A credit union must have a board of directors responsible for its general control and management. The board should be sufficiently sized and possess adequate expertise to carry out its role effectively.
Specific requirements are detailed regarding the composition of the board, including maximum and minimum numbers of directors (from 7 to 11), stipulating an odd number.
Directors are mandated to dedicate certain time to their roles and associated responsibilities. The first board is elected from credit union members, and subsequent vacancies are filled from among members by secret ballots at the Annual General Meeting (AGM).
Directors’ terms commence at the AGM and may last until the third subsequent AGM. Retiring directors are eligible for re-election, subject to legislation and credit union rules. The number of directors whose term of office expires at an AGM should be as consistent as possible. Individuals under the age of majority are ineligible to be directors.
Additionally, employees, volunteer members of the board, oversight committee members from other credit unions, or persons causing a conflict of interest may not be directors.
Any person who becomes ineligible must resign from the directorship. Each director must possess the requisite level of expertise, experience, professionalism, personal qualities, and propriety to effectively fulfill their duties.
Directors are required to have relevant financial expertise, qualifications, and backgrounds. They may also be mandated to undergo training to understand the credit union’s business nature, their individual and collective responsibilities, and financial statements.
An individual who has served more than nine years, within an aggregate of 15 years on the board or the oversight committee, is ineligible for appointment to the board of directors or oversight committee.
Directors are restricted from serving more than three consecutive years in any principal post. Any person holding a principal post cannot be re-elected until a year has passed since they last held the position.
The board of directors may appoint members to fill casual vacancies, subject to the requirements of the Act and financial services legislation. A director appointed to fill casual vacancy holds office until the next AGM or special general meeting at which an election for directors is held.
Directors are required to convene as often as necessary to fulfil their responsibilities effectively and prudently. They must meet at least ten times a year, with intervals not exceeding six weeks. The meetings are chaired by the chairman or vice-chairman according to rules.
Minutes of all meetings must be maintained by the secretary, and a detailed agenda must be prepared for each meeting. Directors should have sufficient time to review the agenda before each meeting. Clear supporting information must be circulated, and urgent matters included in the agenda should be discussed and recorded in the minutes.
The minutes should sufficiently detail
- the substance and outcomes of discussions,
- decisions made,
- points for further action,
- votes, and
- other pertinent information.
All discussions related to conflicts of interest and their consequences must be recorded. The minutes of each meeting should be agreed upon, subject to qualifications or modifications, at the subsequent board meeting. The chairman is responsible for ensuring adequate discussion time for all relevant matters.
Directors are expected to attend board meetings, except in circumstances beyond their control. Director attendance is to be recorded in the minutes.
A minimum list of functions is applied to the board of directors. These include setting credit union strategy, monitoring strategic plan implementation, and appointing management. The board must ensure that no single person has unfettered control over the credit union’s business and decisions.
The board must identify all significant risks and mitigate them appropriately through a risk management process. It must appoint a compliance officer and a risk management officer, both having the necessary authority, experience, and expertise to discharge their functions.
The board of directors is required to review its performance annually, implementing necessary changes and objectives. Directors must maintain a formal register of matters requiring board approval, which cannot be delegated to individuals other than the board. If delegated, the board retains responsibility for the matter concerned.
The board must review the performance of the internal audit function annually, update the internal audit charter and plan, and rectify any issues identified in the review.
The chairman of the board is elected by directors among themselves. Certain persons, including those who have been an employee or held a management role within the credit union in the previous five years, may not act as chairman.
The chairperson organises and conducts meetings and handles matters concerning the constitution, composition, and activities of the nomination committee. They evaluate the performance of each director annually and ensure proper management of conflicts of interest. Additionally, the chair facilitates the work of the board oversight committee.
Committees, consisting of directors or a majority of directors, may be appointed by the board to carry out certain functions. The decision to assign functions, terms of reference, procedures, and monitoring should be documented. Members of each committee are appointed by the board.
The Central Bank may make regulations requiring credit unions to establish committees for specific matters, including in particular audits, risk, and remuneration. All members of these committees must be directors.
The board must ensure an appropriate balance on the committee, ensuring specialized skills and expertise to carry out their functions. Similar obligations applicable to the board in their functions are also applied to committees.Each committee is required to report annually to the board.
Credit unions are mandated to establish a nomination committee consisting of between three and five directors. This committee’s responsibilities include identifying candidates, accepting nominations, and ensuring compliance with requirements under financial services legislation. They must develop a succession plan, ensure directors receive relevant training and induction, and are aware of expected time commitments.
All nominations to the board should be channeled through the nomination committee and reviewed before the AGM at which an election is held.
The nomination committee, in identifying candidates, should consider the balance of skills on the board, potential conflicts of interest, and other matters prescribed by the Central Bank. Any potential conflicts of interest should be disclosed at an AGM, and persons with such conflicts should not be nominated if they would significantly impact the board’s overall work.
Board of Directors
A credit union is required to have a board of directors responsible for the general control and management of the credit union. The board must be large enough and have sufficient expertise to fulfill its role, with a minimum of seven and a maximum of 11 members (an odd number).
Directors must have adequate time to devote to their roles and responsibilities. The first directors are elected from among the members, and vacancies may be filled by secret ballot at the annual general meeting. The term of office starts at the AGM and may not extend past the third subsequent annual general meeting. A retiring director is eligible for reelection and must comply with Financial Services Regulation and the rules of the credit union.
Several categories of persons, including employees, voluntary assistance, members of the board oversight committee, and directors of other credit unions, are deemed to have conflicts of interest and are ineligible to become directors. This ineligibility applies from the commencement of the legislation.
Directors are required to have the necessary level of expertise, experience, professionalism, personal qualities, and probity to carry out their duties effectively. Collectively, they must possess relevant financial expertise, qualifications, and background. They may be required to undergo training to understand the nature of the credit union’s business, their individual and collective responsibilities, and the financial statements.
An individual who has served more than nine years in the previous 15 years on either the board or the oversight committee is ineligible for reelection. This provision applies from the commencement of the legislation and to existing directors or oversight board members.
Directors may not serve more than three consecutive terms in any one principal post. Any individual who has held a principal post is not eligible for reelection to that post until one year has passed since it was last held by that person.
The board of directors may appoint persons, including former directors, to fill a casual vacancy, subject to compliance with financial services legislation. A casual vacancy holder remains in office until the next annual general meeting or, if earlier, the next special general meeting where an election is held for directors.
The Act requires meetings of the board as often as appropriate to fulfill its responsibilities effectively, prudently, and at least 10 times a year, in any event. The interval between board meetings may not exceed six weeks. Meetings are chaired by the chairperson or vice-chair as provided in the legislation.
The secretary must keep minutes. A detailed agenda is to be prepared and adequately circulated in advance. Sufficient and clear supporting information must also be circulated. In the case of an urgent matter, it should be discussed and recorded in the minutes.
The legislation specifies the type of information that must be kept in the minutes. They should contain sufficient details to demonstrate attention, substance, and the outcome of discussions at meetings. They must include all discussions, points for further action, minority votes, discussions relating to conflicts of interests, and any consequential actions or decisions. The minutes of each board meeting must be agreed upon and approved at the subsequent meeting.
The chairperson must ensure that adequate and proportionate time is given to all material relevant matters for discussion by allocating time to agenda items at board meetings. Board members must attend meetings unless prevented due to circumstances beyond their control, which should be recorded in the minutes.
A statutory list of directors’ functions is provided for by the legislation. This includes establishing a strategy for the credit union, monitoring and reviewing the implementation of the strategic plan, and appointing a manager. The board of directors must ensure that one person is not given unfettered control of the business of the credit union. No single person is to be responsible for decisions of the credit union, making all decisions of the credit union collectively.
The board must identify significant risks and mitigate them appropriately through its management process. The board must approve the appointment of a compliance officer and a risk management officer. They must have the necessary authority, experience, and expertise to discharge their functions within the credit union.
Directors must review overall performance at least annually and implement any changes and objectives. The board must set out in writing a formal register of matters that require board approval and cannot be assigned to a person other than the board.
The board of directors must review the performance of the internal auditing function at least annually. They must update the internal audit charter and plan.