SOUTH BURLINGTON, Vt. — The Association of Vermont Credit Unionsis the latest to adopt a resolution that supports providingprotections for credit unions as “hostile” takeover targets.

The resolution, adopted April 19, says taking into considerationthe best interests of the members, a CU's board has the right toapprove or disapprove a merger proposal. Third parties also have noright to interfere in the business operations of a CU or hinder itsability to act in the best interests of its members. Credit unionsor other third parties cannot provide “inaccurate or misleading”communications to members of another CU, the resolution reads.

“Unsolicited attempts to affect unwanted mergers by encouragingill-considered decisions to declare dividends can raise serioussafety and soundness concerns, and the authority of one creditunion to spend funds to influence member votes at another creditunion should be subject to serious review by regulators,” accordingto the resolution.

AVCU has called on NCUA and the Vermont Department of Banking,Insurance Securities and Healthcare Administration to “reinforcecredit union principles of cooperation and reaffirm the strongestsupport for honored credit union values.” Regulators should refrainfrom approving any merger application that has resulted from ahostile attempt to takeover, AVCU suggested.

The Minnesota Credit Union Network previously adopted a similar“position statement” regarding unsolicited takeovers while theAmerican Association of Credit Union Leagues, working with a numberof league CEOs, drafted a sample resolution on the matter.

In addition to taking a stand against takeovers, AVCU has alsoadopted a resolution on making the CU charter stronger. Theassociation said it will continue to seek state and federallegislative and regulatory changes to make that happen. Theresolution also says it will provide CU officials with “informationand persuasion” prior to any decision to convert including callingfor state and federal input to strengthen conversion disclosurerequirements to ensure that members are fully informed about theirownership interests and the consequences to them of aconversion.

AVCU's resolution also seeks guidelines on a more “open andfair” voting process including illuminating CU directors' fiduciaryresponsibility to protect the members' interests by advocating fordisclosures of personal conflicts of interest and providingalternative structural mutations that might include merger,liquidation, or dividend prior to conversion. The association wantsto eliminate any “unjust enrichment of insiders” in credit unionconversions or in subsequent conversions of the thrifts to stockownership.

When it comes to talking to the press, AVCU's resolution callsfor “fact-based opinions to the media regarding the importance ofcomplete, fair and balanced disclosures, the avoidance of undueenrichment on the part of any credit union official, and the needfor a fair voting and conversion process in order to protect theinterests of all members. –[email protected]