Removing Barriers Blog

CUNA Seeks Input on NCUA Voluntary Merger Proposal
Posted June 08,2017 by CUNA Advocacy

CUNA has issued its Comment Call on NCUA’s proposed rule proposed rule to revise the procedures a Federal Credit Union (FCU) must follow to merge voluntarily with another credit union.  In part, the rule would:  

  1. Revise and clarify the contents and format of the member notice; 

  1. Require merging FCUs to disclose all merger-related financial arrangements for covered persons; 

  1. Increase the minimum member notice period; 

  1. Provide procedures to allow reasonable member-to-member communications regarding the proposed merger; and 

  1. Make conforming amendments regarding termination of insurance when the surviving credit union is not an FCU. 

CUNA is particularly seeking comments on certain provisions that are a departure from the current rule as follows: 

  1. The definition of “Covered Person” which is proposed to expand the class of persons subject to disclosure in the merger process beyond the current Senior Management and the Board to include the CEO (or manager), the four most highly-compensated employees other than the CEO or Manager; and any member of the board of directors or the supervisory committee.    

  1. The proposed definition of “merger-related financial arrangement” will change the disclosure threshold for a “material increase” in compensation from the existing standard of the greater of 15 percent of $10,000 to the proposed standard of “any increase in compensation for a covered person”.  “Compensation will include all compensation or benefits received in connection with a merger including early payout of pension benefits and increased insurance coverage. 

  1. The member-to-member communications proposal that will require an FCU to distribute communications received from a member to all members as part of the voting process. The FCU will need to administer the communications process at the expense of the member.  

For further information and analysis of the proposed rule, please click here.