Special Resolution Results

Legal documents often have definitions and interpretation principles set out at the beginning of the document. For our Rules, the definitions are listed at the end of the Rules, but some general interpretation provisions appear in Rule 1.

One new interpretation provision that has been added is Rule 1.3, which says that, if there is any conflict between the Rules and legislation, it is the legislation that will apply.

Membership is an important and unique aspect of credit unions. This Rule describes how a person becomes a member and withdraws or is terminated from membership.

The main change that appears here is that the concept of jointly-held shares has been removed. No member of Coastal Community currently holds jointly-held shares. This change will not impact jointly-held bank accounts in any way.

In addition, some of the Rules about junior members are being simplified, because junior members hold the same number of membership shares as all other members. Certain other housekeeping changes are also being proposed for Rule 2.

Rule 3 explains how shares are to be handled generally. The main change being proposed relates to the removal of provisions about jointly-held shares. In addition, the outdated references to old legislation have been corrected and replaced with references to the new legislation that applies.

From time to time, credit unions need to borrow money, whether to maintain or strengthen liquidity or for operating purposes. The Rules allow the Board of Directors to raise and borrow money as the Board determines appropriate for the credit union’s needs. They also allow the Board to establish the terms and conditions of deposits made with the credit union and loans issued by the credit union.

No changes are being proposed for Rule 4. In Rules 5 and 6, the only updates relate to the removal of references to repealed legislation.

Rule 7 deals with how many people sit on the Board of Directors and what happens if there is a casual vacancy or a need to appoint additional directors. No substantive changes are being proposed for Rule 7, but a couple of grammatical and layout changes are being proposed.

When it comes to the election of directors, many of the provisions are unchanged. For example, directors will still be elected to three-year terms and must meet the same basic eligibility requirements as under the current Rules. The new term limit provision, which sets a limit to the tenure for directors for serving on the board, which was adopted by the members earlier this year, has been submitted to the BC Financial Services Authority, our regulator, for formal consent. If the regulator provides consent, the term limit provision will appear in Rule 8.4(h) of the new and revised Rules in the same form as was approved by the members (with a few non-substantive grammatical corrections).

Some new wording is being added in order to ensure that an evenly balanced number of director terms come up for election each year. Also, some clarity is being added in relation to circumstances in which a person might be disqualified to act as a director or need to be removed from office as a result of the director failing to perform their duties adequately.

The Rule on nominations sets out the mechanism for annually establishing the Nominating Committee, contains provisions about the nominations process and enables the Nominating Committee to oversee elections. The key changes to this Rule include the following:

• The name of the Nominating Committee is being changed to the “Nominations & Elections Committee”. The reason for this is because the committee not only oversees the process relating to the nomination of candidates, but is also responsible for overseeing the election process as a whole.
• It is being clarified that the Nominations & Elections Committee must be comprised of directors (who are not running for office). This change aligns to the requirements of the regulator, the British Columbia Financial Services Authority (BCFSA) of credit unions in BC (and is the current practice at Coastal Community. The regulator expects the directors to take an active role in the recruitment, development and the succession of the Board of Directors.
• Members of the Nominating Committee currently are allowed to nominate more than one candidate. However, it is being proposed that even members of the Nominations & Elections Committee will only be allowed to nominate one candidate. This change provides alignment with all members eligibility to nominate candidates and being made to ensure fairness and avoid an unbalanced concentration of power at the Board level or within the Nominations & Election Committee.

This Rule sets out how an election should be conducted. Some of the changes include the following:

• More flexibility is being added in regards to the method of voting in an election of directors.
• A new provision is being proposed to require more transparency about the results of elections, including making available the number of votes received by each candidate in an election.
• A new recount procedure is being added for situations where the number of votes between an elected candidate and an unelected candidate is close.

This Rule sets out how meetings of the Board should be conducted, including how often the directors must meet, how meetings are called and what the rules are relating to other procedural matters such as quorum, rules of order and chairing of Board meetings. Some changes include increased flexibility for when to hold Board meetings, less prescriptive rules relating to the appointment of Board committees, and alignment to recent legislative changes for electronic meetings of the Board and Board committees.

Most of Rule 12 deals with standard practices related to general meetings of credit unions, including, among other things, rules of order, quorum, order of business at an annual general meeting, eligibility to vote at general meetings, the chairing of meetings and so forth. New changes include the following:

• Provisions have been added to align with recent legislative changes for electronic meetings.
• Less prescriptive wording has been included for what must be dealt with at Annual General Meetings in order to enable the meetings to be run more effectively based on the needs of the credit union and the members.
• Reflecting a recent legislative change, a process has been added about how matters may be brought forward for discussion at an Annual General Meeting.
• Rules about decorum have been updated to ensure that members may not bully or harass others attending the meeting.

Rule 13 provides some more details about how the Rules of the credit union can be changed and how special resolutions of the members should be handled. The revised Rules describe the method and procedure for voting on special resolutions and, for the most part, they implement the same changes being proposed for voting in elections.

Rule 14 clarifies who is entitled to vote in elections, at general meetings or on special resolutions. The proposed changes incorporate new legislative provisions relating to voting record dates and voting by non-individual members (e.g., businesses and unincorporated associations).

Rule 15 explains how notices of general meetings and special resolutions should be given. The proposed changes increase flexibility for the credit union to provide electronic notices and add some requirements which will apply to the credit union for when notices are given for electronic meetings.

This Rule outlines common guidelines for the use of the corporate seal of the credit union. No changes are being proposed to this Rule.

A number of new definitions have been added to Schedule “A” in an effort to improve the clarity of the Rules.

Each share class comes with certain rights and restrictions that are attached to the shares. These rights and restrictions are described in Schedule “B”. The changes include the following:

• Reflecting a recent legislative change, it is clarified that Class “Z” Non-Equity Shares issued on or after January 1, 2020, are not guaranteed by the Credit Union Deposit Insurance Corporation.
• References to jointly-held shares are being removed in order to be consistent with other changes mentioned above.
• Unincorporated associations are being expressly recognized as a type of eligible member.
• It is clarified that entitlement to dividends are non-cumulative in order to ensure compliance with capital requirements for credit unions.