Note, the opinion letter refers to a "nonstandard bylaw amendment," but the bylaws indicate that NCUA no longer makes a distinction between “standard” and “nonstandard” bylaw amendments. “Consequently, the NCUA considers any change to the FCU Bylaws that is not a “fill-in-the-blank” provision or part of a range of options to be a bylaw amendment that requires the NCUA approval.” Thus, a credit union may resolve a tied election by a bylaw amendment. This bylaw amendment permits the credit union to hold a secret ballot anytime a director’s election results in a tie. If a credit union chooses to adopt a bylaw amendment resolving tied BOD elections, it must be approved by NCUA:
“You have asked this office to review and comment on a nonstandard bylaw amendment submitted for approval by [redacted] Federal Credit Union (FCU). The proposed nonstandard amendment addresses the issue of resolving an election that ends in a tie. This issue is not addressed in the FCU Bylaws or Robert’s Rules of Order. The FCU proposes having the members present at the annual meeting break the tie by voting by secret ballot only for the candidates involved in the tie. We have no legal concerns with the proposal. It is a reasonable alternative to the prohibitive cost of conducting another election.”
The NCUA opinion letter addresses only one potential solution, but if the credit union wants to adopt an alternate, reasonable tie-resolution other than secret ballot, the credit union should consult local counsel and NCUA for an official opinion.
Below is the procedure to get approval for a bylaw amendment outlined within the model bylaws:
“3. The procedure for approval of a bylaw amendment is as follows:
a. The FCU must submit its request to the Office of Credit Union Resources and Expansion (CURE).
b. The request must include:
1. The section of the FCU Bylaws to be amended;
2. The reason for, or purpose of, the amendment;
3. An explanation of why the amendment is desirable and what it will accomplish for the federal credit union; and
4. The specific wording of the proposed amendment.”
If you have any questions concerning this topic, please contact the America's Credit Unions' compliance team at compliance@americascreditunions.org.
