18.— The Principal Act is amended by inserting the following after section 55 (inserted by section 17):

“55A.— (1) The board of directors of a credit union shall elect one of its number to be the chair of the board, subject to that person being eligible to be chair of a board of directors.

(2) The chair of the board of directors of a credit union may be referred to by whatever title the rules of the credit union provide.

(3) The functions of the chair of a credit union include the following:

(a) ensuring that meetings of the board of directors operate in an efficient and effective manner;

(b) encouraging constructive discussions and debate at board of directors meetings;

(c) promoting effective communications between members of the board of directors and between the board of directors and the management team of the credit union;

(d) causing the agenda to be set by the secretary, attending and chairing board of directors meetings;

(e) ensuring that the responsibilities of the nomination committee, as set out in section 56B(4), are performed by that committee;

(f) conducting a performance evaluation of each member of the board of directors on an annual basis to ensure that each director is complying with the obligations under financial services legislation and the board of directors’ objectives as set out in the credit union’s strategic plan;

(g) facilitating the work of the board oversight committee through providing it with all reasonable assistance to enable that committee to carry out its functions;

(h) ensuring that conflicts of interest are appropriately managed by the board of directors, and by each of them, in accordance with section 69.

(4) A director of the credit union shall not be eligible to be elected as chair if the director had, at any time during the 5 years preceding the election, been—

(a) an employee of that credit union, or

(b) a person who acted in any management capacity (whether voluntary or paid) in that credit union,

and, for the purposes of this subsection, ‘acted in any management capacity’ includes performing a role where the person was in a position to exercise a significant influence on the conduct of the credit union’s affairs but does not include acting as a member of the board of directors or as a member of the board oversight committee.

(5) Subject to subsection (7)(a), the term of office of a chair of a board of directors shall be for the period of one year.

(6) A chair of a board of directors shall not serve more than 4 consecutive terms in that position and, having so served, shall not be eligible to be chair until—

(a) after another director has served at least one term as chair, or

(b) where such other director has served for less than one year, after 2 or more directors have served as chair for the equivalent of at least one complete term,

but nothing in this section shall prevent a former chair of the board of directors from being selected under section 54(2) from chairing a meeting of the board in the absence of the chair and, where relevant, the vice-chair.

(7) A person shall cease being chair of a board of directors if—

(a) the person ceases being a director for any reason, or

(b) the person resigns from being chair in accordance with subsection (8).

(8) A director may resign from being chair of the board of directors by sending his or her resignation in writing to the secretary of the credit union.”.