OLYMPIA, Wash. – The growing number of credit unions adding non-voting "associate" members to their boards of directors should understand that associates must meet the same statutory requirements as elected members of a board, the state regulator here said in a new interpretative letter.
The requirements include fiduciary duty, confidentiality, meeting attendance and avoidance of conflicts of interest, said the director of the Division of CUs for the Department of Financial Institutions.
The letter was issued to address the growing number of credit union boards that are appointing associate directors, who are non-voting and have not been elected by credit union members. Many serve one-year terms. Some credit unions have appointed as many as three associates to their boards.
While the state credit union statute does not address this trend, associate directors still have the same statutory requirements as elected directors, the DFI said.
Any credit union that wants to use associate directors must vote to amend its bylaws to allow for them and to delineate the limits and conditions under which they may serve. That includes term of office, method of appointment, non-voting status, indemnification and insurance, limits on personal liability, and the fiduciary responsibility involved.
In addition, associate supervisory committee members also would be allowed.
