A Direct Line Blog

By Donya Parrish, MCU VP- Risk Management

Have you ever had a request from a member (or a former employee or a competitor…) for a copy of your board minutes? As an owner/member of your financial cooperative, are they entitled to see them? The answer might surprise you. That answer also varies depending on the type of charter your credit union has.

Federal Credit Unions (FCUs) — The short answer is “yes”, but with considerable conditions and restrictions. NCUA adopted regulation 701.3 in 2007 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 is received:

• petition by 1% of members (with a minimum of 20 and a maximum of 500 members);
• must state a “proper purpose for the inspection”; and
• petitioner must agree to pay the direct and reasonable costs of inspection or copying.

The credit union has 14 days to respond to a request and if all or part of the requested records are withheld, a reason must be given. The regulation exempts and specifically prohibits 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, who must rely on state general corporation law at 35-14-1602 M.C.A.  It 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:

… (c) 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…”

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 ensure your credit union has a policy on handling these requests, no matter your charter.

It is also important to note that there are some records that members are always entitled to, and requests should be complied 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 them 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.