The Investment Dealers Association is reminding its members of the rules governing changes in ownership and the share capital of brokerage firms.

Members are required to give prior written notice to the IDA’s secretary when securities in a firm or its holding company are issued or transferred. The issue or transfer of securities includes any legal or beneficial interest in securities and would, for instance, include the pledge of shares, repurchases and the issue of shares pursuant to option programs.

The approval of the applicable District Council is required for any transaction in which an investor acquires ownership of a significant equity interest in a member firm. A significant equity interest is defined to include 10% of the voting securities, participating securities or total equity of the member or holding company.

Any alteration in the capital structure of a member must be preceded by at least 20 days notice to the secretary and/or vice president, financial compliance. Alterations include the allotment, issue, repurchase, redemption or other reorganization of capital. The proposed transaction must also be submitted to the applicable District Council for approval.