Lending Committee Terms

Status: v0.1 draft. Not in force. Counsel posture confirmed by Drew 2026-06-05; counsel review per jurisdiction continues as a parallel workstream, not a build gate. Sections of this document fold into the cooperative-society / credit-union bylaws of the regulated entity at activation.

Where this sits in the Custody Framework

This document operates under Category B of the Custody Framework Charter — the escrow-only category that governs lending pool capital, loan accounts, collateral escrow, and the Circle Protection Reserve. Member vote does not apply to Category B custody; the rule is constitutional. Accounts are opened in the name of the Members' own co-operative legal form, with a multi-signature mandate held by the Lending Committee.

Category A — regular cycle contributions in single-jurisdiction Circles, which may be Member-to-member or escrow-held by Member vote — is outside this surface. Category C — Circles that cross a jurisdictional boundary — adds the escrow-only rule to all funds in those Circles; this surface inherits Category C when the Circle is cross-border.

1. The Committee as a constitutional body

The Lending Committee is the governance body for a single lending pool. It exists by virtue of the Membership vote that established the pool (see the Lending Pool Establishment Terms) and is composed of Members of the pool's funder base, elected for fixed terms.

The Committee is not the circle's Treasurer, the federation's coordinator, or a Circlworld employee. It is a Member-elected body, accountable to the Membership.

The Committee exists for the operational lifecycle of the pool. It is replaced by election; it is not appointed; it does not co-opt; it cannot exist without the Membership's confirmation through the next election.

2. Roles

The Committee elects from its own number:

• Chair — convenes meetings; signs published reports; the public-facing representative of the Committee on matters internal to the pool. The Chair has no casting vote distinct from any other Committee member.
• Secretary — keeps the meeting minutes; manages the Committee's correspondence; files the platform audit-trail entries; maintains the Conflict-of-Interest Register (§5.4).
• Committee Treasurer — keeps the reconciliation of the pool's account against the platform ledger; surfaces the cash position to the Membership at the published cadence; coordinates with the account provider on matters of the multi-signature mandate.
• Members — full voting Committee members.

Election of the role-holders happens at the Committee's first meeting after election. Roles may be reassigned by the Committee at any point with a recorded majority vote.

The Chair, Secretary, and Committee Treasurer roles are not the same as the circle Treasurer or the federation coordinator. They are roles internal to the Committee and carry no authority outside the Committee's published scope.

3. Powers

3.1 The Committee may

• Receive loan applications submitted through the platform.
• Review applications against the platform's underwriting formula, the pool's parameters, and the Member's posted security and consents.
• Approve or decline applications by recorded vote.
• Authorise disbursement through the multi-signature mandate on the dedicated account.
• Receive repayments and apply them to loans per the schedule.
• Declare a loan in default after the conditions in the Member Borrowing Agreement §6 are met.
• Execute the Loss Waterfall on declared defaults.
• Receive and respond to disputes through the Lending Dispute Pathway.
• Recommend parameter changes (reserve %, concentration caps, withdrawal notice, etc.) to the Membership.
• Recommend pool suspension, restructure, or wind-down to the Membership.

3.2 The Committee may not

• Move funds without satisfying the multi-signature mandate.
• Approve a loan to a Committee member without that member's recusal and an explicit quorum + threshold (§5).
• Approve a loan that breaches the platform's underwriting formula, the pool's parameters, or the jurisdiction's consumer-credit law.
• Conclude a settlement with a defaulting borrower without recording it on the audit trail and notifying the loan's funders.
• Vary the pool's parameters unilaterally (changes go to a Membership vote).
• Operate outside meetings (decisions outside a meeting must be ratified at the next meeting; emergency procedures in §4.5).
• Compel a Member to fund, borrow, or guarantee.
• Speak for Circlworld in any matter (Circlworld is not represented by the Committee; the Committee speaks for itself and the pool, not for the platform).

4. Meeting procedure

4.1 Frequency

The Committee meets at least monthly during active operations, and as often as required to consider pending loan applications and repayment matters.

4.2 Quorum

A Committee meeting reaches quorum when a majority of the seated Committee members are present (in person, by video, or by recorded vote). For Committees of 3, this is 2; for 5, 3; for 7, 4.

4.3 Decision threshold

Routine decisions (loan approvals within the formula, repayment schedule adjustments) pass on a majority of the present quorum. Material decisions (parameter recommendations, default declarations, settlements with defaulting borrowers, recommendations to the Membership) require a two-thirds majority of the seated Committee, not merely the present quorum.

4.4 Minutes

Every meeting has minutes capturing:

• Date and time, attendees, apologies, recusals.
• Agenda items.
• Decisions taken, with the vote count.
• Conflicts of interest disclosed.
• Action items, assigned to specific Committee members.

Minutes are filed within seven (7) days of the meeting and are accessible to every funder of the pool.

4.5 Emergency procedure

Where a time-sensitive matter (a default declaration affecting a fast-moving borrower; a fraud alert) requires action before the next scheduled meeting, the Chair may convene an emergency meeting with twenty-four (24) hours' notice. The quorum and threshold rules apply unchanged.

Decisions taken outside a formally convened meeting (e.g. by email vote between meetings) must be ratified at the next scheduled meeting and noted in the minutes.

5. Conflict of interest

5.1 Mandatory recusal

A Committee member must recuse from deliberation and vote when:

• They are the borrower of a loan under consideration.
• They are a guarantor of a loan under consideration.
• An immediate family member of theirs is the borrower or guarantor.

Recusal means leaving the meeting (or muting/leaving the call) during the matter, not merely abstaining.

5.2 Discretionary recusal

The Chair may require recusal where:

• The Committee member has a close personal relationship with the borrower or guarantor.
• The Committee member has a business relationship with the borrower or guarantor.
• The Committee member benefits indirectly from the loan (e.g. they are a customer of the borrower's business that the loan funds).

A Committee member may also recuse voluntarily.

5.3 Quorum on recusal-touched matters

Where recusals reduce the meeting below quorum on a matter, the matter is deferred to the next meeting at which quorum can be reached. It is not decided by a sub-quorum.

5.4 The Conflict-of-Interest Register

The Secretary maintains a Conflict-of-Interest Register, accessible to the Membership, listing every Committee member's declared relationships that could give rise to recusal. The Register is updated at each meeting; new disclosures are made before deliberation begins.

5.5 Self-dealing prohibition

A Committee member may not approve a loan to themselves, full stop — recusal is mandatory and the loan must be considered by a sub-Committee or, where impossible, by an emergency vote of the Membership.

A Committee member may borrow from the pool under the same terms and underwriting formula as any other Member. The recusal procedure governs the approval.

6. Indemnification

6.1 The Committee's exposure

Committee members act in a fiduciary-like capacity in respect of the pool's Members. They are indemnified by the circle's / federation's own co-operative form for acts in good faith within the scope of their Committee duties, in accordance with that co-operative form's bylaws and the law of its jurisdiction.

Indemnification does not extend to:

• Gross negligence.
• Wilful misconduct.
• Self-dealing in breach of §5.5.
• Acts outside the Committee's scope.

6.2 The Committee's protection from Member claims

A funder who disputes a loan approval, a default declaration, or a parameter recommendation goes through the Lending Dispute Pathway. The pathway protects Committee members from individual claims for decisions taken in their Committee capacity in good faith; the pathway does not protect against the categories in §6.1.

6.3 Circlworld's role on Committee acts

Circlworld does not approve or sit on the Committee. The Committee is a Member body. Circlworld provides the audit trail, the voting machinery, the meeting and reporting surfaces, and the dispute pathway. Circlworld is not liable for Committee decisions.

7. Compensation

7.1 The default

Committee membership is a volunteer Member role. By default, no compensation is paid.

7.2 Where compensation is paid

Larger pools (typically L2 federation pools) may compensate Committee members through a small stipend, voted by the Membership and paid from pool fees, not from interest income. The stipend is documented in the pool's bylaws.

7.3 The Treasurer Earnings Programme separation

The platform's Treasurer Earnings Programme (TEP) compensates circle Treasurers for circle coordination. Lending Committee compensation is separate from TEP and is not coordinated through the same scheme.

8. Replacement

8.1 Resignation

A Committee member may resign at any time by written notice to the Secretary. The notice takes effect on the date stated or seven (7) days later, whichever is later.

8.2 Removal by the Membership

A Committee member may be removed by the Membership through a vote with the same quorum and threshold as the establishment vote. Grounds include:

• Breach of the conflict-of-interest rules.
• Failure to attend three (3) consecutive meetings without leave.
• Conduct bringing the Committee into disrepute.
• Conviction of a relevant offence in the entity's jurisdiction.

The Committee member may submit a written defence; the Membership considers it before voting.

8.3 Filling vacancies

A vacancy is filled by:

• Co-option of the next-highest-voted candidate from the last election, where there are eligible runners-up.
• By-election where there are no eligible runners-up.

Co-opted members serve the remainder of the original term.

8.4 Replacement of the entire Committee

Where the Membership loses confidence in the entire Committee, a vote of no-confidence triggers a fresh election. The outgoing Committee continues in office only to maintain the pool's basic obligations (responding to repayments, declaring defaults if necessary) until the new Committee is seated.

9. Winding up

Where the pool is wound down (by Membership vote or by regulatory direction), the Committee:

• Pauses new loan disbursement.
• Continues to receive repayments.
• Distributes residual capital to funders pro-rata to their stakes, net of any unrecovered loss.
• Closes the dedicated account once all loans have terminated.
• Files a final report with the Membership and the audit trail.

The Committee's term continues during winding up. Compensation, where paid, continues at a reduced rate or stops, as determined by the Membership at the winding-up vote.

Reminder: v0.1 draft. The cooperative-society / credit-union law of the entity's jurisdiction may impose stricter requirements on Committee composition, term length, indemnification, or compensation. Counsel review will confirm per jurisdiction; the activated version of this document folds the jurisdiction-specific requirements in.