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

The resolution, adopted April 19, says taking into consideration the best interests of the members, a CU's board has the right to approve or disapprove a merger proposal. Third parties also have no right to interfere in the business operations of a CU or hinder its ability to act in the best interests of its members. Credit unions or other third parties cannot provide “inaccurate or misleading” communications to members of another CU, the resolution reads.

“Unsolicited attempts to affect unwanted mergers by encouraging ill-considered decisions to declare dividends can raise serious safety and soundness concerns, and the authority of one credit union to spend funds to influence member votes at another credit union should be subject to serious review by regulators,” according to the resolution.

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

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

In addition to taking a stand against takeovers, AVCU has also adopted a resolution on making the CU charter stronger. The association said it will continue to seek state and federal legislative and regulatory changes to make that happen. The resolution also says it will provide CU officials with “information and persuasion” prior to any decision to convert including calling for state and federal input to strengthen conversion disclosure requirements to ensure that members are fully informed about their ownership interests and the consequences to them of a conversion.

AVCU's resolution also seeks guidelines on a more “open and fair” voting process including illuminating CU directors' fiduciary responsibility to protect the members' interests by advocating for disclosures of personal conflicts of interest and providing alternative structural mutations that might include merger, liquidation, or dividend prior to conversion. The association wants to eliminate any “unjust enrichment of insiders” in credit union conversions or in subsequent conversions of the thrifts to stock ownership.

When it comes to talking to the press, AVCU's resolution calls for “fact-based opinions to the media regarding the importance of complete, fair and balanced disclosures, the avoidance of undue enrichment on the part of any credit union official, and the need for a fair voting and conversion process in order to protect the interests of all members. –msamaad@cutimes.com

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Vermont League Adopts Resolution for 'Hostile' Takeovers, Stronger Conversion Charter

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