§5-16-14. Directors, officers and employees.

(a) The rights, privileges and powers and the duties and liabilities of all directors and officers of an association are to be as fixed by the bylaws and this chapter. The business of the association shall be managed by a board of directors of not less than five nor more than 15 as determined and elected by ballot from among the members by a plurality of the votes of the members. In order to qualify as a director, a member of an association must hold an account, the participation value of which is at least $500.00; provided, that if the assets of the association exceed $500,000.00, such member must hold an account the participation value of which is at least $1,000.00; and, provided further, that if the assets exceed $2,500,000.00, the participation value of such account must be at least $2,000.00. A director shall cease to be a director when he ceases to be a member or when the net equity above loans of all accounts of the association held by him aggregate less than the minimum required to be eligible for election as a director, and his office shall automatically become vacant; provided, that no action of the board of directors shall be invalidated through the participation of such director in such action. At the first annual meeting, the directors shall be divided into three classes of as nearly equal numbers as possible. The term of office of directors of the first class shall expire at the annual meeting next ensuing the first election, of the second class, one year thereafter and of the third class, two years thereafter, and at each annual election thereafter directors shall be chosen for a full term of three years to succeed those whose terms expire. The number of directors within the limits hereinabove specified may be subsequently increased only by vote of the members. If the members fail to elect a director to fill each vacancy created by any such increase, the directors may fill such vacancy by electing a director to serve until the next annual meeting of the members, at which time a director shall be elected to fill the vacancy for the unexpired term for the class of director in which such vacancy exists. Whenever under the provisions of this section the number of directors is changed and vacancies caused by such change are filled, the directors so elected shall be classified in accordance with the provisions of this section, so that each of the three classes shall always contain as nearly equal numbers as possible. If any vacancy shall occur among the directors by reason of death, resignation or removal, such vacancy not previously filled by the board of directors may be filled by the members at any meeting held during the existence of such vacancy, and no prior notice of such election need be given. The existence of such vacancy, however, does not require the calling of a special meeting of members, unless there shall be a written request for such meeting by members holding of record at least one tenth of the capital of the association. Any vacancy among the directors not so filled by the members may be filled by a majority vote of the remaining directors, though less than a quorum, by electing a director to serve until the next annual meeting of the members, at which time a director shall be elected to fill the vacancy for the unexpired term for the class of director in which such vacancy exists.

(b) All directors, officers and employees of an association having control of or access to moneys or securities of such association shall, before entering upon the performance of any of their duties, execute their individual bonds with adequate corporate surety payable to the association as an indemnity for any pecuniary loss the association may sustain of money or other property by or through any fraud, dishonesty, forgery or alteration, larceny, theft, embezzlement, robbery, burglary, holdup, wrongful or unlawful abstraction, misapplication, misplacement, destruction or misappropriation or any other dishonest or criminal act or omission or infidelity to duty of or by any such director, officer, employee or agent. Associations which employ collection agents who for any reason are not covered by a bond as hereinabove required shall provide for the bonding of each such agent in an amount equal to at least twice the average monthly collections of such agent. Such agents shall be required to make settlement with the association at least monthly. No bond coverage will be required of any agent which is a bank insured by the Federal Deposit Insurance Corporation or an institution insured by the Federal Savings and Loan Insurance Corporation. The amounts and form of such bonds and the sufficiency of the surety thereon shall be approved by the board of directors and by the commissioner. In lieu of individual bonds, a blanket bond, protecting the association from loss through any such act or acts on the part of any such director, officer or employee shall be obtained if required by the commissioner. A true copy of all bonds of directors, officers, employees and agents shall be filed at all times with the commissioner. Such bonds shall provide that a cancellation thereof either by the surety or by the insured shall not become effective unless and until 10 days' notice in writing shall have first been given to the commissioner, unless he shall earlier approve such cancellation.

(Acts 1939, No. 459, p. 616; Code 1940, T. 5, §220; Acts 1943, No. 107, p. 107.)