Amendments to the Interpretation of the NASD Board of Governors on "Forwarding of Proxy and Other Materials"
TO: All NASD Members and Other Interested Persons
The Securities and Exchange Commission recently approved amendments to the Interpretation of the NASD Board of Governors on "Forwarding of Proxy and Other Materials" under Article III, Section 1 of the NASD Rules of Fair Practice.1/ These amendments, which became effective on May 30, 1986, provide for an increase in the guidelines for fees that may be charged by NASD members to issuers in connection with proxy solicitations.
The text of the amendments is attached to this notice.
The Interpretation requires members to forward proxy materials to their customers promptly upon receipt of sufficient copies of the materials and satisfactory assurance that the issuer will reimburse the member for expenses incurred. The Appendix to the Interpretation sets out suggested rates of reimbursement.
The recently approved amendments increase by 10* the guidelines for amounts a member may charge an issuer in connection with proxy solicitations. The increase of 10* applies to charges under the following categories: Charges for Initial Proxy and/or Annual Report Mailings; Charges for Proxy Follow-Up Mailings; and Charges for Interim Report Mailings. This increase of 10* does not apply to the recently approved proxy surcharge and fee for members' costs in providing the names of beneficial shareholders to the issuer. 2/
The purpose of these amendments is to assist members in recouping the increasing costs of processing and transmitting proxy materials. Proxy solicitations demand a substantial amount of clerical work by members. In most instances, time is of the essence since there is a limited period during which materials must be mailed to beneficial owners and their votes returned to the issuer.
Questions regarding this notice should be directed to Craig L. Landauer, NASD Office of the General Counsel, at (202) 728-8291.
Frank J. Wilson
Executive Vice President and General Counsel
AMENDMENTS TO THE INTERPRETATION OF THE NASD BOARD OF GOVERNORS ON "FORWARDING OF PROXY AND OTHER MATERIALS" UNDER ARTICLE III, SECTION 1 OF THE NASD RULES OF FAIR PRACTICE*
FORWARDING OF PROXY AND OTHER MATERIALS
The Board of Governors has determined that the following suggested rates of reimbursement for expenses incurred in forwarding proxy material, annual reports, information statements and other material are to be used as a guide by members:
Charges for Initial Proxy and/or Annual Report Mailings
 60 cents for each set of proxy material, i.e., proxy statement, form of proxy and annual report when mailed as a unit, plus postage, with a minimum of $5.00 for all sets mailed;
 20 cents for each copy, plus postage, for annual reports that are mailed separately from the proxy material pursuant to the instruction of the person soliciting proxies.
Charges for Proxy Follow-Up Mailings
 40 cents for each set of follow-up material, plus postage, when the follow-up material is mailed to all beneficial owners;
 60 cents for each set of follow-up material, plus postage, when the follow-up material is mailed only to beneficial owners who have not responded to the initial mailing.
Charges for Interim Report Mailings
 30 cents for each copy, plus postage, for interim reports, post-meeting reports or other material with a minimum of $2.00 for all sets mailed.
1/NASD Manual (CCH), Para. 2037-3.
2/See Notice to Members 86-35, dated May 14, 1986.
* New language is underlined; deleted language is bracketed. These amendments were effective on May 30, 1986.