CU Governance

Table of Contents

Board of Directors

Each credit union must have a Board of Directors which has responsibility for the control direction of its affairs funds and records. They are elected by secret ballot by the members.

The directors have a range of powers and responsibilities, including key decision-making, recommending dividends, fixing interest rates, fixing maximum loans, decisions on investment borrowing, AGM matters, and submission of accounts for audit.

The Board of Directors must prepare accounts and lay them before the annual general meeting. Copies of the accounts must be circulated to members in advance. The accounts and its report must be available at the general meeting.

Officers

The officers under the legislation include the

chairman or president, vice chairman/vice president,
secretary,
members of the board,
directors,
treasurer
members of the Supervisory Committee, and
certain others.

The Board of Directors elects a chairman, vice-chairman or president or vice president, treasurer and secretary.

The treasurer must submit monthly accounts to the Board of Directors and ensure proper systems of control the treasures has custody of funds security and documentation. Unlike other members officers who may not receive remuneration, the treasurer may be remunerated as determined by the members.

Officers are obliged to give security of the amount and type determined by the board for the proper performance of their functions. Officers may not participate in matters in which they have a conflict of interest. The interest in all matters must be declared.

Officers and volunteers must maintain confidentiality in relation to matters concerning a member and transactions on account.

Committees

A Board of Directors may appoint committees which may delegate functions this may include a credit committee the credit control committee membership committee. Committees must submit reports of their dealings to the board.

A supervisory committee oversees the directors. It consists of three to five members elected by secret ballot. It must examine books and documents at least twice a year to vouch decisions are in accordance with the rules of the credit union and the law. They must compare the past books of at least 10 percent of members with credit union records.

The management of the credit union is vested in the directors and the supervisory and other committees.

Appointment of Officers

The legislation specifies the general functions of the board, which are expanded upon by the rules. The rules specify the number of directors, method of election, eligibility, and terms of office.

There must be an odd number of directors, at least seven. The first board is elected at the organizational meeting. Subsequent vacancies are filled by secret ballot at the AGM.

A director must be an individual over 18 years of age, and the term of office is not to exceed three years. Retiring directors may be reappointed.

A person who is bankrupt or convicted of an offence related to a credit union or involving fraud and dishonesty may not be involved in the formation, management, or operation of a credit union. The provisions related to director restriction under the Companies Act apply to officers of credit unions.

A credit union may remove one of its directors by a resolution passed at a general meeting. The director has the right to be heard, with at least 21 days’ notice of the special general meeting. Representations may be given by them in writing and reading. This is without prejudice to the possibility that fair procedures require an oral hearing.

After the organizational meeting or after a general meeting at which directors are elected, the board is to fill the principal posts of chairman or president, vice-president, or chairman, treasurer, and secretary. The election by the board is by secret ballot.

Proceedings of Directors

The board meets as often as necessary to conduct its business, endeavoring to meet monthly and holding at least 10 meetings annually. The intervals between meetings are not to exceed six weeks.

In principle, the directors are responsible for managing and operating the credit union, subject to the possibility of directions by the members in a general meeting. Specific board functions include considering membership appointments, loan applications, interest rates, fund investments, dividend rates, borrowings, property purchases, employment, investments, officer removals, accounts preparation, audit submission, and general credit union affairs.

Officers’ Functions

The chairman’s functions include chairing the meetings and having a second casting vote in the event of a tie.

The treasurer’s functions include submitting financial statements monthly to the board, safeguarding and ensuring custody of all funds and investments, preparing and maintaining accurate accounts and records, safeguarding cash deposits or investments per the board’s instructions, reporting to members at the AGM, and complying with the board’s directions.

The treasurer or assistant treasurer may not serve on the Credit Committee. The treasurer is to not to act as a managing director. Managers may be appointed and employed to carry out functions, and a professional manager may attend board meetings.

The secretary is to keep minutes of all meetings and maintain the registers of directors and the Supervisory Committee. The maximum period for the principal posts is now three years, unless the rules provide otherwise, and outgoing officers may be re-elected.

The legislation requires a Supervisory Committee. There must be three outside members overseeing the functions and performance of functions by the directors. The first committee is elected at the organizational meeting.

Supervisory Committee

Directors, employees, and persons performing functions with the credit union, or a body corporate are not eligible to be on the Supervisory Committee. The Supervisory Committee meets at least once a month and with the board of directors at least four times a year to review their performance, submitting a report to the board beforehand.

Members of the Supervisory Committee may attend meetings of other committees and of the board, and they may notify the registrar of concerns about the credit union’s conduct. They must give notice to the registrar of an intention to resign on the same date.

The Supervisory Committee has access to meeting minutes, must examine the books and accounts, undertake a sample comparison of passbook to statements for at least 10 percent of the members, and ascertain that relevant officers have performed their functions in accordance with the law.

Their term of office extends for three years, retiring in rotation at the AGM. The longest-serving members retires goes first, and in cases where others have served the same length, lots are drawn to choose the retiree. Retiring members may be re-elected or reappointed, in the absence of a rule to the contrary.

The Supervisory Committee may be removed by a special resolution majority of the members present and voting at a special general meeting, provided at least 21 days’ notice is given, and written representations are made. This is without prejudice to any greater process requirements that may apply.

The credit union’s Secretary keeps a register of the Supervisory Committee members, and the credit union meets the committee’s reasonable expenses. A Supervisory Committee may call a special general meeting if it considers that an officer has breached the rules or law. The special general meeting votes on the matter by secret ballot, giving the officer an opportunity to be heard according to fair procedure.

Credit Committee

A credit union must have a Credit Committee appointed by the board of directors, with other optional committees that may be appointed. At least one member of each mandatory committee must be a director.

Committees must have at least three members and meet as necessary to carry out their functions and report to the board. The Credit and Credit Control Committees must meet every month.

The Credit Committee decides on loan applications as specified in the third schedule to the Act. The Credit Control Committee ensures payment and repayment of loans in accordance with loan agreements.

Officers and voluntary assistants must maintain confidentiality regarding loan transactions and enter a written declaration of secrecy. Breach is an offense, with certain limited exceptions.

Expenses and Indemnities

Officers of a credit union may be indemnified against liability incurred in defending proceedings where a judgment is given in their favor, or they are acquitted. A court may relieve an officer or volunteer assistant where it considers that the individual has acted honestly and reasonably and ought to be excused regarding negligence, default, or breach of duty or trust.

Payment for services alone is not permitted for directors of credit unions or Credit Committees. Expenses necessarily incurred may be reimbursed in the performance of duty. Treasurers may be paid an honorarium in advance, approved by the members and not exceeding the amount recommended by the board of directors.

Certain documents must be signed by two officers of the credit union, with at least one being a director. This includes property transfers and certain contracts.

Rules must specify the signing of cheques and disbursement of funds. Persons receiving money must account to the board for the same.

Officers of credit unions owe fiduciary duties to the credit union, to act in good faith in its interest and not taking advantage of their position. They must disclose conflicts and potential conflicts of interest and act with due care and honesty. The expected degree of care is that of a person of their knowledge and experience in their place. They cannot evade duties by failing to attend meetings.