ALEXANDRIA, Va.–The newly enacted rules for how members can communicate with one another during proposed mergers among credit unions has been addressed in a new Letter to Credit Unions from NCUA.
In letter 18-CU-03, NCUA said it has established a process for member-to-member (MTM) communications to facilitate the information sharing (as part of its rulemaking).
The new MTM rules are part of a package of rules NCUA enacted in the wake of disclosures many senior managers/CEOs and board members were receiving excess compensation and other benefits as part of mergers, especially at smaller CUs that were being enticed to merge by larger CUs. CUToday.info had extensive reporting around the issue.
At the time the rules were put in place the NCUA board said the goal was to create more transparency in the process.
Notice Required
According to the letter, any federally insured credit union seeking to merge with another federally insured credit union must now include in its member notice of the merger information on the availability of a website where members of the merging credit union can share comments or questions with each other about the proposed merger. Through the website, members may jointly or individually submit a comment and attachments about the merger, according to NCUA.
As part of that process, NCUA said its office of Credit Union Resources and Expansion (CURE) will, in advance of any website posting, review each submitted communication. The agency said its rules give it the right not to post a communication that the agency “reasonably believes” is false or misleading, omits a material fact necessary to make the statement in the material not false or misleading, advances a personal claim or personal grievance, or solicits personal gain or business advantage by or on behalf of any party.
In addition, NCUA said it further reserves the right to block a comment or attachment which “directly or indirectly and without expressed factual foundation” impugns the character, integrity, or reputation of a person; makes charges concerning improper, illegal, or immoral conduct, or that “makes statements impugning the safety and soundness of the credit union.”
App Must Be Reviewed
Under the new rules, all FICUs must submit a proposed merger application to the agency for review and application. NCUA said that once a federal CU involved in a merger gets the OK to proceed with a membership vote, it must send a copy of its notice to the CURE office. That notice must be emailed to the agency by the FCU at least 15 days before it its mailed to members, and must include a link showing a credit union-specific MTM web address “where members can find how and where to submit comments pertaining to the proposed merger.”
State charters that are federally insured credit union must also comply with the requirements of its respective state regulator(s), in addition to applicable requirements of the NCUA’s merger rule, NCUA said.
The agency said all members of a merging credit union may submit comments using the specific MTM web address provided, and that each comment submitter will be asked to provide certain personal information. “Once CURE reviews and posts a comment, it will be accessible for viewing at the merging credit union’s MTM-URL address,” the letter states.
Other Requirements
Regardless of credit union charter type, NCUA said that under the new rules the member notice must:
- Include a link where members can find how and where to submit comments
- Be emailed to the agency’s CURE office at least 15 days before it is mailed to members
- Be received at least 45 but no more than 90 days before the meeting date by the members of the credit union proposing to merge.
Other rules with which merging CUs must comply include:
- A requirement that merging federal credit unions must update their bylaws (state charters are instructed to check with their respective regulators)
- A requirement merging CUs disclose certain merger-related financial arrangements for covered persons in its member notice
- A requirement that merging and continuing credit unions certify (by the board presiding officer and CEO) there are no other merger-related financial arrangements other than those disclosed in the notice to the members of the proposed merging credit union.