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CU board removal authority limited says NCUA
WASHINGTON (1/29/09)—The National Credit Union Administration (NCUA) reminded federal credit unions (FCU) that a board does not have blanket authority to remove a director. The NCUA legal opinion letter was responding to a query by a credit union board member who was removed when his or her seat was declared vacant by a special meeting of the board of directors. The agency said FCU Bylaws allow a board to declare a seat vacant only if the director fails to attend regular meetings or otherwise fails to perform any of the duties as a director. Even under those circumstances, a special meeting of the members would be needed to remove the director. The inquiring board member said, in declaring the seat vacant, the board relied on alleged infractions, including breach of confidentiality, divisive behavior, and breach of fiduciary duty. The NCUA noted, “Absent an affirmative membership vote at a special meeting, a director cannot be removed from membership on the board of directors.” The NCUA also pointed out that if a board believes a member is acting inappropriately, as did the board of the credit union in this instance, it may bring the issue to its supervisory committee, which can then suspend the director until a special meeting of members is called.
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