A Direct Line - A Blog addressing issues and topics of interest for Montana credit union board members
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Starting with our "Welcome aBoard" post, our weekly blog addresses issues and topics of interest for Montana credit union board members. 

Member Inspection Rights

by Donya Parrish, MCUN

Our blog a few weeks ago on board minutes resulted in a very good question -- Are we required to give members access to board minutes upon request? The answer differs slightly if your credit union is state or federally chartered.

Federal Credit Unions (FCUs)

The short answer is “yes,” but with considerable conditions and restrictions. In 2007, NCUA adopted regulation 701.3 that details procedures for honoring requests for inspection of credit union records. FCUs are required to allow inspection or provide a copy of records, including board minutes, if the following three conditions are met:

  • the credit union receives a petition by 1% of members (with a minimum of 20 and a maximum of 500 members),
  • the petition states a “proper purpose for the inspection,” and
  • the petitioners must agree to pay the direct and reasonable costs of inspection or copying.

The credit union has 14 days to respond to a request by either providing access or, if all or part of the requested records are withheld, giving a reason for the decision to withhold. The regulation exempts and specifically prohibits the disclosure of nonpublic personal information of members and information that would violate employee privacy.

It also prohibits divulging information that would cause “predictable and substantial financial harm” to the credit union, such as strategic competitive or proprietary information. In the case of board minutes, any such references would have to be fully removed before release.

State Chartered Credit Unions (SCUs)

The answer is not as easy for state chartered credit unions. They must rely on state general corporation law at 35-1-1107 M.C.A., which states in part that:

“(2) A shareholder of a corporation is entitled to inspect and copy, during regular business hours at a reasonable location specified by the corporation, any of the following records of the corporation if the shareholder meets the requirements of subsection (3) and gives the corporation written notice of the demand at least 5 business days before the date on which the shareholder wishes to inspect and copy:
    ... (a) excerpts from minutes of any meeting of the board of directors...

    (3) A shareholder may inspect and copy the records identified in subsection (2) only if:
        (a) the demand is made in good faith and for a proper purpose;
        (b) the shareholder describes with reasonable particularity the purpose
             and the records the shareholder desires to inspect;
        (c) the records are directly connected with the shareholder’s purpose...”

In Summary

It will be up to the credit union to decide what is a “proper purpose” and how much to divulge. As with any FCU, any nonpublic personal member or employee information must be redacted to protect individual privacy. It would be a good idea to make sure your credit union has a policy on handling these requests, no matter your charter. If you want assistance with policy verbiage, contact Tracy or myself.

It's also important to note that there are some records members are always entitled to, and that requests should be dealt with as soon as reasonable. That would include requests for copies of your bylaws, account agreement, privacy notice, or annual report. Your financials should already be posted in your lobby area, so that would be an appropriate place to direct members for those.

Withholding board minutes is not about denying a member participation in their member-owned financial institution, but instead, balancing privacy and proprietary rights with membership.

Donya Parrish is the VP-Dues Supported Services for the Montana Credit Union Network. She would welcome any questions or comments on this material. You can email Donya or call her at 406.324.7374.

At the bottom of the page, you'll find links to past blog posts organized (loosely) into four categories. Feel free to browse. The blogs are all fairly short and provide food for thought in the areas of directors' duties and responsibilities, advocacy, working with the CEO, and ideas for strategic planning.

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