Proposed Rule2022-02038
Succession Planning
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
February 3, 2022
Issuing agencies
National Credit Union Administration
Abstract
Through this proposed rule, the NCUA Board (Board) would require that Federal Credit Union (FCU) boards of directors establish and adhere to processes for succession planning. The succession plans will help to ensure that the credit union has plans to fill key positions, such as officers of the board, management officials, executive committee members, supervisory committee members, and (where provided for in the bylaws) the members of the credit committee to provide continuity of operations. In addition, the proposed rule would require directors to be knowledgeable about the FCU's succession plan. Although the proposed rule would apply only to FCUs, the Board's purpose is to encourage and strengthen succession planning for all credit unions. The proposed rule would provide FCUs with broad discretion in implementing the proposed regulatory requirements to minimize any burden.
Full Text
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<title>Federal Register, Volume 87 Issue 23 (Thursday, February 3, 2022)</title>
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[Federal Register Volume 87, Number 23 (Thursday, February 3, 2022)]
[Proposed Rules]
[Pages 6078-6082]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-02038]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 87, No. 23 / Thursday, February 3, 2022 /
Proposed Rules
[[Page 6078]]
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
[NCUA-2022-0016]
RIN 3133-AF42
Succession Planning
AGENCY: National Credit Union Administration (NCUA).
ACTION: Proposed rule.
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SUMMARY: Through this proposed rule, the NCUA Board (Board) would
require that Federal Credit Union (FCU) boards of directors establish
and adhere to processes for succession planning. The succession plans
will help to ensure that the credit union has plans to fill key
positions, such as officers of the board, management officials,
executive committee members, supervisory committee members, and (where
provided for in the bylaws) the members of the credit committee to
provide continuity of operations. In addition, the proposed rule would
require directors to be knowledgeable about the FCU's succession plan.
Although the proposed rule would apply only to FCUs, the Board's
purpose is to encourage and strengthen succession planning for all
credit unions. The proposed rule would provide FCUs with broad
discretion in implementing the proposed regulatory requirements to
minimize any burden.
DATES: Comments must be received on or before April 4, 2022.
ADDRESSES: You may submit comments, by any of the following methods
(Please send comments by one method only):
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
The docket number for this proposed rule is NCUA-2021-NCUA-2022-0016
and is available at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the
instructions for submitting comments.
<bullet> Fax: (703) 518-6319. Include ``[Your name] Comments on
``Succession Planning'' in the transmittal.
<bullet> Mail: Address to Melane Conyers-Ausbrooks, Secretary of
the Board, National Credit Union Administration, 1775 Duke Street,
Alexandria, Virginia 22314-3428.
<bullet> Hand Delivery/Courier: Same as mail address.
Public inspection: All public comments are available on the Federal
eRulemaking Portal at: <a href="https://www.regulations.gov">https://www.regulations.gov</a> as submitted, except
as may not be possible for technical reasons. Public comments will not
be edited to remove any identifying or contact information.
Due to social distancing measures in effect, the usual opportunity
to inspect paper copies of comments in the NCUA's law library is not
currently available. After social distancing measures are relaxed,
visitors may make an appointment to review paper copies by calling
(703) 518-6540 or emailing <a href="/cdn-cgi/l/email-protection#652a222628040c09250b0610044b020a13"><span class="__cf_email__" data-cfemail="7c333b3f311d15103c121f091d521b130a">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: Ariel Pereira, Senior Staff Attorney,
Office of General Counsel, at (703) 548-2778; or by mail at National
Credit Union Administration, 1775 Duke Street, Alexandria, Virginia
22314.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
A. Succession Planning
B. Increased Relevance of Succession Planning
II. Legal Authority
III. This Proposed Rule
A. Applicability of Proposed Rule
B. Proposed Regulatory Amendments
C. Current Succession Planning Efforts
D. Minimizing Burden
E. Questions for Comment
IV. Regulatory Procedures
A. Regulatory Flexibility Act
B. Paperwork Reduction Act
C. Executive Order 13132 on Federalism
D. Assessment of Federal Regulations and Policies on Families
I. Background
A. Succession Planning
Board members play a key role in a credit union's success.\1\ The
Federal Credit Union Act (FCU Act) vests the general direction and
control of an FCU to its board.\2\ Credit union boards are faced with a
multitude of complicated challenges, such as meeting evolving member
needs, fostering employee loyalty and trust, retaining and developing
necessary skills, and keeping pace with technological and industry
changes. Among this list of issues, succession planning is one of the
most critical.
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\1\ Unless otherwise specified, the term ``credit union'' as
used in this preamble refers to all federally insured credit unions,
whether federally or state chartered. As noted in this preamble, the
proposed regulatory amendments would apply only to FCUs; however,
the Board's intent in issuing the proposed rule is to encourage and
strengthen succession planning for all federally insured credit
unions.
\2\ 12 U.S.C. 1761b; 12 CFR 701.4, and Article VI, section 6 of
the Federal Credit Union Bylaws codified in Appendix A of 12 CFR
part 701.
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Succession planning is the process through which an organization
helps identify, develop, and retain key personnel to ensure its
viability and continued effective performance. It also allows an
organization to prepare for the unexpected, including the sudden
departure of key staff. Succession planning is recognized as vital to
the success of any institution, including credit unions. One of the
variables over which a credit union board has control is the hiring of
the organization's senior management. A board's failure to plan for the
transition of its management could potentially come with high costs,
including the potential for the unplanned merger of the credit union
upon the departure of key personnel.
Conversely, good succession planning confers a variety of benefits,
including:
<bullet> Minimizing service disruptions during management
transitions;
<bullet> Ensuring organizational viability over the long term;
<bullet> Clarifying the employee development path;
<bullet> Developing current talent;
<bullet> Creating opportunities for employees; and
<bullet> Bringing in new ideas from outside hires.
Succession planning is a critical component of a credit union's
overall strategic plan. It ensures that the appropriate personnel are
available to execute the credit union's strategic plan and mission. As
noted, the goal of succession planning is to build and/or identify a
pool of qualified individuals who can be recruited or selected to fill
a vacancy in a key position. To be successful, succession planning
should be an ongoing and iterative process, not a one-time event.
[[Page 6079]]
B. Increased Relevance of Succession Planning
Several factors have contributed to increase the relevance of
succession planning for credit union boards. First, there has been a
decline in the number of credit unions mainly resulting from the long-
running trend of consolidation across all depository institutions. This
trend has remained relatively constant across all economic cycles for
more than three decades.
During the third quarter of 2021, the number of FICUs increased in
every asset category tracked by the NCUA, except for those with less
than $50 million in assets.\3\ The number of FICUs with assets of at
least $10 million but less than $50 million declined to 1,467 in the
third quarter of 2021 from 1,561 in the third quarter of 2020 (a
decline of 94 credit unions).\4\ The decline in the number of FICUs
with less than $10 million in assets was even greater. The number of
FICUs with less than $10 million in assets declined to 1,068 in the
third quarter of 2021 from 1,199 in the third quarter of 2020 (a
decline of 131 credit unions).\5\ The available data does not
differentiate between those smaller credit unions that consolidated or
were liquidated, versus those that expanded into a larger asset
category. However, the decrease in the total number of FICUs with less
than $50 million in assets (especially those with assets of less than
$10 million), combined with the ongoing industry trend of
consolidation, suggests that mergers may be more prevalent among
smaller credit unions.
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\3\ NCUA, Financial Trends in Federally Insured Credit Unions
Q3, page iii, available at: <a href="https://www.ncua.gov/files/publications/analysis/quarterly-data-summary-2021-Q3.pdf">https://www.ncua.gov/files/publications/analysis/quarterly-data-summary-2021-Q3.pdf</a>.
\4\ Id.
\5\ Id.
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One of the reasons for the consolidation is the lack of succession
planning. An NCUA analysis found that poor management succession
planning was either a primary or secondary reason for almost a third
(32 percent) of credit union consolidations.\6\
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\6\ NCUA, Truth in Mergers: A Guide for Merging Credit Unions,
page 9, available at: <a href="https://www.ncua.gov/files/publications/Truth-In-Mergers.pdf">https://www.ncua.gov/files/publications/Truth-In-Mergers.pdf</a>.
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The FCU Act contains provisions that disfavor consolidation,
implying a presumption that the public is better served with a greater
number of credit unions. For example, the statute imposes added
limitations on the addition of larger groups to multiple common-bond
credit unions, prompting the Board to consider the feasibility of
formation of a separate credit union.\7\ Further, the FCU Act provides
that the Board shall ``encourage the formation of separately chartered
credit unions instead of approving an application to include an
additional group within the field of membership of an existing credit
union whenever practicable and consistent with reasonable standards for
the safe and sound operation of the credit union.'' \8\
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\7\ 12 U.S.C. 1759(d)(1).
\8\ 12 U.S.C. 1759(f).
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Another reason for a heightened focus on succession planning is the
ongoing retirements of the so-called ``Baby Boomer'' generation
(individuals born between 1946 and 1964). These individuals comprise
more than a quarter of the total population of the United States.\9\
Each day, commencing in 2011 (when the oldest members of the generation
turned 65) and continuing until 2030, approximately 10,000 Baby Boomers
will turn age 65.\10\ The COVID-19 pandemic has accelerated the pace of
retirements among this generational cohort.\11\ These retirements
include credit union board members and executives. According to some
sources, approximately 10 percent of credit union chief executive
officers were expected to retire between 2019 and 2021.\12\ Succession
planning is critical to the continued operation of those credit unions
with board members and executives that are part of this retirement
wave.
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\9\ Russell Heimlich, Baby Boomers Retire, Pew Research Center
(December 20, 2010) <a href="https://www.pewresearch.org/fact-tank/2010/12/29/baby-boomers-retire/">https://www.pewresearch.org/fact-tank/2010/12/29/baby-boomers-retire/</a>.
\10\ Id.
\11\ Richard Fry, The Pace of Boomer Retirements Has Accelerated
in the Past Year, Pew Research Center (November 9, 2020) <a href="https://www.pewresearch.org/fact-tank/2020/11/09/the-pace-of-boomer-retirements-has-accelerated-in-the-past-year/">https://www.pewresearch.org/fact-tank/2020/11/09/the-pace-of-boomer-retirements-has-accelerated-in-the-past-year/</a>.
\12\ <a href="http://CUtoday.info">CUtoday.info</a>, CUNA ACUC Coverage: What's Happening in
Executive Compensation (June 19, 2019) <a href="https://www.cutoday.info/Fresh-Today/CUNA-ACUC-Coverage-What-s-Happening-in-Executive-Compensation">https://www.cutoday.info/Fresh-Today/CUNA-ACUC-Coverage-What-s-Happening-in-Executive-Compensation</a>.
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II. Legal Authority
The Board is issuing this proposed rule pursuant to its authority
under the FCU Act. The proposed rule would establish succession
planning requirements for an FCU. Section 113 of the FCU Act provides
that the board of directors shall have the general direction and
control of the affairs of the FCU.\13\ The board of directors must
oversee the credit union's operations to ensure the credit union
operates in a safe and sound manner. For example, the board must be
kept informed about the credit union's operating environment, hire and
retain competent management, and ensure that the credit union has a
risk management structure and process suitable for the credit union's
size and activities.
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\13\ 12 U.S.C. 1716b.
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Further, under the FCU Act, the NCUA is the chartering and
supervisory authority for FCUs and the Federal supervisory authority
for FICUs.\14\ The FCU Act grants the NCUA a broad mandate to issue
regulations governing both FCUs and all FICUs. Section 120 of the FCU
Act is a general grant of regulatory authority and authorizes the Board
to prescribe rules and regulations for the administration of the FCU
Act.\15\ Section 207 of the FCU Act is a specific grant of authority
over share insurance coverage, conservatorships, and liquidations.\16\
Section 209 of the FCU Act is a plenary grant of regulatory authority
to the Board to issue rules and regulations necessary or appropriate to
carry out its role as share insurer for all FICUs.\17\ Accordingly, the
FCU Act grants the Board broad rulemaking authority to ensure that the
credit union industry and the NCUSIF remain safe and sound.
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\14\ 12 U.S.C. 1752-1775.
\15\ 12 U.S.C. 1766(a).
\16\ 12 U.S.C. 1787(b)(1).
\17\ 12 U.S.C. 1789(a)(11).
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III. This Proposed Rule
A. Applicability of Proposed Rule
As described in more detail in the following discussion, the
proposed regulatory amendments would apply solely to FCUs. FISCUs must
comply with any state-specific requirements pertaining to succession
planning. However, the Board encourages FISCU boards, to the extent
compatible with state law, to undertake succession planning efforts to
help ensure continued viability of their credit union.
In addition, the proposed rule would not amend the regulations in
12 CFR part 704, which establishes requirements applicable to federally
insured corporate credit unions, since the Board believes these
regulations already adequately address succession planning. For
example, Sec. 704.13(c)(1) requires that the board must ensure that
``[s]enior managers . . . are capable of identifying, hiring, and
retaining qualified staff.'' Further, paragraph (c)(2) of the section
requires that the board also ensure that ``[q]ualified personnel are
employed or under contract for all line support and audit areas, and
designated back-up personnel or resources with adequate cross-training
are in place.'' The Board welcomes public comment on whether changes to
the wording of Sec. 704.13 are necessary to effectuate the purposes of
the proposed regulatory amendments.
[[Page 6080]]
The proposed rule applies to all FCUs, irrespective of asset size.
However, as discussed above, smaller credit unions may be more
susceptible to consolidation. Further, data demonstrates that the lack
of succession planning is a major cause of credit union mergers.\18\
Accordingly, smaller credit unions may be the most likely to benefit
from the proposed rule. The Board specifically invites comment from
smaller credit unions on the proposed regulatory amendments, as well as
other suggestions, to improve credit union succession planning.
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\18\ Supra, note 6.
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B. Proposed Regulatory Amendments
The proposed rule would amend Sec. 701.4, which sets forth the
general duties and responsibilities of FCU directors. The proposal
would add a new paragraph (e) requiring that FCU directors must
establish and adhere to processes for succession planning for key
positions. In specifying the officials covered by the succession plan,
the Board has relied on the language of the FCU Act, which provides
that ``[t]he management of a Federal credit union shall be by a board
of directors, a supervisory committee, and where the bylaws so provide,
a credit committee.'' \19\ The FCU bylaws codified in Appendix A of 12
CFR part 701 expand the list of senior FCU executives to include the
members of an executive committee and management officials.
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\19\ 12 U.S.C. 1761.
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The board of directors or an appropriate committee of the board
would be required to review and approve a written succession plan
regarding the specified FCU executives and officials. The succession
plan must, at a minimum, identify the credit union's key positions,
necessary competencies and skill sets for those positions, and
strategies to identify alternatives to fill vacancies. The board of
directors must review the succession plan in accordance with a schedule
established by the board, but no less than annually.
In addition, the proposed rule would amend Sec. 701.4(b)(3), which
sets forth certain education requirements for FCU directors, to require
that directors have a working familiarity with the FCU's succession
plan. In making this change, the Board also proposes to reorganize the
current contents of paragraph (b)(3) for clarity and grammar. No
substantive changes are proposed to the current requirements of Sec.
701.4(b)(3).
C. Current Succession Planning Efforts
This proposed rule is intended to strengthen current succession
planning efforts being taken by credit unions, and to require others
that have not yet done so to commence their succession planning
process. The proposed rule is also consistent with the guidance issued
by the other banking agencies to address succession planning.\20\
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\20\ See e.g., Federal Reserve Board, Supervisory Guidance on
Board of Directors' Effectiveness (Feb. 26, 2021); also the
guidelines of the Office of the Comptroller of the Currency (OCC) at
12 CFR part 30, Appendix D, captioned ``OCC Guidelines Establishing
Heightened Standards for Certain Large Insured National Banks,
Insured Federal Savings Associations, and Insured Federal
Branches.''
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The Board is aware that many credit unions have already adopted
succession planning strategies and models. The NCUA offers training and
other resources to aid credit unions in developing their succession
plans. For example, the NCUA has posted a video series on succession
planning on the internet.\21\ In addition, the Board's 2019 final rule
on FCU bylaws promoted succession planning efforts by providing
guidance to FCUs on associate director positions.\22\ The proposed rule
clarified, through staff commentary, that these positions may be
thought of as apprenticeships in which the incumbent receives training
and knowledge about the business of the board, with the expectation
that the experience will prepare the individual for an eventual
election to a director position.\23\
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\21\ NCUA, Succession Planning (2021), <a href="https://ncua.csod.com/LMS/catalog/Welcome.aspx?tab_page_id=-67&tab_id=221000382">https://ncua.csod.com/LMS/catalog/Welcome.aspx?tab_page_id=-67&tab_id=221000382</a>.
\22\ 84 FR 53278 (Oct. 4, 2019).
\23\ Id. at 53301.
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D. Minimizing Burden
In designing this proposed rule, the Board has endeavored to
minimize the burden on FCUs, especially small FCUs. The proposed
regulatory amendments provide FCUs with broad discretion in how to
implement the new requirements. For example, while the proposed rule
would require succession plans to include certain mandatory elements,
the rule neither specifies how the topics should be addressed nor does
it otherwise prescribe the contents of the succession plans. Similarly,
the proposal would require that directors have a working familiarity
with the FCU's succession plan but does not mandate the contents of
training to meet this requirement.
The expectation is for credit unions to develop a plan and provide
training that is consistent with the size and complexity of the credit
union. Therefore, smaller credit unions are more likely to have a
simple succession plan that only addresses a few key leadership
positions. The Board envisions that the examination program would
confirm the existence of a succession plan and training. The
examination program will defer to a credit union's self-assessment of
its succession planning needs and the information contained in the
plan, so long as its plan addresses the elements required by the rule.
Further, the Board envisions that, as a result of other planning
and documentation efforts, many FCUs already have the necessary data
and information to complete their succession plans. Rather than
undertaking new analysis specifically for the succession plan, FCUs are
encouraged to use already existing information in preparing their
plans. For example, under the NCUA guidelines codified in 12 CFR part
749, Appendix B, all federally insured credit unions are encouraged to
develop a program to prepare for a catastrophic act. The codified
guidelines suggest that the program address several elements that are
also relevant to succession planning. These suggested elements include
a ``business impact analysis to evaluate potential threats,'' the
determination of ``critical systems and necessary resources,'' and the
identification of the ``[p]ersons with authority to enact the plan.''
The Board is committed to assisting credit unions in implementing
their succession plans. For example, the NCUA has posted online
training on succession planning through its Learning Management
System.\24\ In addition, credit union trade associations may also
provide training and have guidance available to assist credit unions in
the development of their succession plan process. Credit unions with
low-income designation may be able to apply for technical assistance
grants to support succession planning or offset training costs through
the Community Development Revolving Loan Fund. Credit unions are
encouraged to make use of these and other available resources in
complying with the proposed rule. The NCUA will develop additional
guidance, as it deems necessary, to aid credit union succession
planning efforts.
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\24\ Supra, note 21.
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E. Questions for Comment
The Board welcomes comments on all aspects of this proposed rule.
It is especially interested in comments addressing ways the NCUA may
better support succession planning in small
[[Page 6081]]
credit unions and suggestions on ways the final rule might minimize
burden. In particular, the Board requests public input on the following
questions:
1. What do you believe will be the quantified burden imposed by the
rule, be it in hours, dollars, or effort?
2. It is anticipated that most FCUs already possess the information
needed to comply with the proposed rule, and thus that most FCU will
not have to create any new documentation as a result of the rule. Do
you agree with this view? Why or why not?
3. As noted, the Board anticipates that the examination program
will establish an FCU's compliance with the proposed rule by confirming
the existence of a succession plan and training. Do you have any other
suggested methods of establishing compliance?
4. This preamble provides that smaller credit unions with less than
$10 million in assets will be the primary beneficiaries of the proposed
rule. What benefits do you think smaller credit unions will receive
from the Board's adoption of this proposed rule?
5. What benefits do you anticipate larger FCUs will receive from
adoption of the proposed rule? For purposes of this question, ``larger
FCUs'' may include FCUs with more than $10 million in assets or FCUs in
another higher asset category.
6. What benefits do you anticipate members will receive from the
adoption of the proposed rule?
7. What impact do you believe this rule will have on credit union
consolidations?
8. The NCUA believes that the proposed rule will result in benefits
for the National Credit Union Share Insurance Fund, to the overall
safety and soundness of the credit union system, and to FCU members. If
the rule is adopted as is, what would you suggest the NCUA do to test
the assumption above?
9. The NCUA reviews all of its existing regulations every three
years. The NCUA's Office of General Counsel maintains a rolling review
schedule that identifies one-third of the NCUA's existing regulations
for review each year and provides notice to the public of those
regulations under review so the public may have an opportunity to
comment.\25\ In addition, should the NCUA commit to revisiting this
rule within a specific period, say after 7 years, at which time the
rule would either be rescinded or approved by the Board for renewal?
The Board might also choose, at that time to renew the rule but with
some revisions.
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\25\ See, <a href="https://www.ncua.gov/regulation-supervision/rules-regulations/regulatory-review">https://www.ncua.gov/regulation-supervision/rules-regulations/regulatory-review</a>.
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IV. Regulatory Procedures
A. Regulatory Flexibility Act
The Regulatory Flexibility Act requires the NCUA to prepare an
analysis to describe any significant economic impact a regulation may
have on a substantial number of small entities.\26\ For purposes of
this analysis, the NCUA considers small credit unions to be those
having under $100 million in assets.\27\ The Board fully considered the
potential economic impacts of the proposed succession planning
requirements on small credit unions during the development of the
proposed rule. As noted in the preamble, the proposed rule would
provide FCUs with discretion in how to implement the new regulatory
requirements. For example, the rule does not specify how specific
succession plan topics should be addressed. Similarly, the proposal
does not mandate the contents of succession plan training. Accordingly,
the NCUA certifies that it would not have a significant economic impact
on a substantial number of small credit unions.
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\26\ 5 U.S.C. 603(a).
\27\ 80 FR 57512 (Sept. 24, 2015).
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B. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in
which an agency by rule creates a new paperwork burden on regulated
entities or amends an existing burden.\28\ For purposes of the PRA, a
paperwork burden may take the form of a reporting, disclosure, or
recordkeeping requirement, each referred to as an information
collection. The proposed changes to part 701 would establish new
information collections in the form of succession policies, plans, and
related trainings. These revisions will be addressed in a separate
Federal Register notice and will be submitted for approval by the
Office of Information and Regulatory Affairs at the Office of
Management and Budget.
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\28\ 44 U.S.C. 3501-3520.
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C. Executive Order 13132 on Federalism
Executive Order 13132 \29\ encourages independent regulatory
agencies to consider the impact of their actions on state and local
interests. The NCUA, an independent regulatory agency, as defined in 44
U.S.C. 3502(5), voluntarily complies with the executive order to adhere
to fundamental federalism principles. The proposed rule would not have
substantial direct effects on the states, on the relationship between
the national government and the states, or on the distribution of power
and responsibilities among the various levels of government. The Board
has therefore determined that this rule does not constitute a policy
that has federalism implications for purposes of the executive order.
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\29\ Executive Order 13132 on Federalism, was signed by former
President Clinton on August 4, 1999, and subsequently published in
the Federal Register on August 10, 1999 (64 FR 43255).
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D. Assessment of Federal Regulations and Policies on Families
The NCUA has determined that this proposed rule would not affect
family well-being within the meaning of Section 654 of the Treasury and
General Government Appropriations Act, 1999.\30\
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\30\ Public Law 105-277, 112 Stat. 2681 (1998).
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List of Subjects in 12 CFR Part 701
Advertising, Aged, Civil rights, Credit, Credit unions, Fair
housing, Individuals with disabilities, Insurance, Marital status
discrimination, Mortgages, Religious discrimination, Reporting and
recordkeeping requirements, Sex discrimination, Signs and symbols,
Surety bonds.
By the National Credit Union Administration Board on January 27,
2022.
Melane Conyers-Ausbrooks,
Secretary of the Board.
For the reasons stated in the preamble, the NCUA proposes to amend
12 CFR part 701, as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNION
0
1. The authority for part 701 continues to read as follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759,
1761a, 1761b, 1766, 1767, 1782, 1784, 1785, 1786, 1787, 1789.
Section 701.6 is also authorized by 15 U.S.C. 3717. Section 701.31
is also authorized by 15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and
3601-3610. Section 701.35 is also authorized by 42 U.S.C. 4311-4312.
0
2. Amend Sec. 701.4 by:
0
a. Revising paragraph (b)(3).
0
b. Adding paragraph (e).
The addition and revision to read as follows:
Sec. 701.4 General authorities and duties of Federal credit union
directors.
* * * * *
(b) * * *
(3) At the time of election or appointment, or within a reasonable
time thereafter, not to exceed six months, have at least a working
[[Page 6082]]
familiarity with, and to ask, as appropriate, substantive questions of
management and the internal and external auditors of:
(i) Basic finance and accounting practices, including the ability
to read and understand the Federal credit union's balance sheet and
income statement; and
(ii) The Federal credit union's succession plan established
pursuant to paragraph (e) of this section.
* * * * *
(e) Succession planning. (1) General. A Federal credit union board
of directors must establish a process to ensure proper succession
planning to include officers of the board, management officials,
executive committee members, supervisory committee members, and (where
provided for in the bylaws) the members of the credit committee, as
described in Appendix A.
(2) Board responsibilities. The board of directors or an
appropriate committee of the board must:
(i) Approve a written succession plan that covers the individuals
described in paragraph (e)(1) of this section; and
(ii) Review, and update as deemed necessary, the succession plan
and policy in accordance with a schedule established by the board of
directors, but no less than annually.
(3) Succession plan contents. The succession plan must, at a
minimum, identify key positions covered by the plan, necessary general
competencies and skills for those positions, and strategies to identify
alternatives to fill vacancies.
[FR Doc. 2022-02038 Filed 2-2-22; 8:45 am]
BILLING CODE 7535-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on February 3, 2022.
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