League requests CU input on NCUA Voluntary Merger Proposed Rule
Thursday, July 13, 2017
In a letter sent to credit union CEOs, attorneys and compliance professionals this week, the League requested input on the National Credit Union Administration’s (NCUA) voluntary merger proposed rule that was issued on May 25.
“Our goal in requesting input from credit unions in the Carolinas is to ensure we (the League) fully represent the views of member credit unions,” said Jeanne Couchois, VP regulatory/compliance counsel. “While the proposed rule revises procedures a Federal Credit Union (FCU) must comply with in merging with another credit union, the NCUA also asks whether the rule should apply to all federally insured credit unions, including state charters.”
NCUA revisions to the rule are to help ensure that a merging FCU’s member-owners have more complete and accurate information concerning the merger. Among proposed changes are a modified definition of “merger-related financial arrangement,” an expanded definition of “covered person,” and significant changes to the required notice of merger to members of the merging credit union. For further background, please see CUNA’s executive summary.
Within the letter, the League ask for credit union input on the following questions by Monday, August 24:
1. Should the definition of covered person as it relates to merger-related financial arrangements be expanded?
The current rule only requires the FCU to disclose only senior management and the board or directors.
The proposed rule will require disclosure of the CEO, the next four most highly compensated individuals, and any board member or supervisory committee member.
2. Should the definition of merger-related financial arrangements eliminate the thresholds that define a “material increase?”
The current rule requires the FCU to disclose the material increase (greater of 15% or $10,000) in compensation for CEO and board. This includes bonuses, deferred compensation or other financial rewards.
The proposed rule eliminates the percentage and dollar thresholds, replacing them with “any increase in compensation or benefits that any covered person of a merging credit union has received during the 24 months prior to the date of merger plan approval by the boards of both credit unions. It also means any increase in compensation or benefits that any covered person of a merging credit union will receive in the future because of the merger. This definition includes all direct and indirect compensation, such as salary, bonuses, deferred compensation, early payout of retirement benefits, increased insurance benefits, or any other financial rewards or benefits.”
3. Should a merging FCU be required to include in their notice that members have the right to communicate with other members by mail or e-mail, which must be facilitated by the merging credit union?
The current rule does not require the FCU to provide any notice to members concerning member-to-member communication.
The proposed rule would require the merging FCU notice to include a statement of the members’ right to communicate with other members by mail or email. The proposed rule also includes specific requirements the member and credit union must follow. Note: the member is responsible for the costs of the communication.
4. Should the rule apply to state-chartered federally insured credit unions?
Responses on this proposed rule should be emailed to Jeanne Couchois at firstname.lastname@example.org along with any additional comments on the merger process.