There are at least two schools of thought when it comes to attendance and participation in annual and special meetings of credit union members. Some credit unions are comfortable with, or even prefer, low attendance while others get creative with ideas for increasing member attendance, from door prizes, to raffles, to entertainment, to cookouts, to YouTube videos.
For almost 20 years, some for-profit companies that want to increase shareholder meeting attendance have had the option to conduct either “virtual” or “hybrid” shareholder meetings. A “virtual” shareholder meeting is held exclusively via online technology without a corresponding in-person meeting. A “hybrid” meeting is an in-person meeting in which shareholders may participate online.
In about half the states, a company can amend its bylaws to allow either virtual or hybrid (or both) shareholder meetings, usually as long as certain safeguards are in place. As a general matter, states that allow virtual and hybrid meetings require that each online participant be able to:
- Vote during the meeting;
- See and hear the proceedings on a real-time basis;
- Ask questions; and
- Have their remarks heard by the other participants.
In addition, the company typically must make its shareholder list available for electronic inspection by any shareholder and must keep an electronic record of the meeting.
In the past few years, more than a hundred public companies have made the switch to either hybrid or virtual annual shareholder meetings, including HP, Intel, FitBit, Sprint, JetBlue and GoPro. And there's evidence that the practice has caught the eye of a few credit unions. In January, the Washington State credit union regulator issued guidance clarifying that Washington credit unions can amend their bylaws to allow for hybrid member meetings.
Of course, employing this technology will not be the right fit for many credit unions. But some credit unions – learning from their experiences with online and mobile access – may want to have the option to at least give this approach a try. For members and prospective members who seem addicted to social media, online member meetings might be one more tool in the member experience toolbox.
Over the next few weeks, credit unions have the opportunity to ask the NCUA to grant federal credit unions the flexibility to hold virtual and/or hybrid member meetings. If this catches on with federal credit unions, it's likely a number of state regulators will want to follow Washington's and the NCUA's lead.
In late March, the NCUA asked for public comment on ways to streamline, clarify and improve the standard federal credit union bylaws. Adopted and made part of NCUA rules in 2007, the standard federal credit union bylaws are overdue for an overhaul.
One question on which the NCUA is seeking comment is whether federal credit unions should be permitted to hold either virtual or hybrid annual or special meetings of their members. The NCUA's advance notice of proposed rulemaking (ANPR) specifically states:
In addition, with the rise of e-commerce and mobile banking, the Board is interested in stakeholder comments on ways that it might improve Article IV of the standard FCU bylaws to allow FCUs to harness new technologies, particularly social media and web-based conferencing solutions to allow more members to attend annual and special meetings.
Credit unions interested in having the alternative to use technology in this way should take the opportunity to register their opinions with the NCUA. Click here to see the ANPR. Comments are due May 21, 2018.
François G. Henriquez, II is a Partner at Shutts & Bowen LLP. He can be reached at [email protected] or 305-415-9076.
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