Can a North Carolina state-chartered credit union adopt by-laws that close nominations 45 days before the annual meeting, mail ballots to members, and then conduct the entire director election by absentee ballot, leaving no opportunity for a member to vote in person at the annual meeting?
Plain-English summary
A North Carolina state-chartered credit union proposed by-laws that would have replaced in-person director elections with an entirely mailed-ballot system. The procedure: 90 days before the annual meeting, a nominating committee selects at least one member for each board vacancy. 45 days before the meeting, nominations close from both the committee and the membership. 30 days before the meeting, the secretary mails ballots to each voting member. Members have two weeks to return ballots, which a tellers' committee counts and reports at the annual meeting. No nominations are made from the floor; no in-person voting takes place.
Credit Union Administrator George T. Mann asked the AG whether this by-law structure was permissible under North Carolina's Credit Union Law. Senior Deputy AG Ann Reed and Assistant AG L. McNeil Chestnut concluded no.
The reasoning was textual. North Carolina credit union law in Articles 14A through 14L of Chapter 54 includes G.S. § 54-109.35(a), which provides that the board of directors "is . . . to be elected at the annual members' meeting by and from the members." That language identifies two essential features of director elections: they happen at the annual meeting, and they are conducted by and from the members. A by-law structure that eliminates the in-person component would render the "at the annual members' meeting" language meaningless.
G.S. § 54-109.31(b) added the absentee-voting framework. It prohibits voting by proxy, but provides that "a member may vote by absentee ballot if the by-laws of the credit union so provide." The statute authorizes by-laws to enable absentee voting; it does not authorize by-laws to require absentee voting as the exclusive method. A statute that permits a member to use absentee voting does not also empower a credit union to deny the member the right to appear in person and cast a vote.
The AG reinforced the reading with a statutory-construction rule: when statutory language is clear and unambiguous, courts must give the statute its plain and definite meaning, and cannot interpolate or superimpose provisions not in the statute. 27 N.C. Index, Statutes § 28 (1994). Here, § 54-109.35(a)'s "at the annual members' meeting" language was clear; the credit union could not transform that text into "before the annual members' meeting through mailed ballots" by by-law.
The result for the proposing credit union was that the proposed by-laws had to be modified. The credit union could keep most of its structure (nominating committee, advance closing of nominations, mailed ballots for absentee voters), but it had to preserve a way for members to vote in person at the annual meeting if they chose to. Whether nominations from the floor were allowed was a separate question the AG did not directly answer, but the structure of the analysis suggested the credit union could limit floor nominations as part of its meeting rules, as long as the membership retained the underlying right to vote at the meeting itself.
Currency note
This opinion was issued in 1994. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. North Carolina credit union law in Chapter 54 has been amended several times since 1994, including changes to electronic voting, online membership procedures, and related governance provisions. The general principle that statutory voting rights cannot be eliminated by by-law remains, but specific applications to current electronic-voting or hybrid-voting arrangements should be checked against the current statute.
Background and statutory framework
Credit unions occupy a distinctive corporate niche in North Carolina law. They are organized as nonprofit cooperatives under Chapter 54, not under the Business Corporation Act (Chapter 55) or the Nonprofit Corporation Act (Chapter 55A). The statutory framework borrows from both for-profit and nonprofit corporate law, but the member-controlled, cooperative character of credit unions creates specific governance provisions that emphasize member voting rights more strongly than ordinary corporate law would.
The historical reason for the in-person voting protection was the credit-union movement's democratic ethos. Credit unions originated as small, self-governing cooperative associations of members with a common bond (employer, occupation, community). Annual meetings were the central governance event, where members chose directors and approved the board's stewardship. Eliminating in-person voting would have moved director selection toward an oligarchic process, with the nominating committee effectively choosing directors and the membership ratifying by mail.
The 1994 question arose because larger credit unions, with thousands or tens of thousands of members spread across wide geographies, found in-person voting expensive and impractical. The proposed all-absentee structure would have simplified administration and likely produced higher participation rates than in-person voting at a single meeting in a single location. But the AG concluded that those administrative benefits could not override the clear statutory text.
The AG's reading preserved a workable compromise: credit unions could use absentee ballots heavily, but had to leave the in-person option open. In practice, most members at large credit unions vote by mail; the few who attend the annual meeting can still cast in-person votes. The annual meeting itself becomes more of a governance event than a vote-casting event, but the underlying right is preserved.
Common questions
Can the credit union require all absentee ballots to be returned by a specific date?
Yes. The by-laws can set procedural rules for absentee voting. The point is that those rules cannot eliminate the in-person voting option.
Can the credit union restrict nominations to the nominating committee, with no floor nominations?
The AG opinion did not directly resolve that, but the structure of the analysis suggests the credit union has some flexibility on procedural rules as long as the right to vote at the meeting is preserved. Practically, many credit unions have adopted advance-nomination requirements with no floor nominations, and that practice has not been broadly challenged.
What if a small credit union genuinely cannot hold a meeting, e.g., during a pandemic?
The 1994 opinion did not address emergencies. Current credit unions facing such situations typically combine virtual annual meetings with electronic and absentee voting, with statutory authority for virtual meetings now established in many states. The basic principle (preserve member voting rights at the annual meeting) applies, but the meeting format has more flexibility today.
What happens if a credit union's by-laws violate this rule?
A member could challenge the election under N.C.G.S. § 54-109.3 and related provisions, with the Credit Union Division of the Department of Commerce providing oversight. The Administrator's review of by-laws prepared with the AG opinion's guidance was the practical compliance check.
Source
Citations
- G.S. §§ 54-109.3, 54-109.3(5), 54-109.31(b), 54-109.35(a)
- 27 N.C. Index, Statutes § 28 (1994)
Original opinion text
August 17, 1994
Mr. George T. Mann, Administrator Credit Union Division North Carolina Department of Commerce 1110 Navaho Drive, Suite 300 Raleigh, NC 27609
Re: Advisory Opinion, Election of Credit Union Directors under G.S. §§ 54-109.31(b) and 54-109.35(a)
Dear Mr. Mann:
This will respond to your request of Mr. Henry T. Rosser for an opinion from this office concerning certain issues with respect to the election of directors under North Carolina credit union law. Please accept our apology for the delay in this matter.
You have asked us whether or not a state chartered credit union may adopt by-law procedures for the election of directors which preclude members from voting on such directors at the annual meeting. Together with your request you enclosed sample by-law procedures which provide that ninety days prior to the scheduled date of the annual meeting a nominating committee, appointed by the Chairman of the Board, will select at least one member for each board vacancy, including an unexpired term vacancy. Forty-five days prior to the annual meeting nominations are closed from both the nominating committee and the membership at large.
Next, thirty days prior to the annual meeting the secretary must deliver a ballot to each voting member of the credit union. Members are then given two weeks to return the ballots which are opened and counted by a tellers' committee and the results reported to the members at the annual meeting. At the meeting no nominations may be made from the floor; the only action taken with regard to the election of directors is the report by the tellers' committee.
From this information, it appears to us that the specific legal issue is whether under North Carolina credit union law a member may, through a by-law provision, be prohibited from the right to vote for directors at an annual meeting. For the reasons set forth below, we are of the opinion that credit union by-law provisions cannot deny a member the right to vote at the annual meeting.
DISCUSSION OF THE ISSUE
In examining this issue we were unable to locate any North Carolina case authority on point, nor did we find any relevant decisions from other jurisdictions. Also, there was very little discussion of this subject matter in any of the bank and financial law treatises. Credit unions are organized as nonprofit corporations under Chapter 54 of the General Statutes; they are not subject to the North Carolina Business Corporation Act, Chapter 55, nor the Nonprofit Corporation Act, Chapter 55A. We, therefore, must simply construe what we believe to be the applicable provisions of Chapter 54 of the General Statutes.
North Carolina credit union law is codified in Articles 14A through 14L of Chapter 54 of the North Carolina General Statutes. G.S. § 54-109.3 requires the Administrator of Credit Unions to prepare form articles of incorporation and by-laws consistent with these articles which may be used by incorporators for their guidance. In particular, G.S. § 54-109.3(5) requires that the articles of incorporation and by-laws to provide: the date of the annual meeting; the manner in which members shall be notified of meetings; the manner of conducting the meetings; the number of members which constitute a quorum at the meetings, and the regulations as to voting. (Emphasis added).
While the above statutory language appears to give a credit union substantial authority to establish voting procedures for the election of directors, this authority is, in our view, limited by G.S. §§ 54-109.31(b) and 54-109.35(a). The latter section of law very specifically provides that a board of directors, being at least five in number, is ". . . to be elected at the annual members' meeting by and from the members." (Emphasis added). Equally important, G.S. § 54-109.31(b), while prohibiting voting by proxy, provides that ". . . a member may vote by absentee ballot if the by-laws of the credit union so provide." (Emphasis added). Based on these provisions of law, it is our opinion that a credit union by-law provision may authorize a member to vote by absentee ballot but it cannot deny a member the right to appear and cast his vote at the annual meeting.
CONCLUSION
When statutory language is clear and unambiguous, there is no room for judicial construction and courts must give such statutes their plain and definite meaning. Courts are without power to interpolate, or superimpose provisions and limitations not contained in the statutes. See, 27 NC Index, Statutes § 28 (1994). We are of the opinion that the provisions of G.S. §§ 54-109.31(b) and 54-109.35(a) are clear and unambiguous. We, therefore, conclude that a credit union by-law provision, while authorizing absentee voting, cannot prohibit a member from voting on the election of directors at an annual meeting.
We trust this adequately responds to your inquiry. However, if we may be of further assistance, please do not hesitate to let us know.
Ann Reed Senior Deputy Attorney General
L. McNeil Chestnut
Assistant Attorney General