2012 BOARD OF DIRECTORS ANNUAL GENERAL MEETING
2012 EDUCATION CREDIT UNION ANNUAL GENERAL MEETING BOARD OF DIRECTORS Annual Meeting Nominating and Election Policy Eligibility 1. A person must be 18 years of age or older to be a director of the credit union. 2. A candidate must be a Canadian citizen or permanent resident of Canada. 3. A candidate must be a member but not an employee of the credit union. (If a director ceases to be a member, he/she must cease to be a director.) Nominating Committee The board of directors will appoint a nominating committee, who shall attempt to seek a nomination of at least one member for each vacancy for which an election is to be held. (An individual running for election may not be a member of this committee.) 2012 Nominating Committee Cathy Hale ........................................................................................................... email: [email protected] Kenneth MacPherson............................................................................email: [email protected] Jim Marshall (Chair).........................................................................................email: [email protected] Election 1. No member of the credit union under the age of 18 years shall be entitled to vote. 2. All nominations submitted to the chairperson of the nominating committee must be in written form signed by three (3) members. 3. Persons who wish to run for a position on board of directors must file their intent in writing no later than 30 days prior to the Annual General Meeting. 4. Not less than 20 days prior to the AGM a bio of each candidate will be posted on the credit union website. 5. The committee chairperson at the annual meeting shall place the names of the persons nominated for the vacancies before the meeting. 6. The maximum number of candidates voted for on each ballot may not exceed the number of vacancies. 7. All persons nominated will be introduced and invited to address the members (2 minutes maximum) if they wish. 8. Ballots will be counted by two or more scrutineers (non-members) appointed by the members at the annual meeting. 9. The candidate(s) receiving the highest number of votes in descending order until all vacancies are filled will be declared the winner(s) by the chairperson of the nominating committee. 10. In the event of a tie vote for the last vacancy of an official, a vote will be held by ballot, with the persons who were tied being the only eligible candidates. The person receiving the highest number of votes will be declared the winner by the chairperson of the nominating committee. 11. For election purposes, a member is defined as a member through ownership of a minimum of one membership share ($5.00) in the credit union. 12. A member of the credit union which is an unincorporated association shall only cast its vote as a member through a written proxy produced at the meeting, signed by the president or other head officer or by the vice-president or secretary or treasurer of the unincorporated association and appointing some one or more persons to vote on its behalf. Any person so appointed need not be a member of the credit union. Any such proxy shall cease to be valid after the expiration of one year from its date. 13. A candidate not present at the annual meeting must submit to the nominating committee in writing his/her intention to stand for elections. 14. All ballots will be destroyed at the conclusion of the elections. NOTICE OF INTENT I, _________________________________________, hereby submit in writing my intention to run for election to the Board of Directors of the Education Credit Union Limited at the meeting of November 27, 2012. Dated at __________________________ this __________ day of ______________ 2012. _______________________________ Signature __________________________________ Member Signature __________________________________ Member Signature __________________________________ Member Signature *Election Policy states that written nominations must be signed by three (3) members and submitted to the Nominating Committee. Feel free to contact the Nominating Committee Chair any questions: 2012 Nominating Committee Cathy Hale ................................................................................................................ email: [email protected] Kenneth MacPherson.................................................................................email: [email protected] Jim Marshall (Chair) ..............................................................................................email: [email protected] Policy Manual Corporate Governance Policies 4 Director Training & Qualifications Table of Contents Policy Statement ...........................................................................................................................1 Objectives ......................................................................................................................................1 Minimum Director Competency Requirements and Time Frames ....................................1 Assessment Criteria and Requirements ...................................................................................2 Training and Personal Development Requirements.............................................................2 Board Competency and Skills Matrix.......................................................................................3 Conditions Where an Individual May be Disqualified from Acting as a Director .........3 Summary of Responsibilities.....................................................................................................3 Issued: Revised: September 24, 2012 Policy Manual Corporate Governance Policies 4 Director Training & Qualifications Policy Statement Education Credit Union shall establish and maintain effective guidelines and processes to ensure that directors understand, meet and maintain appropriate competency requirements. Each director shall perform an annual self-assessment, prepare a development plan, and undertake any required training/development requirements in order to achieve these competencies within the timeframes established herein. Directors that fail to meet these requirements will be subject to disqualification. Each Board candidate shall be informed of the requirements set out in this policy. Objectives The objectives of this policy are to: Define minimum director competency requirements Establish time frames to attain competency levels Outline assessment criteria and requirements Outline training and personal development requirements Set out Board competencies requirements Minimum Director Competency Requirements and Time Frames All directors elected or appointed on or after July 1, 2012 are required to achieve the minimum competency requirements within the specified timeframes set out in the Table 1 below. A description of each of the competencies and competency levels is set out in Appendix 1. Table 1: Required Competencies, Competency Levels and Time Frames Competency All Directors Audit Committee Audit Committee Chair Board Chair Governance Committee S S E S S S S S S S S S S S S S S S S S S S S S S E S S S S S S S E S S E S S S S S S S S Competency Level 1. Audit and Compliance Oversight 2. Board and CEO Performance 3. Credit union operations 4. Financial Literacy 5. Governance and Ethics 6. Leadership 7. Regulatory Environment 8. Risk Management Oversight 9. Strategic Planning Time Frames to Achieve Competency Level Within date of Election or Appointment 24 months Issued: Revised: September 24, 2012 12 months 6 months 6 months 6 months 1 Policy Manual Corporate Governance Policies 4 Director Training & Qualifications Assessment Criteria and Requirements All directors shall complete a standard self-assessment in order to confirm their level of knowledge, skill and experience in each of the required competencies. The objectives of this self-assessment are to: to identify training or development needs for each director in order to ensure that the appropriate competency level is attained in accordance with the credit union’s requirements; and determine the degree to which the Board, on an overall basis, satisfies the competency requirements; Self-assessment criteria for each of the required competencies are set out in Appendix 2. An initial selfassessment should be conducted by each director within 6 months of election Results of the selfassessment will be reviewed with the Governance Committee to confirm results and identify potential gaps and any training requirements The Corporate Secretary will schedule and administer director selfassessment and training requirements, and maintain appropriate records. Supporting documentation will be required to confirm completion of formal director training courses undertaken as a director of the credit union. Training and Personal Development Requirements As part of the self-assessment process, each director shall prepare a development plan, and undertake any required training/development in order to achieve these competencies within the timeframes established herein. All Directors are expected to avail themselves of appropriate training courses, where necessary, at the earliest opportunity in order to fulfill competency requirements. Once minimum competency levels are attained, directors are required to attend at least one one director development course, seminar, work shop or program each year. Directors may also choose to pursue a director certification program. A budget for director training will be set for each fiscal year based on development plans and training requirements, including continuing education opportunities. Expenses for all planned training and development courses must be pre-approved by the Governance Committee. Expenses will be reimbursed in accordance with established policy limits and criteria. Board Competency and Skills Matrix Competency assessments will be conducted on an annual basis in order to confirm and update the competency levels attained by each director and to record any changes in additional skills. These assessments will also help identify additional training or self development programs to help directors maximize their overall knowledge and skill levels to meet competency requirements, and to attain additional skills as may be appropriate. Training courses, education programs or personal development initiatives undertaken by directors will be tracked by Corporate Secretary and reported to the Governance Committee. A record of each director’s educational achievements will be maintained accordingly. A matrix of competency levels required and attained for each director will be maintained together with a summary of director skills as set out in Appendix 3. Issued: Revised: September 24, 2012 2 Policy Manual Corporate Governance Policies 4 Director Training & Qualifications Conditions Where an Individual may be Disqualified from Acting as a Director Where a director has not met the competency and training requirements within the time frames set out in this policy, the Board may pass a resolution declaring the director’s position vacant in the absence of a reasonable explanation or extenuating circumstances. Summary of Responsibilities The Board is responsible for: Approving director competency requirements and competency levels Confirming director competency requirements are met Approving policy changes The Governance Committee is responsible for: Recommending self-assessment criteria Reviewing and confirming self-assessment results Approving training and development plans Monitoring director and Board competency requirements The Corporate Secretary is responsible for: Scheduling director self-assessment requirements Scheduling and monitoring training and development requirements Monitoring director competency levels Maintaining the Board competencies/skills matrix Maintaining appropriate records Issued: Revised: September 24, 2012 3 Policy Manual Board Information Package 1 Duties and Obligations of Directors Table of Contents 1 Duties and Obligations of Directors Legal Responbilities ....................................................................................................................1 Duties and Obligations ...............................................................................................................1 Providing Stewardship.......................................................................................1 Fudiciary Duties ..................................................................................................1 Acting with Care, Diligence and Skill ..............................................................2 Exercising Sound Business Judgment ..............................................................2 Respecting and Contributing to the Values of the CU...................................3 Respecting and Abiding by Laws, Regulations and CU By-Laws ...............3 Acting for the Credit Union as a Whole..........................................................3 Speaking With One Voice ..................................................................................3 Conflict of Interest Duties and Obligations............................................................................3 Privacy and Confidentiality Duties and Obligations............................................................5 Duty to Comply and Disclose ....................................................................................................6 Contravention of this Policy.......................................................................................................7 Protection Against Liability .......................................................................................................9 Issued: November 28, 2005 Policy Manual Board Information Package 1 Duties and Obligations of Directors 1 DUTIES AND OBLIGATIONS OF DIRECTORS Legal Responsibilities The legal responsibilities and obligations of Directors have their roots in: Legal documents that establish and empower the credit union, including: Credit Unions and Caisses Populaires Act (the “Act”) and associated regulations Incorporation documents and By-Laws of the credit union made pursuant to the Act Policies established by the Board of Directors Directives of the Ministry of Finance DICO’s Sound Business and Financial Practices Reference manual. Common Law duties and responsibilities applicable to corporate directors. As a general premise, there are no conflicts between the empowering documents and common law requirements. This policy focuses on the generic responsibilities of Directors, and specific requirements can be verified in the wording of the Act, By-laws or other specified documents. Duties and Obligations Directors are “fiduciaries” of the organization they serve and are expected to fully participate in orientation and development opportunities. They have an obligation to act honestly and in good faith with a view to the best interests of the credit union, and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. In particular: Providing Stewardship Directors have a role of stewardship of the credit union. Stewardship means that a Director should exercise leadership visibly and be assertive when necessary. Stewardship also requires vision and forward thinking, particularly in areas such as strategic planning and identifying areas of risk. Fiduciary Duties Directors are elected by the membership. Once elected, their primary fiduciary duty is to act in good faith and with a view to the best interests of the credit union, not any particular member or group of members. This means: acting in the best interests of current and future members maintaining the confidentiality of information obtained as a Director Issued: November 28, 2005 1 Policy Manual Board Information Package 1 Duties and Obligations of Directors disclosing information that would be important for the board to know in making its decisions disclosing conflicts of interest complying with the Act and any associated regulations taking positive and proactive steps to protect the interests of the credit union bringing an independence of mind to their Director duties working to build trust and co-operation among members and between the board and stakeholders. Individual Directors may bring specific knowledge of a geographic area or cultural/sectoral dimension that, when shared appropriately, can be valuable to the board in making its decisions. Nonetheless, a Director must ultimately vote on an issue based on his or her perspective in furthering the interests of the credit union. Acting with Care, Diligence and Skill Directors must devote sufficient time and attention to the affairs of the credit union so that they are in a position to exercise informed judgment. Directors must use all of their skills and experience in carrying out their duties. A Director has a common law duty to exercise the level of care, scrutiny and supervision that a prudent person (taking into account such person’s level of skill, knowledge and education) would exercise in comparable circumstances. Exercising Sound Business Judgment Directors must exercise sound business judgment and act reasonably and in good faith, without a conflict of interest. Consistent with the requirements of due diligence, Directors ensure that: adequate information is available agendas and background documents are provided prior to meetings they attend meetings and ask questions with independent minds they establish the appropriate committees to ensure that certain matters receive an indepth and expert examination that would be difficult for an entire board to conduct objections to board motions are recorded in the official minutes, otherwise it is deemed that a Director is in agreement with the motion. Directors who are absent from a board meeting will, by virtue of the Act, be deemed to have consented to or acquiesced in a decision taken at that meeting unless the absent Director, upon becoming aware of the decision, indicates his/her dissent by delivering notice of that dissent to the Issued: November 28, 2005 2 Policy Manual Board Information Package 1 Duties and Obligations of Directors Credit Union within seven days, or requesting that his/her dissent be placed in the minutes of the meeting. Notwithstanding having recorded a dissent, Directors speak with “one voice.” Respecting and Contributing to the Values of the Credit Union Directors abide by, respect, and contribute to the fulfillment of the By-Laws, objects, mission, vision and values of the credit union. They conduct themselves in a manner befitting the credit union and promote the credit union, its purpose and values among Members, stakeholders, and the community. Respecting and Abiding by Laws, Regulations, and Credit Union By-Laws and Policies Directors respect and abide by legal and regulatory requirements and the policies of the credit union, such as they exist at present and may, from time to time, be agreed by the board. This includes taking care to ensure that their conduct cannot be interpreted as being in contravention of applicable laws and regulations. Acting for the Credit Union as a Whole Pursuant to section 144 of the Act, Directors act for the credit union as a whole rather than for: a Director’s own personal interest groups whose positions a Director might favour predecessor credit unions. Speaking with One Voice Directors support the decisions of the Board of Directors. After the board has reached a recorded decision, Directors speak to the CEO and to members with a “single voice” and refrain from all public criticism of the board’s decision. Directors exercise power collectively through resolutions of the board under the authority of the credit union’s articles of incorporation and by-laws. Unless given specifically delegated authority, a Director has no individual authority to act on behalf of the credit union. Conflict of Interest Duties and Obligations A Director’s fiduciary duty to the credit union carries with it an obligation to avoid situations in which their personal interests could conflict with the best interests of the credit union, in particular: a. Putting the best interests of the credit union first Directors must give the highest priority to the interests of the credit union and disclose any conflict of interest between their personal interests and those of the credit union. Issued: November 28, 2005 3 Policy Manual Board Information Package 1 Duties and Obligations of Directors If a Director has a loyalty to other individuals, groups or entities that would impair his or her judgment on a decision within his or her sole or shared authority, the Director must disclose this potential conflict to the Chair and ask for direction. This disclosure is made whether or not the Act, Regulations or the credit union’s other policies and procedures would require the disclosure in the specific circumstances. b. Not accepting secret commissions If any personal reward or benefit is offered to a Director by any supplier of goods or services to the credit union or a Member, the Director must decline the offer immediately and advise the Chair of the offer at the earliest opportunity. c. Political support Since the credit union’s membership encompasses the entire community, it does not endorse any one candidate or political party at any time. Directors maintain an attitude of strict impartiality at public gatherings at which they are representing the credit union. The credit union will, in turn, respect the right of Directors to absolute privacy with regard to personal political activity, and will not attempt to influence or discourage any such activity, as long as it is not detrimental to the credit union. Credit union funds, goods or services, may not be used as contributions to political parties or their candidates. Credit union facilities may not be made available to candidates or campaigns, except as specifically recommended by the CEO and approved by the board. Notwithstanding the above, it is permissible for the credit union to purchase tickets for, and for officers to attend, public events sponsored by persons holding political office or their parties/riding associations, even if a sponsoring political party is required by law to report the ticket price, or any portion thereof, as a political donation by the credit union. d. Using credit union assets for personal use Directors are not permitted, either during or after their service with the credit union, to use for their own purposes or those of their relatives or friends anything entrusted to them to use on behalf of the credit union or affiliated organization. This includes land, buildings, equipment, services of employees, money and confidential information. The fact that the use may not result in any loss to the credit union is irrelevant. e. Public communications When communicating publicly on matters that involve credit union business, the Chair, or another person authorized by the Chair, speaks for the board. A Director, when dealing with anyone outside the credit union, including public officials, takes care not to compromise the integrity or damage the reputation of any outside individual, business, or government body, or that of the credit union. As a general rule, senior management will communicate the credit union’s position on public policy or industry issues. Issued: November 28, 2005 4 Policy Manual Board Information Package 1 Duties and Obligations of Directors Directors separate their personal roles from their credit union positions when communicating on matters not involving credit union business. If publicly introduced at public gatherings, Directors may allow his or her connection to the credit union to be identified, if the identification is part of a general curriculum vitae and the context of the event is such that it is obvious that the views expressed by the Director do not represent the views of the credit union. f. Contracting with suppliers Authorized credit union officers may enter into a contract on behalf of the credit union with a supplier of goods or services, provided that the contract is in the best interests of the credit union. No Director will attempt in any way to persuade or influence a supplier to accept less than the contract price in order to ensure that the supplier will be considered for, or awarded, future contracts. g. Restricted party transactions Under the Credit Union and Caisse Populaires Act, Directors are deemed to be “Restricted Parties”. Where a Restricted Party has borrowing transactions with the credit union, either personally or through a business where the Director is an owner, approval of such transactions is required at the board level. This generally results in a delay in the approval time frame and requires greater disclosure of the details of these transactions to the board. Privacy and Confidentiality Duties and Obligations a) General duty to maintain confidentiality Every director and officer, unless otherwise specifically granted permission to disclose the information, keeps confidential all information respecting the credit union’s business and members’ transactions. In respect of information pertaining to members’ transactions with the credit union, an Officer or Director may, in addition to any specific consent granted by the member, subject to Personal Information Protection and Electronic Documentation Act (PIPEDA) and the credit union’s privacy code requirements, disclose such information in the following circumstances: Issued: To a person acting in a confidential or professional relationship to the credit union. To a credit grantor or to a reporting agency, if the disclosure is for the purpose of determining the credit worthiness of the member. To the regulator or deposit insurer or stabilization authority for the credit union. To protect the interests of the credit union. November 28, 2005 5 Policy Manual Board Information Package 1 Duties and Obligations of Directors To any person entitled to the information by force of law. Where any confidential information of any kind is disclosed under any circumstances, an Officer or Director has a duty to advise the Chair of the Board and the CEO forthwith. The Chair designates items discussed at board meetings as confidential when such matters are not to be made available to persons other than those persons at the Credit Union who need to know. b. Compliance with privacy law and the credit union’s privacy code The duty of Directors to maintain confidentiality includes a commitment to comply with PIPEDA and the specific requirements arising out of that law and the privacy code of the credit union. The board is responsible to ensure that a privacy policy is in place for directors and employees of the credit union and that the policy is in compliance with privacy legislation. c. Access to advice Directors are expected to increase their understanding about credit union business through exposure to issues, training, and seeking and receiving legal advice as required. The board and/or individual Directors can obtain independent advice about any legal, risk management, accounting or other technical issues facing the Board of Directors at the expense of the credit union, with the prior approval of the board. Duty to Comply and Disclose All Directors of the credit union are required to comply with the duties and obligations as described above. Every Director is provided with a copy of “Section 1 – Duties and Obligations of Directors” (this document), and is required to sign annually a statement indicating their understanding of the policy and agreement to comply with the policy. If a Director is in doubt about the application of this policy in any given circumstances, he or she should discuss the matter with the Chair of the Board. On an annual basis following the credit union’s annual general meeting (and as required by circumstances from time to time) each director and officer of the credit union declares his/her economic interests and the economic interests of his/her spouse and minor, dependent children by completing both: a restricted party disclosure form, in the form prescribed by the Board of Directors from time to time; and Issued: November 28, 2005 6 Policy Manual Board Information Package 1 Duties and Obligations of Directors a conflict of interest disclosure form, in the form prescribed by the Board of Directors from time to time. Contravention of this Policy The credit union treats any contravention of this policy as a serious matter. However, any suspected or alleged contravention will be investigated in a manner that is fair to the Director, and treated with the utmost confidentiality. If a Director becomes aware, or has reasonable grounds to suspect, that a contravention of this policy has occurred or is about to occur, he or she will promptly advise the Chair of the Board for further investigation. The Chair will take action according to the process described in this policy in “Section 5 - Structure / Role of the Board”, describing the Role of the Chair and Vice-Chair. If the concern is regarding actions of the Chair, the Director will advise the Vice Chair who will take appropriate action according to the process described also in Section 5. If a contravention occurs, to ensure confidentiality and impartiality, the person making the accusation should not confront the person accused of the contravention. If a Director believes that his or her own actions have, or may have, contravened this policy, he or she should advise the Chair of the Board. Directors who fail to fulfill their duties and obligations as described in this policy are subject to a review process and possible sanctions up to and including removal from office. In the event of a contravention of this policy that is either: a misappropriation or misdirection of funds, securities or other property of the credit union; or a contravention of the Act, the Regulations or the credit union’s by-laws by the board, a Director, a committee member, an Officer, or the senior management employee, The person discovering the alleged contravention notifies the credit union’s Audit Committee and the Audit Committee deals with the alleged contravention in the manner prescribed by section 127 of the Act. Protection Against Liability Directors of the credit union are entitled to the full protection permitted under the Act, against personal liability. In addition to assist Directors in being duly diligent, the credit union provides Directors with: Issued: November 28, 2005 7 Policy Manual Board Information Package 1 Duties and Obligations of Directors access to professional advisors advance notice of meetings and agenda items maintenance of complete corporate records, including minutes for all board and committee meetings, Also, the credit union provides Directors with: personal indemnification on the basis permitted by the Act and the credit union’s bylaws and as authorized by the Board of Directors from time to time “Directors’ and Officers’ liability insurance” under policies pursuant to coverage that is consistent with best practices in the financial services industry. The form of indemnity and the type and extent of Directors and Officers liability insurance coverage is reviewed by the Audit Committee on an annual basis. Issued: November 28, 2005 8 Policy Manual Board Information Package 4 Board Meetings Table of Contents 4 Board Meetings Board Meeting Practices, Protocols, Procedures and Rules..................................................1 Non-Director Attendance at Board Meetings..................................................2 In Camera Meetings.....................................................................................................................2 Meeting Evaluation......................................................................................................................3 Annual General Meeting ............................................................................................................3 Election of Board Chair ...............................................................................................................3 Appointment of the Vice Chair and Board Secretary............................................................3 Role of the Board Secretary ........................................................................................................4 Issued: November 28, 2005 Policy Manual Board Information Package 4 Board Meetings 4 BOARD MEETINGS Board Meeting Practices, Protocols, Procedures, and Rules Meetings of the Board of Directors are an essential part of the credit union’s governance processes. The Board of Directors meets as necessary to effectively fulfill its governance responsibilities. The board uses a policy governance model of leadership that is informed by, and committed to, cooperative principles. To the greatest extent possible, and to foster team building, the board determines its own meeting practices, protocols and procedures with a view to ensuring effective, professional and efficient board meetings are conducted. Those practices, protocols and procedures include, but are not limited to: coming to meetings fully conversant of the pre-meeting materials arriving at the appointed time and staying until the end disclosing any perceived conflicts of interests at the outset of a discussion considering only matters of policy governance actively participating in each discussion not repeating points of view that others have already made allowing others to speak without interruption expressing dissent in a respectful manner keeping comments brief and respecting the timeframes outlined in the agenda avoiding sidebar conversations or caucus meetings. While the board makes every effort to manage and control its own meeting processes, in the event that a meeting situation arises that cannot be resolved through established board practices, protocols or procedures, the board will use Roberts Rules of Order to address that situation. It is a goal of the credit union that, over time, there should be no requirement to resort to Roberts Rules of Order. All meetings of the board will be held “in person”, unless there is a specific, singular issue that the Chair determines requires a conference call to be arranged. Directors, who may be unavailable to attend a regularly scheduled meeting of the board in person, will only be able to “call into” the meeting via conference facility in exceptional circumstances, and only upon the approval of the Chair. Issued: November 28, 2005 Revised: February 23, 2006 1 Policy Manual Board Information Package 4 Board Meetings Non-Director Attendance at Board Meetings Serving as resources to the board, the following individuals attend the regular meetings of the Board of Directors: CEO/Corporate Secretary Department Managers – Credit, Member Services, IT and Financial Services External Auditors (as requested by the CEO or board) In Camera Meetings An “in camera” meeting is one in which only the board meets, without any other management personnel present. The Chair is responsible for managing the “in camera” process. Any Director may request an “in camera” meeting, however one may be held (at the discretion of the Board), prior to or following each board meeting. The purpose of an “in camera” meeting is never for the purpose of discussing business or operational issues that are within management’s scope of responsibility. It is the responsibility of the Chair or Vice Chair, to advise Directors when the discussion violates these guidelines. “In camera” meetings may be used to discuss or review: The performance of the Board of Directors. The performance of individual Directors. Legal or compliance issues, or the integrity of the Corporation’s financial condition. In these instances, the external auditors and/or the CEO may be present at the request of the Chair. Highly sensitive or confidential matters, or discussions that determine whether a particular matter is the responsibility of the board or the CEO. The compensation or performance of the CEO. The performance of an individual director, for the purpose of improving how the director functions. Any other governance matter that the Chair decides needs to be addressed “in camera”. Confidential issues at the request of the CEO When an “in camera” meeting is held, the CEO will be advised of the general purpose of the meeting, where appropriate. Where the purpose is the performance or remuneration of the CEO, the results of the “in camera” session are communicated to the CEO through the board, by the Board Chair or Vice Chair. Issued: November 28, 2005 Revised: February 23, 2006 2 Policy Manual Board Information Package 4 Board Meetings Meeting Evaluation To ensure its effectiveness as a board, at the conclusion of each meeting the Chair conducts a debriefing of the performance of the meeting as a whole. Directors are encouraged to express views on what worked and what did not, including how the meeting could have been more effective and efficient. The minutes will reflect the outcome and the CEO/Corporate Secretary and the Chair will take items under advisement to ensure improvement at future meetings. Annual General Meeting The Board of Directors’ primary accountability is to the members of the credit union. In accordance with legal and regulatory requirements, the Board of Directors through the Board Chair, presents a written report to the credit union’s members at the Annual General Meeting. The Annual General Meeting must occur within 120 days of the end of the fiscal year. The agenda of the Annual General Meeting must include, at a minimum, those items prescribed in section 212 of the Act, and the credit union’s bylaws. Election of the Board Chair The Board Chair is elected by the Board of Directors, at the first regular meeting of the board following the Annual General Meeting. The CEO chairs the election process. All board members shall stand nominated for the position and be asked to declare whether or not they will stand for election A board member who has prior knowledge of absence must submit in writing his/her intention and follow up in writing. A board member who is ill may telephone the CEO with his/her intention and follow up in writing. If there is only one nominee, the CEO declares the nominee elected by acclamation. If there is more than one nominee, the election is then held by secret ballot. The CEO announces the results. Appointment of the Vice Chair and Board Secretary The newly appointed Board Chair assumes the role of chair for the meeting, and repeats the process outlined above to elect the Vice Chair and Board Secretary. Issued: November 28, 2005 Revised: February 23, 2006 3 Policy Manual Board Information Package 4 Board Meetings Role of the Board Secretary and Corporate Secretary (CEO) It is required by law that accurate minutes of all board and Committee meetings be maintained. These minutes are the formal record of the board’s decisions and serve as proof that the credit union has exercised an appropriate level of due diligence. From a liability perspective, the protection of the board and of individual Directors relies on demonstrable due diligence in the fulfillment of their governance obligations. The Board Secretary attends all board meetings, including “in camera” meetings. It is the role of the Board Secretary to prepare the minutes of all board meetings, including “in camera”, as well as the Annual General Meeting. For confidentiality purposes, the minutes of all “in camera” sessions are maintained in a separate file, with limited access. It is the role of the Corporate Secretary (CEO) is to maintain and hold in safekeeping the minutes of all Board of Directors meetings, including “in camera” minutes. The credit union’s external auditors and regulators have full access to the minutes of all board, Committee and “in camera” meetings. Issued: November 28, 2005 Revised: February 23, 2006 4 Policy Manual Board Information Package 5 Structure/Role of the Board Table of Contents 5 Structure/Role of the Board Structure of the Board..................................................................................................................1 Composition of the Board and Term .............................................................................1 Director Attendance .........................................................................................................1 Committees of the Board.............................................................................................................1 General Information.........................................................................................................1 Audit Committee..............................................................................................................4 Governance Committee ...................................................................................................9 Credit and Investment Committee ..............................................................................12 Board/Director Expense Reimbursement...............................................................................15 Expense Reimbursement ...............................................................................................15 General Principles ..........................................................................................................15 Transportation ................................................................................................................15 Professional Development ............................................................................................15 Role of the Chair, Vice Chair, Committee Chairs ................................................................16 The Chair of the Board...................................................................................................16 The Vice-Chair of the Board..........................................................................................17 Committee Chairs...........................................................................................................18 Evaluation of the Board Chairs and Committee Chairs............................................18 Issued: Nov 28/05 Policy Manual Board Information Package 5 Structure/Role of the Board 5 STRUCTURE/ROLE OF THE BOARD Composition of the Board and Term The board of directors shall consist of nine (9) members each elected by ballot by the general membership for a maximum term of three years. If a director should resign or be removed from his or her position before their term of office has expired, the board shall appoint a temporary director from the credit union membership to fill the vacated position until the next general meeting of the credit union. The member elected to permanently replace the resigned/removed director will complete the term of said director. Director Attendance In order to fulfil the responsibilities of a director, the following attendance rules must be adhered to: Each director is expected to attend all Board and selected committee meetings. If a director is unable to attend a scheduled meeting, the anticipated absence and reason should be relayed to the chair or CEO prior to the meeting. If a director finds that due to conflicting circumstances he/she can no longer fulfil the responsibility of meeting attendance, his/her resignation as director should be volunteered. Committees of the Board General Information Purpose of Committee Structure A formal committee structure exists to support and expedite the work of the Board of Directors. Committees of the board are empowered to review matters requiring specialized expertise, issue formal recommendations, and in some cases, make decisions on behalf of the board. This allows the credit union’s Board of Directors to optimize its time, and achieve greater depth in its deliberations than would otherwise be possible. In reviewing committee recommendations, the board’s role is to ensure the soundness of the recommendations without re-doing the work of the committee. Formation of Committees The Board of Directors has established by resolution, two standing committees: Issued: Nov 28/05 Revised: Feb 23/09 an Audit Committee 1 Policy Manual Board Information Package 5 Structure/Role of the Board a Governance Committee Other standing or ad hoc committees may be formed as appropriate. The Mandate and Terms of Reference for each committee are developed for approval by the Board of Directors, and incorporated into the credit union’s Governance Policy. Appointments of Members and Chairs While the Board of Directors sets out the general criteria for the recruitment and selection of new Directors, standing committees may set forth additional criteria for committee participation. The process for appointing Directors to the two standing committees begins with each elected Director completing a “Preference Sheet” which indicates his/her first, second and third choices, as well as whether he/she wishes to serve as a committee chair. These “Preference Sheets” are submitted in confidence to the CEO/Corporate Secretary, who records the director preferences and presents the results at the first board meeting following the Annual General Meeting. Any necessary adjustments are made at that meeting and committee appointments are finalized. Standing committee members are appointed on an annual basis, with each committee consisting of a minimum of three (3) directors. The Chair of each Committee is appointed by the Board. Meeting Frequency and Notice Standing committees meet as often as required to fulfill their mandates, and attend to the specific responsibilities outlined in their respective Terms of Reference. It is anticipated that each standing committee will meet monthly except for July and August but at a minimum may meet four times per year. The day and time of each meeting will be established at the first Board meeting following the Annual General Meeting. Declaration of Quorum A committee’s business may only be transacted at a meeting in which a quorum of the committee is present, or by a resolution in writing signed by all committee members. A majority constitutes a quorum. Committee Responsibilities A committee’s Terms of Reference reflects various responsibilities, namely; to review; monitor; approve; report; recommend; conduct or act .Where reference is made to “act on behalf of the board” this means that authority is delegated to the Committee to represent the board with full authority. Issued: Nov 28/05 Revised: Feb 23/09 2 Policy Manual Board Information Package 5 Structure/Role of the Board Communications and Reporting In addition to ensuring that any additional communication or reporting requirements outlined in a committee’s Terms of Reference are met, committee chairs are responsible for: a) ensuring that the board is aware of the committee's deliberations, decisions and/or actions, by providing the board of Directors with a timely report after each committee meeting. b) ensuring that accurate minutes of every committee meeting are maintained and available to the Board. Preparation of the minutes is the responsibility of the committee secretary who will be appointed at the first Board meeting following the Annual General Meeting. The secretary may be either a director or a staff member. c) reporting to the board of Directors during the Board’s regular meetings, as per the regular committee Reports item on the Board’s agenda. Issued: Nov 28/05 Revised: Feb 23/09 3 Policy Manual Board Information Package 5 Structure/Role of the Board Audit Committee Audit Committee Mandate As required by the Credit Unions and Caisses Populaires Act the Audit Committee is responsible for: a) reviewing the financial statements, internal controls, accounting policies and reporting procedures of the credit union. b) ensuring the integrity of financial reporting. c) providing oversight over the external audit processes. d) managing the audit relationship with external auditors. e) overseeing the management of significant operational risk. f) reviewing and recommending to the board the Capital & Liquidity Management and Internal Control Policies for the credit union. g) monitoring compliance with the board’s Capital & Liquidity and Internal Control Management Policies. Audit Committee Terms Of Reference In carrying out its mandate, the credit union’s Audit Committee acknowledges the following specific responsibilities, committee processes and member requirements. Specific Responsibilities a) Financial Reporting and Accounting Policies Review the credit union’s audited annual financial statements and recommend their approval to the Board of Directors Act on behalf of the board to ensure that the credit union’s financial statements are fairly presented in accordance with generally accepted accounting principles, and recommend any significant changes in the accounting principles and policies followed by the credit union Review any reports or other financial information of the credit union submitted to or from any governmental body, or the membership, including any certification, report, opinion or review rendered by the independent auditors Serve as needed as a resource to the Board of Directors on matters relating to the financial position of the credit union and its affiliates, or the reporting related thereto. b) Oversight of Audit Relationships Issued: Nov 28/05 Revised: Feb 23/09 4 Policy Manual Board Information Package 5 Structure/Role of the Board Act on behalf of the board to ensure that the credit union's auditors are “independent” of management, within the meaning given to such term in the rules and pronouncements of the applicable regulatory authorities and professional governing bodies. Review the performance, terms of engagement letter, and the remuneration of the credit union's auditors and make any related recommendations, including those pertaining to re-appointment of the auditors, to the Board of Directors. Act on behalf of the Board of Directors to ensure that the audit function has been effectively carried out (including ensuring adequacy of resources) and that any matter the independent auditors wish to bring to the attention of the Board of Directors has been addressed. Refer to the board any conflict between the auditor and management that the Audit Committee is unable to resolve within a reasonable time. Review and agree with the auditors the scope and plans for future audits. c) Financial Reporting Processes, Internal Controls, and Operational Risk Management Review and approve the audit plan(s) for the current year, the integration of the external audit with the internal control program, and any advice from the external auditors relating to management and internal controls, as well as the credit union's responses to these suggestions. Review and discuss with the auditors the findings of the audit; any restrictions on the scope of the auditors’ work; any problems that the auditor experienced in performing the audit; any management letters, recommendations and reports by the Auditor about the business or financial statements of the credit union; and management’s responses to these items. Monitor the credit union's internal accounting controls, information gathering systems and management reporting on internal control. Review with management and the auditors the relevance and appropriateness of the credit union's accounting policies; and recommend to the board all significant changes to such policies. Act on behalf of the board to ensure that the credit union has implemented appropriate systems of internal control over financial reporting and the safeguarding of the credit union's assets, as well as any other “operational risk management” functions that may be necessary. This responsibility includes ensuring the efficacy of the credit union’s systems to identify significant risks and establish appropriate procedures to manage those risks, as well as monitoring corporate performance in light of any risks affecting the credit union’s assets, management, financial and business operations, or health and safety of its employees. These systems include, but are not limited to: Issued: Nov 28/05 Revised: Feb 23/09 5 Policy Manual Board Information Package 5 Structure/Role of the Board Disaster Recovery Plans Business Recovery Plans Significant legal actions Outsourcing / major suppliers Physical assets and security Business / Reputation Risk Criminal Risk (fraud, extortion, robbery, information security, vandalism, etc.) Technology and Telecommunications Risk Directors and Officers liability, insurance and indemnification Review and recommend to the Board the approval of the risk policies and procedures put forth by management and regularly review the liquidity, capital adequacy and asset/liability risk management policies and programs to ensure compliance with DICO standards. Monitor adherence to the Expense Reimbursement Policy by Directors. Monitoring adherence of the credit union’s directors, officers and employees to the Code of Conduct. Determination of adequate staffing for accounting and financial responsibilities d) Regulatory Compliance Review and recommend to the board the approval of capital and liquidity management policies, standards and procedures; and internal control policies. Monitor compliance with the board’s capital and liquidity management and internal control policies. Act on behalf of the board to ensure that all material statutory deductions are withheld by the credit union and remitted to the appropriate authorities. Act on behalf of the board to ensure that all regulatory compliance issues have been identified and addressed, and identify any items that may require further work. Review and make recommendations concerning the approval of annual reporting requirements for compliance with DICO standards of liquidity management, capital adequacy and asset/liability risk. Report promptly to the Board, the auditor, the deposit insurer, the stabilization authority and the Director of credit unions should it come to the Audit Committee’s Issued: Nov 28/05 Revised: Feb 23/09 6 Policy Manual Board Information Package 5 Structure/Role of the Board attention that a person has misappropriated or misdirected funds, security or other property of the credit union; or that the Board, a Director, an officer or any employee engaged by the Board has contravened or failed to comply with the Act, the regulations, or the credit union by-laws Subject to the board’s approval, the Audit Committee may retain one or more auditors or may call upon the stabilization authority for the credit union, the league of which the credit union is a member, or the deposit insurer to assist it in determining whether a misappropriation or misdirection has occurred. The Audit Committee determines the remuneration payable for such assistance and the credit union pays this amount. Audit Committee Processes a) Appointments and Training The Board of Directors appoints annually from among its members (pursuant to section 125 of the Act), a committee to be known as the Audit Committee. The Board also appoints a Director to serve as Audit Committee Chair. The Audit Committee is composed of a minimum of three Directors. The majority of Committee members will have a reasonable understanding of financial reporting and accounting practices and principles, and the ability to interpret financial statements and legal/regulatory requirements. Should specialized training be required for Audit Committee members under the Regulations, Committee members will be required to undertake such training. b) Meeting Frequency and Notice The Audit Committee meets as often as necessary to meet its mandate and fulfill its responsibilities. Monthly meeting dates (except July and August) are established at the first Board meeting following the Annual General Meeting but the committee may at least meet quarterly. It also meets at least once per year, in camera, with the external auditors, without management present. The credit union’s external auditors have the right to appear before the Audit Committee and are notified of each meeting. The Chair of the Board of Directors and the CEO are notified of each meeting of the Audit Committee and may attend as observers at the pleasure of the Audit Committee. c) Access to Information For the purpose of performing its work, the Audit Committee may inspect all the books and records of the credit union; discuss any matters relating to the financial position of the credit union with the officers and auditors of the credit union; and/or commission related reports or supplemental information. The Audit Committee Chair will have unfettered access to appropriate management as required. Issued: Nov 28/05 Revised: Feb 23/09 7 Policy Manual Board Information Package 5 Structure/Role of the Board d) Communications and Reporting The Audit Committee reports to the credit union’s members on an annual basis, in accordance with legal and regulatory requirements. Requirements for Service on the Audit Committee For the Audit Committee to meet its mandate, each member of the Committee must possess: the ability to understand and interpret financial statements, to ask appropriate questions and to challenge management. familiarity with legislative requirements, or the ability to study and understand them. demonstrated commitment to upholding the highest standards of organizational and financial accountability. common sense and sound judgment. Issued: Nov 28/05 Revised: Feb 23/09 8 Policy Manual Board Information Package 5 Structure/Role of the Board Governance Committee Governance Committee Mandate The credit union’s Governance Committee is a committee of the Board of Directors. It is responsible for ensuring the effective governance of the credit union, and for ensuring that a spirit of trust, teamwork, transparency, and professionalism characterizes its governance processes. More specifically, it is responsible for: Creating and maintaining a healthy governance culture within the organization, so that the credit union members are assured of both appropriate representation and of governance structures, policies and procedures that reflect the industry’s current best practices. Conducting an annual review of the credit union’s Corporate Governance Policy as it relates to member needs and industry trends, and issuing related recommendations to the Board of Directors. Enhancing Board performance by establishing procedures for the recruitment, evaluation and election of Directors and recommending the most qualified candidates. Overseeing the development and implementation of orientation procedures for new Directors, and evaluating its effectiveness. Assessing the effectiveness of the Board, Board Committees and Committee Chairs. Administering the process of reviewing the CEO’s performance and compensation, and issuing related recommendations to the Board. Overseeing the funding for development of Directors, and evaluating the effectiveness of development initiatives. Governance Committee Terms Of Reference In carrying out its mandate, the credit union’s Governance Committee acknowledges the following: Specific Responsibilities a) Board and Committee Structure & Membership: Review on an annual basis the credit union’s leadership needs, and report on the size, composition and skill sets of the Board of Directors in relation to these needs, the commitment required of individual directors and best practices with respect to corporate governance. Review the mandates of the board Committees on an annual basis, and recommend any changes needed to optimize the board’s capacity for quality governance. Issue recommendations to the Board of Directors concerning Committee structure, membership and appointments. Issued: Nov 28/05 Revised: Feb 23/09 9 Policy Manual Board Information Package 5 Structure/Role of the Board b) Governance Policies Support the Board of Directors in providing leadership that reflects the values, principles and standards of the credit union, by developing policies related to the conduct of individual directors and the board’s overall operating procedures. c) Recruitment, Election, Orientation and Evaluation of Directors Assume primary responsibility for the Director recruitment, evaluation selection, and election processes. Establish and annually review the orientation program for new Directors, so that the credit union members are assured that even new directors have a comprehensive understanding of the credit union’s business, its management practices, and their obligations as Directors. Conduct an annual board Competency Analysis and recommend development opportunities for the board and for individual Directors as circumstances may warrant. Professional assistance from an external source may be retained to assist in this process. Ensure an evaluation of the orientation program is undertaken and review the results to ensure its effectiveness Annually assess and report on the effectiveness of the Board of Directors, its Committees, and the contributions of the Chair, Vice Chair and the Committee Chairs. If any gaps in performance are identified, issue recommendations to the Board to address them. d) Assessment of Board/Management Relationship and Management Performance Establish procedures for Board of Directors' meetings, and any processes, procedures and structures needed to ensure that the Board of Directors functions independently of management, without conflicts of interest. Help clarify the roles, duties and responsibilities of the Board of Directors, Committees of the Board and Management, and ensure the appropriate delegation of authority. Monitor the quality of the relationship between management and the Board of Directors and to recommend improvements for effective and appropriate working relationships. Consider and, if deemed appropriate, recommend to the Board for approval, the requests of individual directors to engage outside advisors at the credit union’s expense. Issued: Nov 28/05 Revised: Feb 23/09 10 Policy Manual Board Information Package 5 Structure/Role of the Board Develop a process for the timely and regular review of the CEO’s performance, providing feedback to the Board, and recommendations concerning the CEO’s compensation. e) Development of Directors: On an annual basis establish an appropriate budget for expenditures for development of Directors and oversee its use. Evaluate the effectiveness of the development program conducted for Directors. Governance Committee Processes a) Appointments The Board of Directors appoints the Governance Committee each year. The Governance Committee consists of a minimum of three (3) members of the Board of Directors/Shadow Director(s). The Chair of the Board of Directors also chairs the Governance Committee. b) Avoiding Conflict of Interest Pending Re-Election Governance Committee members who are eligible for re-election are excused from membership of the Nominating Committee and subsequently, participation in the Director Recruitment, Evaluation and Election process for that year. c) Use of Outside Consultants The Governance Committee may retain outside consultants at the credit union’s expense, provided prior notice is given to the CEO. Requirements for Service on the Governance Committee For the Governance Committee to meet its mandate, each member of the Committee must possess: knowledge of credit unions and of co-operative principles, or the desire and ability to participate in intensive supplemental learning experience conducting meetings leadership and diplomacy skills interviewing skills. Issued: Nov 28/05 Revised: Feb 23/09 11 Policy Manual Board Information Package 5 Structure/Role of the Board Board/Director Expense Reimbursement Expense Reimbursement The credit union reimburses Directors for expenses related to their service as Directors, according to the following guidelines. General Principles a) Travel and accommodation arrangements are arranged through the CEO/Corporate Secretary to take advantage of preferred supplier relationships and economical fares. b) Accommodation required by the Director while on authorized credit union business is reimbursed by the credit union. Receipts are required (Human Resources Policy-15 Expenses). c) Meal and Incidental Expense allowance is provided for the Director who is on authorized credit union business (Human Resources Policy-15 Expenses). Transportation a) Mileage for use of personal vehicles on credit union business is reimbursed at the same rate as is set from time to time for employees of the credit union (Human Resources Policy-15 Expenses). b) Directors should ensure that adequate insurance coverage is in place when they are using their personal vehicle on credit union business. c) Business requiring other travel arrangements, such as air or rail, is by the most economical /most convenient means with due regard to economics, with such arrangements made by the CEO/Corporate Secretary. Professional Development a) The cost of participating in personal development projects and educational courses authorized by the Board is paid for in full by the credit union. b) The Board establishes a budget per year for development. The basis for the budget is that each Director has available a set amount for such purposes over each term of office (three years). c) It is the responsibility of each Director to determine their own development needs over that which is provided to the board as a whole. The CEO/Corporate Secretary provides information and support regarding training opportunities. d) Up to three (3) credit union Directors may attend the annual Directors’ Forum with expenses covered by the credit union. e) The Chair of the Board may attend the Central 1 Spring Conference and Trade Show with expenses to be covered by the credit union. Issued: Nov 28/05 Revised: Feb 23/09 12 Policy Manual Board Information Package 5 Structure/Role of the Board f) The Chair of the Board should attend Central 1 Annual General Meeting when held in Ontario with expenses to be covered by the credit union. Special Board approval is required for attendance at the meeting when held outside of Ontario. Issued: Nov 28/05 Revised: Feb 23/09 13
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