# The Attorney General of Texas

June 22, 1978 JOHN L. HILL Attorney General
Honorable BenT.Reyes Chairman House Committee onRules State Capitol Austin, Texas 787ll Dear Representative Reyes: Opinion No. II-1192 Re: Authority of Credit Union Commissioner to refuse application for charter.

Youask whether the Credit Union Commissioner has authority to deny a credit union charter on the ground that the applicant’s proposed bylaws provide that a certain number of directors shall belong to stated minority groups. You inform us that the bylaws are related to the purpose of the credit union. The procedure for establishing acredit union is set out inarticles 2461- 2.01 through 2461-2.04, V.T.C.S. The incorporators must submit to the Commissioners articles of incorporation which state the number ofdirectors and the names of the persons whowill serve on the initial board of directors. V.T.C.S. art. 2461-2.02. In addition, they must file with the Commissioner a copy of the bylaws and biographical information concerning each member of the original board ofdirectors. V.T.C.S. art. 2461-2.03(a). The Commissioner may Investigate the bylaws and biographical information “to determine whether the proposed credit union and its Initial board ofdirectors meet the requirements of this [Texas Credit Union1 Act and of the regulations promulgated under this Act.” V.T.C.S. art. 2461-2.03(c). Ifthe Commissioner determines that all statutory requirements and regulations have been satisfied, he “shall Issue a certificate of incorporation,” which is conclusive evidence of the incorporator’s compliance with the requirements of the Credit Union Act. V.T.C.S. arts. 2461-2.03(e), 2461-2.04. If the proposed credit union or its initial board ofdirectors does not meet the requirement of the Act and regulations, the Commissioner shall deny the application. The incorporators may request a hearing following denial. V.T.C.S. art. 2461- 2.03(d). As you state in your request letter, no statute, rule, or regulation expressly prohibits the designation of places on the board of directors for members ofminority ,groups. However, article 2461-3.02provides inpart:

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At all meetings, each member has only one vote, regardless ofhis shareholdings. Nomember may vote byproxy. ... Article 2461-5.03(a) provides:

Directors of the credit union are elected at an annual membership meeting, by and from the membership, and in the manner provided inthe bylaws. Article 2461-3.02establishes apolicy of“one member, one vote” for the governance ofcredit unions. The Commissioner has interpreted these provisions as giving each member an equal right to seek elective office, without regard to such criteria as race or religion, and as barring any bylaw provisions which designate elective positions for members ofparticular groups. Onthe basis ofthis interpretation, the Commissioner in the past four years has formally denied two written bylaw amendments providing designated slots, and has informally denied at least six inquiries ofthis nature. The construction ofa statute bythe agency charged with its administration is entitled to weight. Trafficante v. Metropolitan Life Insurance Co., 409 U.S. 205, 210(1972); Ex Parte Roloff, 510S.W.2d 913(Tex. 1974). See Attorney General Opinion H-1084 (1977). In our opinion, the Commissioner’sxterpretation that a bylaw which designates certain directorships for members of minority groups does not meet the requirements ofarticles 2461-3.02and 2461-5.03(a) wouldbeupheld by the courts. Thus, we believe the Commissioner may refuse to approve an application which includes such bylaws. SUMMARY The Credit Union Commissioner has authority to deny a credit union charter on the ground that the applicant’s proposed bylaws require a certain number of directors to belong to stated minority groups.

Attorney General ofTexas

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C. ROBERT HEATH, Chairmah Opinion Committee jsn

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