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SIA AND ICI REVISE MODEL CONTRACTUAL CLAUSES TO REFLECT SEC AMENDMENTS TO REDEMPTION FEE RULE 22C-2
The SEC recently approved amendments to the redemption fee rule, Rule 22c-2, and provided additional clarification regarding the rule’s application. In light of the amendments adopted to the rule, the model contractual clauses previously distributed to the industry have been revised to reflect the requirements of the revised rule. The revised model contractual clauses (pdf) were developed jointly by SIA and ICI and are intended to assist members in implementing the written shareholder information agreements requirements of Rule 22C-2 by its compliance date, which was extended until April 17, 2007.
The revisions to the model contractual clauses include:
- An optional additional provision at the top of the agreement that may be used to
a) govern when the parties deem the agreement to be effective, and, if effectiveness is delayed for the 12 months permitted by the 22c-2 release,
b) an optional provision to govern information sharing during the interim period;
- references to “Individual/International Taxpayer Identification Number (ITIN), or other government issued identifier (GII), if known;”
- changes to paragraph x.1.2 “Form and Timing of Response” that track the amended language in the rule; and
- additional definitions for the terms “Intermediary” (x.3.5), “purchase” (x.3.6) and “promptly” (x.3.7).
The model clauses may be used as either a stand-alone agreement with an intermediary or as a supplement to an existing agreement. SIA and ICI encourage use of these model clauses. We recognize, however, that as a result of the variety of business models and relationships in the industry, funds and financial intermediaries that elect to use these model clauses may wish to revise them as necessary to address their particular circumstances. At a minimum, we believe these clauses are a useful resource to members in determining the issues to be addressed in the required agreement.
If you have any questions about the attached model clauses or the requirements of the new rule, please contact Mike Udoff of SIA staff at 212-618-0509 or mudoff@sifma.org.
