Interpretive Release Regulation of Transfer Agents. 34-17111

&9818 	Federal Register I Vol. 45. No. 178 1,'I1lursday, September 11,"\l98O I Rules and Regulations
by alterinl the KenaI, Alaska, transition
area by addqaddltlonal controned
airspace to protect IPR aircraft utl1IzIDs
the Kenai VORTAC 8 DM! arc to
transition to the ftnal approach course
for the n.s runway 19 or VOR runway 19
approaches to Kenal. The additional
controUed airspace would encompass
the present Soldotna, Alaska, transition
area and therefore the need for a
separate Soldotna transition area no
loDger exists. Interested persons were
invited to participate in the rulemaldns
proceeding by submitting written
comments on the proposal to the FAA.
The comments received expressed no
obiections.
Adoption of the Amendment
Accordingly, pursuant to the authority
delegated to me by the Administtator,
I 71.181. of Part 71 of the Federal
Aviation Regulations (14 CPR Part 71) as
republisbed (45 FR 445) is amended,
effective 090t GMT, December 25, 1980,
8sfollows:
Under f i'1.181--Kenai. Alaska. the text Is
deleted and ""'l8t airspace extending
apward from 700 feet above the surface
wiliun an t'1.5-mile radius of the Kenai
Uuicipal Airport (latitude 8!r34'ZI"N.,
longitude 11o"14'44"W.). extending clockwise
hom the oor to the 2!lO" bearing from the
airport" Is substituted therefor.
Soldobla, Alaska. the text is deleted.
(Sea. 3071a) of the Federal Aviation Act of
1958, as amended (49 U.s.c. 1348(a)); Sec. 6(c)
of the Department ofTransportalion Act 149
USc. t6S5(c)); and 14 CPR 11.69)
Note_The FAA has determined that this
document involves a tegUtation which is not
significant under Executive Order 1Z044, lUI
implemented by DOT Regulatory Policies and
Procedures (44 PR 1134, February Z6, 1979).
Sinoo this regulatory action Involves an
established body of technical requirementa
for which frequent and routine amendmenta
are necessary to keep them operationaOy
e:ummt and promote safe Bight operations,
and anticipated impact is so minimal that Ibis
action does not wanant preparation of a
reguJatory evaluation.
Issued in Anchorage. Alaska, on August Z8,
1980.
Robert L Failh.
Director. AJosko Region.
IfR Doc:. m-D181 filed 9-10-80; 8:4$ amI
8ILIJlIlQ coot ....., ..
SECURmES AND EXCHA"'GE
COMMiSSION
17 CfR Part 241
......... No.34-17U11
Regulation of Transfer Agents
AGI'JlICY: Securities and Exchange
COrrmlSl"C'n
ACTION: interpretations of rules.
IUMMARV: The Commission has
authorbsed the issuance of a release that
set4 forth In a summary manner the
InterpretatJons of its staff regarding
rules that estabUsh minimum
performance standards and other
requirements for aU registered transfer
agents. The pwposes of the release are
to aid interested persons in
understandins how these rules have
been interpreted, to resolve certain
reCUl'l'ing issues that have arisen under
these rules, and to provide uniform
interpretations of these ruI~s for the
benefit of those persons subject to their
requirements.
DATE: September 2. 1980.
FOR FURTHER IINFORIIATiON CONTACT:
Usa Gessow Michelson. Branch Chief.
or Thomas V. Sjoblom. Staff Attorney,
Division of Market Regulation.
Securities and Exchange Commission.
Washington, D.C. 20549. (202) 272-2895.
or (202) 272-2910, respectively.
SUPPLEllENTAllIY INFORMATION: The
Securities and Exchange Commission, in
order to faa1itate the establishment of a
national system for the clearance and
settJement of tJansaotions in securities
under Seclian 11A of the Securities
hchange Act of:1994 (the "Act"),
adopted Rules 17Ad-I to 17Ad-7 (17
CFR 24o.t7Ad-1 to 17Ad-?) (the
"turnaround rules"), wblch. among other
things, establish minimum performance
standards and recordkeeping
requirements for aU registered transfer
agents. 1 Numerous oral and written
requests for interpretations of the
turnaround rules have been presented to
the Commission's staff. To provide
guidance on the sublects and problems
raised by such requests and on other
significent reCUlTing issues under those
rules, the Commission has authorized
the issuance of this release, which sets
forth the views of its Division of Market
Regulation.
Although many of the issues whicb
have arisen under the turnaround rules
have previously been addressed by the
staff in Interpretive and no-action letters
that are publicly available, the staff has
further clarified, and in certain instances
revised, some of the positions expressed
in those letters. Attention in this regard
is directed particularly to Questions (4),
(8), (9), (14). (26). (34). (40). (41) and (100)
herein. To the extent that views
expressed in previously Issued
interpretive and no--action letters are not
discussed in this release, those views
I Securibes Exchange AcI Release No. 13636
Unne ie. 1971} (hereinafter cued as "Release No.
1363tn I42 FIt ~l {Vol 12. t-.o 9 SEC Docket 853
(! ,-P 2E lIT""" '''"le-, -,pf'er c '"d as "SEC Docket" )1
ma"stiU be'co8sidered to.represenl>the
starrs position'on the question raised
therein.
Table of ConIenta
L Rule 17Ad-l: Detinflions.
A.llem-Rule 17Ad-1(a)
B. Outalde RegiSlrar-Rule 17Aq..l(b)
C. Made Available-Rule 17Ad-1(c)
D. Transfer-R.ule 17Ad-t[d)
E. Turnaround-Rule 17Ad-lle)
F. Receipt-Rme 17Ad-l(g)
G. Business Day-Rule lYAd-1(h)
H. Routlne-Rule 17Ad-I{i)
1. Requisitioning Certificates-IMe 17Ad
1(1)(1)
Z. No Additional Documents, Explanations
or Endorsementa Required-Rule 17Ad-1(i)(3)
3. No Review of Certain Supporting
Documentation Required-Rule Ii'Ad-l(I)(4)
4. Transfers Not in Connection with a
Reorganization. Tender Offer. Exchang~,
Redemption or Uquldation-Rule 17Ad
1{i)(5)
5. Recent Registered Public Offerings Not
of a Continuing Nature-Rule 17Ad-l(i){8)
II. Rule 17Ad-2: Turnaround, Processing
and Forwarding of Items.
A.General
B. Turnaround Requirement for Registered
Transfer Agents-Rule 17Ad-2[a)
C. Processing Requirement for OutSIde
Registrars-Rule 17Ad-2{b)
D. Notice of Non-Complianee-Rule 17Ad
Z{c)
E. Turnaround and ~of
Remaining Routine and All Non-Routme
Items-Rule 17Ad-2{e)
F. Receipt of Items 00 the TJI8nsfer
Premises-Rule 17Ad-Z{f)
IlL Rule 17Ad-4: Exemptions from Certain
Turnaround Rules.
A. Exempt Transfer&-Rule 17Ad-l(a)
B. Exempt Transfer Agehts-Rule 17Ad
4(b)
C. Loss of Exempt Transfer A8ent Status
Rule 17Ad-4(c)
IV. Rule 17Ad-6: Written Inquiries and
Requesta.
A. General
B. Requesta Regarding Status of Items
Presented for Transfer-Rule 17Ad-6[a)
C. Certain Broker-Dealer Requests-Rule
17Ad-6(b) 	.
D. Inquiries or Requests Which May Not
Meet Rule 17Ad-6 (a) through (d)-Rule
17Ad-6(e)
V. Rule 17Ad-8: Recordkeeping
A. Certain Records Required to Monllor
Compliance-Rule 17Ad-«a}
1. Records Showing Date of Receipt and
Availability of Items-Rule 17Ad-6(a)[l)
Z. Monthly Records Relating to Transfer
Agent Turnaround-Rule 17Ad-6(a)(Z)
3. Records of Outside Registrar-Rule
17Ad-6[a)[3)
4. Calculations of Peifonna."lce-Rule
17Ad-6[a){4)
5. Written Inqulrles-Rule 17Ad-6(a)l6)
6. Records Concerning the Appomtment of
a Transfer Agent-Rule 17Ad-6(a)(8)
7. Records of RestrictiODB on T'ransfer
Rule 17Ad-6(a)(9)
8. Joumals-Rule 17Ad-6(a)(IO)
9. Special Event Document&tion-R\lle
17Acl-6[a}(11}

Federal Register I VoL 45. No. 178 I Thursday. September 11. 1980 I Rules and Regulations 	59841
B. Records Regarding Control Logs for Bach
Issue-Rule 17Ad-6(b)
C. Cancelled Registered Certificates and
Accompanying Documentation-Rule 17Ad
6(e)
VI. Rule 17Ad-7: Record Retention. 	.
A. Retention Periods for Records Regarding
Transfer Agent's Appointment, Stops,
Journals and Control Logs-Rule 17Ad-7(c)
B. Retention Periods for Cancelled
Certificates and Accompanying
Documentation-Rule 17Ad-7{d)
C. Microfilming of Records-Rule 17Ad-7(f)
D. Records Maintained by a Third Party on
Behalf of a Transfer Agent-Rule 17Ad-7(g)
B. Transfer Agents thafCease to Perform
Transfer Agent Functions-Rule ~7Ad-7{h)
I. Rule 17Ad-t: DefinitioDs S
A. Item-Rule 17Ad-l(a).· The term
"item" means (1) a certificate or
certificates of the same issue of
securities covered by on ticket (or, if
there is no ticket. presented by one
presentor) presented for transfer, or (2)
an instruction to a transfer agent which
holds securities registered in the name
of the presentor to transfer or to make
available all or a portion of those
securities. (3) In the case of an outside
registrar. each certificate to be
countersigned is an item. 	.
(1) Question.' Does the term "item.n as
the basic unit upon which performance
standards and other requirements are
formulated, apply only to securities
registered under Section 12 of the Act?
Answer.' No. Under Section 17A(c)(1)
of the Act, a transfer agent must be
registered with its appropriate
regulatory agency if it uses the malls or
any means or instrumentality of
interstate commerce to perform any
transfer agent function with respect to
any security either registered under
Section 12 of the Act, 3 or which would
be required to be registered except for
the exemptions provided by Sections
12(g)(2)(B) (securities issued by
registered investment companies) or
12(g)(2)(G) (s~curities issued by certain
insurance companies) of the Act
("qualifying securities"). Once a transfer
agent is registered, the turnarouna rules
apply to all securities, including
securities which are not qualifying
securities, for which the registered
transfer agent performs transfer agent
functions. Accordingly, the term "item,"
and the use of the word "securities" in
defining an "item." refers to all
securities for which a registered transfer
agent performs transfer agent functions,
whether or not all such securities are
qualifying securities.
2 The captions used hereinafter are not intended
and must not be construed as interpretations of the
substance of each rule. The captions are used for
reference only.
3See generally Sections 12(a).12{b) and 12{g){1) of
the Act.
Illustration (a): Facts: A registered
transfer agent performs transfer agent
functions for an issue of qualifying
securities. It also performs transfer
agent functions for nine other issues of'
securities which are not qualifying
securities. Interpretation: The
turnaround rules apply to all ten issues
of securities.
.Illustration (b): Facts: A registered
bank transfer agent performs transfer
agent functions for the securities of an
open-end, management company
registered under the Investment
Company Act of 1940 ("mutual fund
shares") and for its own shares which
are not qualifying securities.
Interpretation: The certificates and
instructions for transfer pertaining to the
bank's own shares and the mutual fund
shares are "items" for purposes of the
turnaround rules. Accordingly, the
turnaround rules apply to the bank's
own shares even though the bank's
shares are not qualifying securities. In
addition, except as provided in Rule
17Ad-4(a), the turnaround rules apply to'
the mutual fimd shares.
(2) Question: What are the essential
elements in determJning whether an
"item" has been received by the transfer
agent? 	'
Answer: In addition to certificates to
be countersigned by an outside registrar,
Rule 17Ad-1(a) refers to two general
categories of "items": certificates and
instructions.
The first part of the definition of
"item" refers to certificates. An "item"
exists for purposes of the turnaround
rules if the certificates are (i) of the
same issue of securities, (ii) covered by
one ticket, or if there is no ticket,
presented by one presentor, and (iii)
presented for transfer, as defined in
Rule 17Ad-l(d).
The second part of the definition of
"item" concerns instructions. An "item"
exists if the instruction requests a
transfer agent (i) that holds securities
registered in the name of the presentor,
(ii) to transfer (as defined in Rule 17Ad
ted)) or to make available (as defined in
Rule 17Ad-l(c)), (iii) all or a portion of
the securities held in its possession or
custody. For example, a shipment
control list ("SCL") containing
instructions from a depository to a
transfer agent holding, under a transfer
agent custodian or other arrangement, a
balance certificate registered in the
name of the depository's nominee to
withdraw by transfer under the Fast
Automated Securities Transfer ("FAST")
program some of those securities and to
make them available to the depository
would constitute an "item." 4
·See Release No. 13636. (SEC Docket, at 855.)
(3) Question: If a registered transfer
agent is requested to replace a lost
certificate, is the request an "item"
presented for transfer?
Answer: No. In this instance, the
transfer agent replaces a lost.certificate
upon receipt of an indemnity bond. No
certificate has been presented for
transfer, and the transfer agent is not
making available any securities which
are registered in the name of the
presentor and are being held by the
transfer agent.
(4) Question: When several
certificates of the same issue of
securities have been presented for
transfer on several occasions during the
same day by the same presentor, has
only one item been presented for
transfer?
Answer: No. Each time a single
certificate is presented for transfer by
one presentor, one item has been
presented for transfer. Similarly, when
there is no ticket, each time certificates
of the same issue of securities are
presented for transfer at the same time
by one presentor, one item has been
presented for transfer. In the latter case,
certificates presented at different times
must not be aggregated as one item,
even though all certificates are of the
same issue of securities and even though
the same person was the presentor.
Illustration: Facts: At 2:00 p.m. on a
business day, a messenger for a broker
dealer presents at the "window" of the
transfer agent's premises two 10 share
certificates of Company A's Class A
common stock. At 10:30 a.m. on the next
business day, the same messenger from
the same broker-dealer presents at the
"window" of the transfer agent's
premises two more 10 share certificates
of Company A's Class A common stock.
Interpretation: Pursuant to Rule 17:Ad
2(a), both presentments were received
on the same business day. However,
two items were presented for transfer
because the presentments occurred at
different times, even though the
certificates were of the same issue of
securities and even though the presentor
was the same in both instances.
(5) Question.' Is there a maximum
number of certificates of the same issue
of securities which may be presented for
transfer at a single time and still be
considered a single "item"?
Answer: No. Only one item is
presented for transfer, regardless of the
number of certificates, as long as all the
certificates presen,ted at the same time
are (a) of the same issue of securities,
and (b) covered by one ticket: or if there
is no ticket. presented by one presentor.
(6) Question.' How many certificates
of the same issue of securities may be
"covered by one icket"?

59842 	Federal Register I Vol. 45. No. 178 I Thursday, September 11, 1980 I Rules and Regulations
Answer: If all certificates are of the
same issue of securities. there is no limit
to the number of certificates which may
be covered by one ticket.
(7) Question: When the presentor
includes certificates representing
securities of nine different issues under
one ticket. to be registered in the name
of the presentor's nominee, how many
items have been presented for transfer?
Answer: Nine. Since the certificates
represent nine different issues, nine
items have been presented for transfer.
(8) Question: Is each broker
originated-window-ticket contained in
or attached to an seL a separate item?
Answer: No. An SCL, not each broker
originated-window-ticket attached
ther'to, is a separate item.
(9) Question: Is the entire SCL one
item or is each line on an SCL
considered a separate item?
Answer: The entire SCL, and not each
line 'thereon, is a single "item." II
(10) Question: When a transfer agent
receives certificates covered by one
instruction from one presentor to
transfer lhe shares to a number of
shareholders, resulting in the issuance of
a greater number of separate
certificates, how many items have been
pres'mted for transfer?
Al1swer: Assuming that all certificates
presented for transfer are of the same
issue of securities, only one item has
been presented for transfer since there
is only one presentor.
Illustration: Facts: A transfer agent
receives five certificates from one
broker under one transmittal letter
requesting that the total amount of
shares be transferred to ten
shareholders in 20 separate certificates.
Inturpretation: There is only one
pre ientor. Therefore, assuming all five
cer _ifieates are of the same issue of
securities, only one item has been
presented for transfer.
(11) Question: Do either of the
following constitute an "item" presented
for transfer:
(a) A bond called for partial reduction
only?
Answer: No. If there is only a partial
reduction of the bond, i.e., the bond is
subject to a series of partial cash
ree 1mptions and has been presented for
on.: of them, the bond is not an "item"
subject to the turnaround rules. As
stated in Question (2) above, one of the
elements of an "item," when a
certificate is involved, is that the
certificate be "pxesented for transfer."
• The entire SCL is a single item. regardless of
whether some certificates or instructions pertaining
to any line on an SCL may be classified as
"routine," and other certificates or instructions
attached to the SeL may be classified as "non
routine." See Question (3f) and note 29 infra.
"Transfer" is defined in Rule 17Ad-l(d)
to include, among other things,
cancellation of a certificate and
issuance of a new one. However. when
a bond is presented for partial
redemption only, the certificate
presented is not cancelled and a new
certificate is not issued. Accordingly,
since there is no "transfer," the
certificate has not been "presented for
transfer" as required by Rule 17Ad-l(a)
and, therefore, is not an "item."
(b) A bond called for partial reduction
and transfer?
Answer: Yes. If the bond has been
presented for both partial reduction and
transfer, then it is an "item." 6
(12) Question: Does an issuer's
instruction to effect a stock dividend
payable from previously authorized but
unissued shares constitute an "item"?
Answer: No. Since no certificates are
presented for transfer, and since the
transfer agent does not hold the
securities as registered in the name of
the issuer-presentor, a stock dividend
issued from previously authorized but
unissued shares (i.e., original issue
securities) is not an item.
(13) Question: Is an issuer's
instruction to a registered transfer agent
to issue shares pursuant to the
company's stock purchase plan
considered an "item" subject to the
turnaround rules?
Answer: If the shares issued pursuant
to a stock purchase plan are original
issue securities, the instruction to issue
certificates for those shares is not an
"item," since no certificates are
presented for transfer and since the
instruction does not relate to securities
registered in the name of the issuer
presentor and already in the transfer
agent's possession. !
However, if treasury shares are used,
the instruction relates to securities held
by the transfer agent and registered in
the name of the presentor-company.
Accordingly, the instruction consPtutes
an item subject to the turnaround rules.7
(14) Question: When the transfer
agent, pursuant to a transfer agent
custodian or other arrangement. holds a
balance certificate registered in the
name of the depository's nominee, do
deposits of certificates by a depository,
and do fanfold instructions attached to
an SCL to withdraw by transfer under
the FAST program any shares and to
reduce the balance certificate constitute
"items"?
6However. because the transaction includes a
partial redemption. the item is "non-routine" under
Rule 17Ad-1(i)(5). Cf. Question (43) Infra,
'When any additional instruction is necessary
before transfer can be effected, the item is
considered non-routine under Rule 17Ad-1(i)(3) See
Question (30) infra.
Answer: Yes. Under the fll'st part of
the definition of an "item," 8 certificates
deposited by the depository constitute
items. The third element-"presented for
transfer"-is met because "transfer." as
defmed in Rule 17Ad-I( d), includes
registration of the change of ownership
without the physical issuance of
certificates.
Under the second part of the
definition of an "item," 9 if the transfer
agent receives an SCL with fanfold
instructions from the depository to
withdraw by transfer under the FAST
program any shares and effects transfer
by reducing the balance certificate and
by issuing certificates, the SCL with
such instructions would also constitute
an "item."
B. Outside Registrar-Rule 17Ad-l(b}:
The term "outside registrar" with
respect to a transfer item means a
transfer agent which performs only the
registrar function for the certificate or
certificates presented for transfer and
includes the persons'performing similar
functions with respect to debt issues.
(15) Question: Do the fe~eral
securities laws prohibit a registered
transfer agent from performing the
functions of both a transfer agent and a
registrar?
Answer: No; The federal securities
laws do not prohibit a single transfer
agent frOID performing both functions,
nor do the federal securities laws
require an issuer to engage two separate
entities for purposes of performing
transfer agent and registrar functions. 10
C. Made Available-Rule 17Ad-l(c}:
An item is "made available" when (1) In
the case of an item for which the
services of an outside registrar are not
required. or which has been received
from an outside registrar after
processing, the transfer agent dispatches
or mails the item to, or the item is
awaiting pick-up by. the presentor or a
person designated by the presentor. or
(2) In the case of an item for which the
services of an outside registrar are
required. the transfer agent dispatches
or mails the item to, or the item is
awaiting pick-up by, the outside
registrar, or (3) In the case of an item for
which an outside registrar has
cempleted processing, the outside
registrar dispatches or mails the item to.
or the item is awaiting pick~up by. the
presenting transfer agent.
6See Rule 17Ad-1(a) and Question [2) supra, and
Release No. 13636. (SEC Docket, at 855).
Old.
10This matter is largely governed by state law. In
addition, the various national securites exchanges
may require separte entities. See e.g., NYSE
Company :Manual, Section A1, Agencies. at A-5.

Federal Register I Vol. 45, No. 178 I Thursday, September 11, 1980 I Rules and Regulations 	59843
(16) Question: What is the meaning of
"dispatched" for purposes of Rule 17Ad
l(c)?
Answer: An item is considered
"dispatched" when it leaves the
premises where transfer agent functions
are performed and is sent to the
receiving party or to a location from
which it is piCked up by the receiving
party. 11
(17) Question: When is an item
considered "mailed" for purposes of
Rule 17Ad-l(c)?
Answer: An item is considered
"mailed" either when it is delivered to a
location from which it is collected by the
U.S. Postal Service or when it is being
delivered to the U.S. Postal Service. II
(16) Question: When a transfer agent,
after completing its performance of both
the transfer and registrar functions,
delivers by n90n on the third business
day a completed item in a properly
addressed envelope to its on-premises
mail room from which the mail is picked
up daily at 5:30 p.m. by the U.S. Postal
Service, is the item considered to have
been made available when it reaches
the mail room?
Answer: Yes. Rule 17Ad-l(c)(l)
indicates that an item is "made
available" when the transfer agent
"mails" the item to the presentor or a
person designated by the presentor. In
this instance, the mail room serves as a
designated drop area from which the
U.S. Postal Service makes daily pickups.
More importantly, since the completed
item was delivered to. the mail room by
noon of the third business day as
required by Rule 17Ad-2(a),13 the item is
considered to have been mailed 14 and,
accordingly, "made available."
(19) Question: After the transfer agent
completes transfer, the items are placed
into an outgoing mail basket from which
they are picked-up by an in-house mail
carrier. The carrier then delivers the
items to the transfer agent's central mail
facility, located several miles away,
which, in turn, delivers the items to the
U.S. Postal Service. When are the items
"made available"?
.1.nswer: The trander agent makes the
items available when the central mail
facility "mails the item[s] to * * * the
presentor." Thus, in this instance, the
items are "made available" when they
are being delivered to the U.S. Postal
Service. Iii
II See Release No. 13636. (SEC Docket. at 855).
12/d.
ISThe result would be different if the item is not
delivered to the mail room by noon on the third
business day as required by Rule 17Ad-Z(a).
14 See note 1Z supra and Question (17).
ISld. Any delay occurring before the item reaches
the U.S. Postal Service must be recorded on the
record maintained under Rule 17Ad-6(a)(1).
D. Transfer-RuJe 17Ad-l(d): (There
are two parts to, or methods which
describe, the definition of "transfer.")
The "transfer" of an item is
accomplished (1) when, in accordance
with the presentor's instructions, all acts
necessary to cancel the certificate or
certificates presented for transfer and to
issue a new certificate or certificates,
including the performance of the
registrar function, are completed and the
item is made available to the presentor
by the transfer agent, or (2) when, in
accordance with the presentor's
instructions, a transfer agent which
holds securities registered in the name
of the presentor (a) completes all acts
necessary to issue a new certificate or
certificates representing all or a portion
of those securities and makes available
the new certificate or certificates to the
presentor or a person designated by the
presentor, or (b) with respect to those
transfers of record ownership to be
accomplished without the physical
issuance of certificates, completes
registration of change in ownership of
all or a portion of those securities.
(20) Question: What is the status of an
item rejected at the window of the
transfer agent's premises?
Answer: Items presented for transfer
but rejected at the window are not
received for transfer and, accordingly,
are not subject to the turnaround rules. IS
(21) Question: How should a transfer
agent treat an item which, after some
internal circulation and review, is
rejected as unacceptable for transfer?
Answer: The item should be
considered as rejected. Since the
transfer agent, pursuant to Rule 17Ad
6(a)(1), made a record showing the date
the item was received from the
presentor, that record should indicate
that the item was subsequently rejected,
so that the item does not appear as an
"open" item on the transfer agent's
records. In addition, if an internal
control ticket was prepared prior to the
time of rejection, the ticket must be
traceable to any rejection notice sent to
the presentor.
The item should not be considered
non-routine under Rule 17Ad-l(i)(3) and
should not be logged in as a non-routine
item under Rule 17Ad-6(a)(2)(iv).
Finally, since these items are
considered rejected, they are not
included in the records required by Rule
17Ad-6(a)(2) and (a)(4) used to compute
the number of items turned around
pursuant to Rule 17Ad-2(a).
(22) Question: When a transfer agent,
pursuant to a transfer agent custodian or
other arrangntent, holds a balance
certificate representing securities
16 See Release No. 13636. (SBC Docket. at 856).
registered in the name of a depository's
nominee, does "transfer" occur when
the transfer agent either (a) issues new
certificates representing a portion of
those securities and makes the
certificates available to the depository,
or (b) registers a change in ownership
from the name of a participant in a
depository to the name of the
depository's nominee without a physical
issuance of securities?
Answer: In either case, such transfers
fall within the second method of
"transfer." Thus, although a "transfer"
usually will involve cancelling old
certificates and issuing new certificates,
no physical issuance of certificates need
occur-e.g., when a depository is the
presentor and it requests the transfer
agent, which holds a balance certificate,
to complete registration of a change of
ownership from the name of the
depositor's participant to the name of
the depository's nominee.l1
E. Turnaround-RuJe 17Ad-l(e): The
"turnaround" of an item is completed (1)
when transfer is acomplished, or (2)
when an outside registrar is involved,
the transfer agent in accordance with
the presentor's instructions completes
all acts necessary to cancel the
certificate or certificate presented for
transfer and to issue a new certificate or
certificates, and the item is made
available to an outside registrar.
(23) Question: If an outside registrar is
involved, when is turnaround 	•
completed?
Answer: Turnround is completed
when the item is made avaUable to the
outside registrar after the transfer agent
has cancelled the old certificate and has
issued the new certificate in accordance
with the prese.llor's instructions.
(24) Question: Is turnaround
completed when the transfer agent
makes the item available to an outside
registrar, even if the outside registrar
performs its function on the transfer
agent's own premises?
Answer: Yes. Rule 17Ad-l(c)(2), in
describing how an item is "made
available" to an outside registrar, does
not specify where the transfer agent
must dispatch or mail the item. In
addition, Rule 17Ad-l(b) does not
specify where an outside registrar must
perform its function. Thus, turnaround is
completed when a transfer agent makes
the item available to an outside
registrar, regardless of whether the
registrar performs its function on or off
the transfer agent's premises. 18
If/d.
18 However. the transfer agent must maintain.
pursuant to Rule 17Ad-6{a)(1)(ii). records showing
clearly when the item was made available to the
outside registrar.

S9844 	Federal Register I Vol. 45, No. 178 I Thursday. September 11, 1980 I Rules and Regulations
Illustration: Facts: A New York
transfer agent has a subsidiary transfer
agent operation located in Chicago,
which receives the items for transfer.
The cancelled certificate is forwarded to
the New York transfer agent for
issuance of the new certificate. A bank
in New York, acting as outside registrar,
daily performs its functions on the New
York transfer agent's premises.
Interpretation: The New York transfer
agent completes "turnaround" when the
new certificate is made available to the
ouside registrar's employees on the New
York transfer agent's premises.
(25) Question: Is 'an item made
available and, therefore, turnaround
completed, when, after the old
certificate is cancelled and the new one
issued, the item is placed by noon on the
third business day following its receipt
in the mail room of the transfer premises
for the only daily pick-up at 5:30 p.m. by
the U.S. Postal Service?
Answer: Yes. Turnaround is
completed either (a) when transfer is
accomplished in accordance with Rule
17Ad-1(d), which requires as the last
step in the transfer of the item making it
available to the presentor (or a person
designated by the presentor), or (b)
when an outside registrar is involved,
the item is made available to the outside
registrar.
Under Rule 17Ad-1(c), an item is
"made available" when, among other
things, the transfer agent "mails" the
item. The item is considered mailed
when it is placed by noon of the third
business day following its receipt in the
mail room on the transfer premises from
which it is collected by the U.S. Postal
Service. 19
F. Receipt-Rule 17Ad-l{g}: The
"receipt" of an item or a written inquiry
or request occurs when the item or
written inquiry or request arrives at the
premises at which the transfer agent
performs transfer agent functions, as
defined in Section 3(a)(25) of the Act.
(26) Question: Are the following
considered items received for transfer
and, accordingly, subject to the
turnaround rules:
(a) Items addressed to another
transfer agent but inadvertently
delivered to the subject transfer agent?
Answer: No. The transfer agent does
not perform transfer agent functions for
such items.
(b) Items addressed to the subject
transfer agent, but for which the transfer
agent does not perform transfer agent
functions?
Answer: No, since the transfer agent
aoes not perform transfer ageni
functions for such items.
19See Question (17) supra.
(c) Items for which the transfer agent
is the appropriate transfer agent but,
because of nonpayment of fees, refuses
to transfer such securities?
Answer: Ifthese items are promptly
returned to the presentor, they would
not be considered received for
transfer.20
(27) Question: Has "receipt" occurred
when the item arrives in the maill room
at the transfer premises?
Answer. Yes. Since the item arrived at
the premises at which the transfer agent
performs transfer agent funCtiODlIi,
receipt has occurred for purpose.. of the
turnaround rules.II The fact that the
item was received in the mail room
instead of the actual office or
department where transfer agent
functions are performed is immaterial.
Thus, when the mail room is located in
the same building as, or in a building
connected to, the transfer premises,
receipt occurs when the item arrives at
the mail room. In this connection, the
transfer agent must minimize delays
which are subject to its control. It will
be in the transfer agent's interest,
therefore, to ensure that a received item
is promptly forwarded from the mlail
room to the transfer department1'.2
(28) Question: Has "receipt" oc(;urred
when items arrive at a "drop" located a
significant distance from the transfer
premises?
Answer: No. The items have not been
received, for purposes of the turnaround
rules, until they arrive at the actual
premises where transfer agent functions
are performed. Thus, since the items
have not arrived at the actual transfer
premises when they arrive at such a
"drop," they are not considered as
having been received under Rule 17Ad
1(g).23 However, when items are
received at a "drop," a registered
transfer agent must have, pursuant to
Rule 17Ad-2(f), appropriate procedures
to assure, and must assure, that itl~ms
are promptly forwarded to the actual
transfer premises.
(29) Question: In those cases where
the named transfer agent for an issue
contracts with a service bureau, 24 which
20 If the transfer agent retains the item, ift must be
considered "received" for transfer but may be
classified as "non-routine." See Question 1.40) infra.
21 See Release No. 13636. (SEC Docket. fIt 856).
'ald.
'ald.
.. As used in this release, the terms "named
transfer agent" and "appointed transfer agent" refer
to the registered transfer agent engaged by the
issuer to perform the transfer agent functions for an
issue of securities. Except where the term "omside
ser..rice bur-dU!' is used. the tam UseiYice bureau"
refers to an entity ihBi penol'Dl8 the trander qeni
functions for that Issue for the named transfer agent
and is a registered transfer agent. A servioe bureau
arrangement is sometimes also referred til as a
"private label service,"
also is a registered transfer agent, to
perform the transfer agent functions for
the issue, including transferring the
certificates and maintaining the security
holder records, does receipt of an item
occur when it arrives at the premises of
the named transfer agent?
Answer. No. An item is "received"
when it arrives at the premises of the
transfer agent that actually performs the
transfer agent functions. Under the facts
as presented, the named transfer agent
does not perform the transfer agent·
functions: rather, those activities are
performed at the premises of the service
bureau. Accordingly, for purposes of the
turnaround rules, receipt of the item
occurs when it arrives at the service
bureau's premises.
However, pursuant to Rule 17Ad-2(f),
both the service bureau and named
transfer e,gent must have appropriate
procedures to assure, and must assure,
that items are promptly forwarded to the
premises of the service bureau.
IJJustration: Facts: Both Company A
and Com1pany B are registered with their
approprillte regulatory agency as
transfer lagents. Company A is the
named transfer agent for an issue.
Company A has contracted with
CompaJlly B, a service bureau, to perform
on behalf of Company A the transfer
agent al;tivities for that issue. Company
A does not maintain or update the
securityholder records. When an item is
presen.ted for transfer to Company A,
Company A promptly forwards the item
to Company B. Company B date-stamps
the iflem upon receipt, completes
turn,around, and makes the item
available directly to the presentor.
Comlpany B daily sends to Compan3r A a
print-out of transfers completed by
Company B. Interpretation: Company A
and B must have appropriate pI'ocedures
to assure. and must assure, that. the item
is promptly forwarded to Company B's
premises. Receipt occurs, for the
purposes of the turnaround rules, when
the item arrives at Company B's
premises. In addition, Company B m~st
maintain the appropriate records 25 and
meet the fequirad turnarotL."ld
performance.
G. Business Day-Rule 17Ad-l{h}: A
''business day" is any day during which
the transfer agent is normally open for
business and excludes Saturdays,
Sundays and legal holidays or other
holidays normally observed by the
transfer agent.
(30) Question: Would any of the
following circumstances give rise to a
determination that a given day not be
considered a "business day" ior
purposes of the turnaround rules:
IS See Rules 17Ad-6 and 17Ad-7.

Federal Register I Vol. 45, No. 178 I Thursday, September 11! 1980 t Rules and Regulations 	59845
(a) Days when, because of severe
inclement weatber, city government and
other businesses are forced to close
down. virtually all forms of
transportation are not available and
ordinary commerce is suspended, but a
bank transfer agent nevertheless opens
its transfer department with a skeleton
staff only?
Answer: Yes. Such days are not
considered "business days" for purposes
of the turnaround rules.
(b) Days when various public
transportation systems have ceased to
operate because of union or other
strikes?
Answer: No. In these circumstances,
most businesses, including transfer
agents. are still "normally open for
business." Transit strikes do not
terminate basic business operations,
even though it may be more difficult for
employees to get to work. 26
(c) Days when businesses are
requested or required to close by order
of a city, municipal or state government?
Answer: Yes. Such days would not be
considered business days for purposes
of the turnaround rules. since most, if
not all. businesses would not normally
be open.
H. Routine-Rule 17Ad-l(i): (The
definition of a "routine" item is stated in
the negative-i.e.• an item received for
transfer will be deemed routine unless it
falls within the specified exceptions
enumerated in Rule 17Ad-t(i)(1H8).) 27
(31) Question: When should a transfer
agent classify an item as "routine" or
"non-routine"?
Arlswer: The decieion that an item is
routine or non-routine must be made as
soon as the item is reviewed upon
receipt at the transfer premises. Once a
transfer agent determines that an item is
"r"utine." the item generally retains that
classification throughout the completion
of turnaround. Thus, an otherwise
rouune item does not become non
routine by virtue of internal delays in
the turnaround of the item.
(32) Question: Once an item is
determined to be "nun-routine," does it
remain so, even after additional
documentation has been received and
reviewed and the item can be
transferred?
Answer: Yes. An item that is
determined to be "non-routine" retains
26 A 10% margin in the turnaround and processing
standards exists in Rule 17Ad-2 (a) and (b). If.
despite this margin. a transfer agent still fails to
meet the turnaround or processing requi.-ement. it
should explain the ci..-cumstances in its notice of
non-compliance filed pursuant to Rule 17Ad-2 or
(d).
27The various subparagraphs of Rule 17Ad-1(i)
are set fortb below preceding the interpretations
thereunder.
that classification until turnaround is
completed.
(33) Question: What is the effect
under the turnaround rules when an
item is classified as non-routine?
Answer: Some of the turnaround rules
apply only to routine items. For
example, the three business day
turnaround requirement in Rule 17Ad
2(a) applies only to routine items. If the
item is non-routine, Rule 17Ad-2(e)
requires that the item receive "diligent
and continuous attentionh and must be
turned around "as soon as possible."
Other rules, while applying to both
routine and non-routine items,
distinguish between the two. For
example, the recordkeeping rules in Rule
17Ad-6 contain separare requirements
depending on whether the item is
routine or non-routine.
Thus, every transfer agent is
encouraged to examine carefully each
turnaround rule.
(34) Question: Is an SCL which has
attached thereto some certificates or
instructions that might be denominated
non-routine treated partially as a non
routine item? 	.
Answer: No. An SCL is a single.2s
routine item, regardless of whether some
of the certificates or instructions
attached thereto pertain to a line on the
SCL that may be classified as non
routine.29
1. Requisitioning Certificates-Rule
17Ad-l(i)(l): An item is "routine" if it
does not require requisitioning
certificates of an issue for which the
transfer agent, under the terms of its
28 See note 5 supra and Question (9).
29 Generally. before the SCL is presented to the
transfer agent. securities depositories review the
certificates and instructions and retain those items
which are non-routine. In those instances where an
SCL does contain both routine and non-routine
certificates or instructions. transfer agents might
consider using the following procedure: Notify the
depository; photocopy the SCL; transfer those
certificates. and effect transfers pursuant to those
instructions. capable of being transferred. and make
them available to the depository together with the
SCL and a memorandum containing information as
to why non-routine certificates or instructions were
not transferred; and return to the depository in a
separate envelope all non-routine certificates or
instructions not transferred. unless the depository
instructs otherwise. This is merely a suggested
procedure; other procedures may be used. However,
this procedure does not suggest or imply that the
SCL. as a single routine item. has now been broken
down into several items-some routine and some
nan fQutina; the SCL remains 8 singie, routine item
in all respects.
In all cases. appropriate documentation satisfying
Rule 17Ad-6 must be prepared and maintained. If
the transfer agent returns any certificates or
instructions because they are non-routine and
cannot be transferred. the record required by Rule
17Ad-6{a)(l)(i) for the SCL should contain either a
notation for that line. such as "returned to
presentor." or an indication of the number of lines
not transferred. such as "3 lines returned to
presentor."
agency. does not maintain a supply of
certificates.
(35) Question: Maya registered
transfer agent, which, under the terms of
its agency, is obligated to maintain a
supply of certificates for an issue of
securities, treat as "non-routine" items
received for transfer if the transfer agent
has exhausted its supply of certificates
for that issue?
Answer. No. A transfer agent, which
is required to maintain under the terms
of its agency a working supply of
unissued certificates, must treat items
received for transfer as "routine." even
though it must requisition additional
certificates from the issuer or another
source before transfer may be effected.
There is no .exception from the definition
of "routine" in such cases, even if the
transfer agent had earlier made a timely
request for more certificates and they
were not forthcoming, or even if there
was an unusually large volume I)f
trading and resulting transfers that
exhausted its supply of certificates
earlier than anticipated. The absence of
such an exception encourages the
implementation of effective inventory
control and efficient reorder
procedures.3O
2. No Additional Documents.
Explanations or Endorsements
Required-Rule 17Ad-l(i)(3}: An item is
"routine" if it does not require any
additional certifica~es, documentation,
instructions, assignments. guarantees,
endorsements, explanations or opinions
of counsel before transfer may be
effected.
(36) Question: A bond is presented for
transfer to the trustee. The trustee
subsequently forwards to the bond
registrar the bond. a bond transfer sheet
and instructions to prepare and execute
the bond as shown on the bond transfer
sheet. Is the bond a non-routine item?
Answer: No. The bond registrar is not
required to perform any additional act in
effecting the transfer of the bond which
it would not otherwise perform had the
bond been presented directly to the
bond registrar. The bond is not
transformed into a "non-routine" item
merel)' because it is first presented to
the bond trustee. Thus. unless the item
otherwise qualifies as non-routine under
Rule 17Ad-l(i), it is a routine item for
purposes of the turnaround rules.
(37) Question: When the registered
transfer agent, as trustee and
authenticating agent for a bond issue,
must forward, pursuant to the Indenture
Agreement, the bonds to the issuer for
signature by an officer in his corporate
capacity before the certificate may be
•• See Release No. 13636. (SEC Docket. at 856-S7j.

&9846 	Federal Register I Vol..45. No. 178 I Thursday, September 11, 1980 I Rules and Regulations
made available to the presentor. is the
item non-routine?
Answer. Yes. Such items may be
treated as non-routine because the
trustee, in order to effect transfer, must
obtain additional signatures from the
corporate officer.
(38) Question: A transfer agent
receives an instruction from the issuer
presentor to use treasury shares. which
are registered in the name of the issuer
and beinB held by the transfer agent, to
issue cerUficates under the issuer's
stock purchase plan. However, transtel.'
can be accomplish only after an
authorization letter is received from the
issuer. Is such an instruction a non
routine item?
Answer. Yes. U the transfer agent
must await the receipt of an
authorization letter from the issuer
presentor before accomplishing transfer,
the instruction qualifies as a non-routine
item, since additional instructions must
rll'8t be obtained from the issuer.
ll/ustration: Facts: A company
submits stock certificate transmittal
forms to its transfer agent. These forms
supply information necessary to issue
one certificate per form and designate
parUcipants eligible to receive shares of
the company pursuant to its stock
purchase plan. Three days later. the
transfer agent receives a general
transmittal letter confirming the number
of stock cerUficate transmittal forms
previously sent and indicating the
number of shares to be issued. The
transfer agent thereafter receives an
authorization letter, 8igned by an officer
of the company, instructing the transfer
agent to draw against treasury shares,
which are registered in the name of the
company and are beinB held by the
transfer agent, to fulfill the transmittal
forms. Although the transfer agent
begins issuing the new certificates as
soon as it receives the stock certificate
transmittal forms. transfer can be
accomplished only after the 	.
authorization letter is received.
Interpretation: Since the transfer agent
must await additional instructions from
the company via the authorization letter
before transfer can be accomplished, the
instruction is a non-routine item.
(39) Question: Maya service bureau,
which is a registered transfer agent,
classify items that are received from and
subsequently returned to the named
transfer agent for performance of the
registrar function as non-routine?
Answer. No. The service bureau must
classify the items as routine. even
though two separate entities perform
part of the transfer function-the
transfer activity by the service bureau
and the registrar activity by the named
transfer agent. No additional documents
or elJdorsements of the type
cont.emplated by Rule 17Ad-1(i)(3) are
re~uired. This example is similar to any
other situation where both a transfer
agent and outside registrar are involved.
IJ/ustration: Facts: The named transfer
agent for an issue receives the
certificates, 10tals and logs them. The
certificates are then forwarded to the
service bureau. which issues new
certificates and creates transfer
journals. Thereafter', the certificates are
returned to the named transfer agent.
which performs the: registrar function.
countersigns the certificates and makes
them available to the presentot.
Interpretation: the service bureau must
consider these iteml' as routine.
(40) Question: if a transfer agent
retains items received for transfer
pendinB receipt of payment of transfer
fees rather than returning them to the
presentor fOf non-pllyment, may such
items be classified us non-routine?
Answer: Yes. If tIlle transfer agent
decides to retain items at it premises
even though transfer fees for such items
have not been paid, ~e items have been
"received."sl Howe ver, such items may
be classified as "non-routine" because
the transfer agent must await additional
instruments by whit:h payment of
transfer fees is to bl! effected. In such
cases. pursuant to Hule 17Ad-2(e'). the
transfer agent is thE'n obligated both to
give such non-routine items "diligent
and continuous attention," which
includes, among ottler things. frequent
and assiduous notification to the
presentor that the item is being retained
pendfnB receipt of transfer fees. and,
-after receipt of payment, to turn around
such items "as 80011 as possible."
(41) Question: M!y an item presented
for transfer be classified as "non
routine" when. in the course of effecting
transfer, the transfer agent is required to
compute its transfnf fee and fill in
several blank checks attached to the
item with the appropriate amount?
Answer. No. Wl:len a blank check is
attached to the item and the transfer
agent can computu its transfer fee and
enter the appropriate amount on the
check, the item must be classified as
"routine." Thus. if a single certificate is
presented for transfer with a blank
check attached. tile item is routine.
Similarly. if sever,il certificates of the
same issue under one ticket are
presE!nted for transfer with blank checks
attached, the item is routine. And. if an
SCL is submitted 'With several vouchers
attac.!led. t.'le item (i.e•• the Sell is
routine. The transfer agent need not
obtain any further documentation or
endorsements. within the meaning of
S1 Compare note 20 tlith Question (26J[c) supra.
Rule 17Ad-1(i)(3), which would
transform such routine items into non
r'Jutine items. 	.
3. No Review of Certain Supporting
iJocumentation Required-Rule 17Ad
1(i)(4): An item is "routine" if it does not
require review of supporting
documentation other than assignments.
endorsements. stock powers. certified
corporate resolutions. signature or other
common and ordinary guarantees or
appropriate tax or tax waivers.
(42) Question: Are all items referred to
counsel for review considered non
routine?
Answer: No. Items referred to counsel
are not automatically non-routine under
Rule 17Ad-1(i)(4). Uthe item requires no
more than a review by counsel of the
documents listed in Rule 17Ad-1(i)(4).
the item is considered routine. If that
review, however, requires counsel to
examine other documentation. to obtain
the information listed in Rule 17Ad
1(1)(3), or to render a legal opinion. the
item would be considered non-routine.
4. Transfers Not·in Connection with a
Reorganization, Tender Offer,
Exchange, Redemption or Liquidation
Rule 17Ad-1(i)(5): An item is "routine" if
it does not involve a transfer in
connection "ith a reorganization, tender
offer, exchange, redemption or
liquidation.
('t3) Question: When a portion of III
registered bond issue is called, and the
bond registrar remits new bonds and
cash to the bondholder as well as pays
on uncashed coupons, is the item non
routine?
Answer: Yes. Under rule 17Ad-1(i)(5j,
the item involves a partial cash
redemption and, accordingly, is not
routine.
5. Recent RegisteredPublic Offerings
Not ofa Continuing Nature-Ru/e 17Ad
1(i)(8): An item is ''routine'' if it does nbt
include a security of an issue which
within the previous 15 business days
was offered to the public, pursuant to a
registration statement effective under
the Securities Act of 1933. in an offering
not of a continuing nature.
(44) Question: When does the 15
business day period start to run?
Answer. For purposes of determining
whether an item is non-routine under
this exception, the 15 business day
period begins from the closing date of
the public offering, i.e.• the date on
which the securities are delivered to the
underwriter for the issue.
(45) Question: Pursuant to a
registration statemenf effective under
the Securities Act of 1933, securities are
sold to the public in an offering not of a
continuing nature. Thirty to forty-five
days elapse before the certificates are
presented for transfer, and they are

Federal Register I Vol. 45, No. 178 I Thursday, September 11, 1980 I Rules and Regulations 	59847
presented in large quantities. May the
transfer agent treat such certificates as
"non-routine" items? 	.
Answer: No. The securities were not
offered to the public within the previous
15 business days, and the offering was
not of a continuing nature. Thus, any
such items received for transfer are
"Doutine." The increase in the volume of
transfers, because of both the offering
and the quantity of certificates
presented, does not entitle the transfer
agent to treat such items as non-routine.
(46) Question: Would the answer to
Question (45) be different if the
securities are initially registered in the
name of nominees that, more than 15
business days later, present in large
quantities certificates for breakdown
and transfer to individual
securityholders?
Answer: No. If more than 15 business
days have elapsed since the securities
were initially offered to the public in an
offering not of a continuing nature, the
items remain routine. The classification
of items is not altered merely because
the securities were initially registered in
nominee name or were presented in
large quantity for breakdown and
transfer to individual holders.
II. Rule 17Ad-2: Turnaround, Processing
and Forwarding of Items.
A. General. 32
(47) Question: Must a registered
transfer agent report to its appropriate
regulatory agency that it is meeting the
turnaround or processing requirements
of Rule 17Ad-2?
Answer: No. Rule 17Ad-2 (a) and (b)
does not require that a transfer agent
report its compliance with the
performance standards of that rule.
(48) Question: Is there an exemption
from the turnaround, processing and
forwarding requirements of Rule 17Ad-2
when a registered transfer agent
converts its transfer operations to an
"on-line" 33 system?
Answer: No. No exemption from the
requirements of Rule 17Ad-2 is provided
for a registered transfer agent that
converts from a "batch" 34 system to an
"on-line" system. There are several
reasons for reaching this conclusion.
First, in order to protect investors, it is
32The following questions and answers have
general application to some or all provisions in Rule
17Ad-2. The text of various paragraphs in Rule
17Ad-2 is set forth below preceding the
interpretations thereunder.
33 When a transfer agent uses an "on-line"
system. the master shareholder files and records are
updated immediately upon transfer.
"Under the "batch" method of updating the
shareholder records. change& to the master files are
not entered until after close of the normal business
day. when all items transferred that day are inputed
into the books and records.
important that transfer agents meet the
performance standards in Rule 17Ad-2
(a) and (b) to avoid any lag in the
transfer and processing of securities
transactions and to prevent any backlog
from occurring. Second., Rule 17Ad-6
imposes requirements that
recordkeeping be "current." If transfer
operations are shut down to allow for
conversion from one system to another,
potential problems in maintaining
"current" records may occur. Finally,
Rule 17Ad-2 provides a 10% margin for
turnaround and processing of items.
Accordingly, a registered transfer agent
must comply with the turnaround rules
when converting from the "batch"
method to an "on-line" 'system, and all
performance standards of Rule 17Ad-2
must still be met.
(49) Question: A registered transfer
agent has located in several cities
satellite offices performing various
transfer agent functions. May such
transfer agent separately compute the
performance statistics for each satellite
office?
_Answer: No. The trafisfer agent must
aggregate figures from all of its
operations when calculating turnaround
and processing performance statistics
for purposes of determining compliance
with Rule 17Ad-2 and for purposes of
recordkeeping under Rule 17Ad-6. In
addition, aggregate figures must be used
in computing volume when determining
the availability of the exemption in Rule
17Ad-4(b).
(50) Question: How should a
registered transfer agent that accepts a
new appointment treat items that are
received for transfer between the
effective date of the appointment and
the date on which the sharebolder
records and stop files are received?
Answer: Once the appointment is
effective, a registered transfer agent is
obligated to perform its contracted
transfer agent activities for those new
issues in compliance with the Act and
the rules thereunder. Hence, all items
arriving after the effective date of the
appointment, regardless of whether the
transfer agent has all the necessary
books and records to effect transfer or
processing, are treated as items received
for transfer subject to the turnaround
rules. Accordingly. a registered transfer
agent should not make its appointment
effective under its agency agreement
until it has custody and possession of all
shareholder records. stop files, unissued
blank certificates and other materials
necessary to effect transfer or
processing. To avoid the possibility of a
transfer agent falling into
noncompliance with the turnaround
rules, it is recommended that registered
transfer agents remind issuers and
others from whom tmnsfer agents
receive such records of the obligations
imposed upon transfer agents by the
turnaround rules. 35 	•
(51) Question: Does a transfer agent
satisfy the 90% standard in Rule 17Ad
2(a) and (b) by applying that standard
cumulatively to a 12 month period, i.e.,
by turning around or processing 90% of
all items received for the year by the
end of that year?
Answer: No. The 90% standard in Rule
17Ad-2(a) and (b) must be applied to
each month sePl!rately. A transfer agent
is not permitted to aggregate the
percentage of items turned around or
processed for each 12 consecutive
months to arrive at an c mual
percentage rate of 90% to establish
compliance with that rule.
B. Turnaround Requirement for
Registered Transfer Agents-Rule
17Ad-2(a): Every registered transfer
agent (except when acting as an outside
registrar) shall turnaround within three
business days of receipt at least 90
percent of all routine items received for
transfer during a month. For the
purposes of Rule 17Ad-2(a). items
received at or before noon on a business
day shall be deemed to have been
received at noon on that day, and items
received after noon on a business day or
received on a day not a business day
shall be deemed to have been received
at noon on the next business day.
(52) Question: Does a bond registrar
comply with the turnaround rules if it
transfers a registered bond within three
business days of receipt?
Answer: Yes. The person who
performs the transfer function for a
bond issue is called a "bond registrar."
Since it performs the "transfer" function
for the bond issue. a bond registrar is
treated the same as any other registered
transfer agent for purposes of the
turnaround rules. including Rule 17Ad
2( a).36 Accordingly, the transfer of bonds
by a bond registrar is subject to the
three business day turnaround
requirement of Rule 17Ad-2(a).
(53) Question: Maya transfer agent
that uses an outside registrar choose to
calculate its turnaround performance as
if it performed the registrar function, i.e.•
by recording the dates on which each
item is received from and made
available to the presentor (rather than
by recording the date on which each
item is made available to the outside
36 See generally Release No. 13636. (SEC Docket.
at 857).
36 A bond registrar is not an "outside registrar,"
which is defined in Rule 17Ad-l[b) as a transfer
agent that performs only the registrar funcliol" or
similar functions with respect to debt issues and
which must process items within one business day
under Rule 17Ad-2(b}

59848 	Federal Register I Vol. 45, No. 178 I Thursday, Septemb~r 11, 1980 I Rules and Regulations
registrar, as contemplated by Rule
17Ad-1(c)(2) and required by Rule
17Ad-6(a)(1)(ii))?
Answer: Yes. The effect of this
election is to treat the outside registrar
as if the registrar function were
performed in-house. Generally, when an
outside registrar is involved, a registered
transfer agent hall three business days
under Rule 17Ad-2(a) to "turnaround"
the item, which is defined under Rule
17Ad-1(e) to include making the item
available to the outside registrar
pursuant to Rule 17Ad-1(o)(2}. The
outside registrar, pursuant to Rule
17Ad-2(h), then has one business day to
"process" the item, which, under Rule
17Ad-t(!}, is(fefined as performing the
registrar function and making the item
available to the presenting transfer
agent pursuant to Rule 17Ad-1( c)(3). The
transfer agent, in turn, must make the
item available to the presentor, as
required by Rule 17Ad-l(c)(1). Thus, the
entire procedure, from the. time of
receipt by the transfer agent until the
item is made available to the presentor,
normally takes four business days.
However, if the transfer agent elects
to treat the outside registrar as an in
house registrar, the item must be made
available to the presentor within three
bnsiness days. When an outside
registrar is not involved, "turnaround"
of an item is completed, under Rule
17Ad-1(e), when "transfer" is
accomplished. "Transfer," by definition
under Rule 17Ad-l(d), includes
performing the registrar function as well
as making the item available to the
presentor. Thus, turnaround of an item
does not involve the additional business
day which would otherwise occur.
If the requirements of Rules 17Ad-2(a)
(turnaround within three business days),
17Ad-l(e) (completing turnaround by
accomplishing transfer),17Ad-l(d)
(transfer, including the registrar
function), and 17Ad-l(c)(1) (making the
item available to the presentor) are met,
the transfer agent is required under Rule
17Ad-6(a)(1) to prepare records showing
the business days on which each item is
received from and made available only
to the presentor.
The transfer agent's election to
comply with the turnaround rules and to
calculate its turnaround performance
under Rule 17Ad-6(a) in this manner
must be set forth in a written
undertaking and sent to the Commission
and the transfer agent's appropriate
regulatory agency. In addition. the
written undertaking must provide that a
failure to comply with the turnaround
performance standards under Rule
17Ad-2(a) will be charged to the
transfer agent, irrespective of whether
[
the delays were caused by the transfer
agent or by the Gu1side registrar._[
(54) Question: What is the effeqt of the
noon cut-off provision when an item is
received before noon in the transfer
agent's mail room but not forwarded
until after noon to the transfer 	i
department where dating of the item
occurs? 	.:
Answer: lltems received in the transfer
agent's mail room, located on the '
premises where the transfer activities
are actually pelformed, are considered
"received" under Rule 17Ad-l(g).r'
Thus, under Rule 17Ad-2(a), items
received in the mail room at or before
noon on a busmess day are deem~d
received by the transfer agent at noon
on that same business day, even though
the items may not be forwarded until
after noon to the transfer department.
When the items are dated by tIle
transfer department and not by the mail
room, the transfer agent rU'st mus~
determine the cut-oft' time by whiph all
items received at or before noon in the
mail room wiIDi be forwarded to tile
transfer department. Then the transfer
agent m1Ulst observe this cut-off tiIhe for
date-stampmg items received in the
transfer department. To implement this
prooedme, the transfer department must
receive a comntllllllittmoot from the ~ail
room that aU items received at or'l before
noon by the mail room will be
forwarded by that specified cut-off time
to the transfer department. Finally, the
transfer agent must periodically check to
ensure that the mail room is meeting its
commitment.
Illustration: Facts: An item is received
by the mail mom at the transfer
premises at 11:45 a.m. on Monday, a
business day. The item is not date or
time-stamped at that time by the mail
room. By 2:00 p.m. on Monday, all items
received by the mail room at or before
noon (including the item received at
11:45 a.m.) are brought to the transfer
department where they are date
stamped. llnterpretation: The item was
received before noon and must be date
stamped accordingly. In addition, since
the item was received before noon on a
business day, it must be turned around
by noon Ollll Thursday, the third next
business day.
(55) Question: When, due to inclement
weather, airports close for several days
suspending the delivery of items, is an
exemption from the requirements of
Rule 17Ad-2(a) available to a transfer
agent for the large quantity of back
items received after the airports reopen
and deliveries recommence?
a'See Question (27) supra, and Release No. 13636.
(SEC Docket, at 856).
Answer.' No. The turnaround roles do
not provide automatic exemptions for
inclement weather or other acts of God.
A lransfer agent is required to meet the
turnaround requirements for all items
received, even if an unusually large
quantity of items is presented on a given
day. This question illustrates why Rule
17Ad-2 (a) and (b) provides a 10%
margin. Nevertheless, ifa transfer agent
is unable to meet the turnaround or
processing requirements of Rule 17Ad-2
(a) or (b) because ofweatb.er conditions,
the notice required to be filed by Rule
17Ad-2 (c) or Cd) should state such
circumstances.
(56) Question: When must the
remaining 10% of routine items .
presented al1lld received for transfer be
turned aroood? 	.
Answer: Rule 17Adl-2(e) requires that
routine items not turned around withiI1
three business days of receipt must be
turned aroood"promptly," which, under
usual circWllllstances, mealll1llS within one
additional busil1lless day.as
c. Processing Requirement for
Outside Registrars-Rule 17Ad-2{b):
Every registered transfer agent acting <liS
an outside registrar shall process 39 at
least 00 percent of all items received
during a month (1) by the opening of
business on the next lmsilllless day, in
the case of items received at or before
noon on a business day, and (2] by nOOD
of the next business day, il1ll the case of
items received after noon on a business
day. For the purposes of paragraphs (b)
and (d) ofRwe 17Adl-2, "items received"
shall not include any item enumerated
in Rule 11Ad-l(i) (5), (6). (7) or (8) or any
item which is not accompanied 'by a
debit or cllll1llcelled certificate. For the
purposes of this paragraph. items
received on a day not a business day
shaH be deemed to have been received
before nOOl1ll on the ne~t business day.
(57) Question: If the transfer agent and
'outside registrar have so agreed, mayan
outside registrar satisfy the processing
requirements of Rule 17Ad-2(b) by
notifying the presentillllg transfer agent
that an item is available for pick-up, if
the item is in fact available for pick-up?
Answer. Yes. To accomplish
processing, whiclll is dermed in Rule
17Ad-l(l),.oo the outside registrar is
required to perform the registrar
function and to make available to the
a8 See Release No. 110000. (SEC Docket, a. 859).
89Rule 17Ad-1I[!) provides: "111e term ·P"P.cells·
means the accomplishing by all outside registrar of
all acts necessary (1) to perform the registrar
function and to make available to the presenting
transfer agent the completed certificate or
certificates or 12j to advise the presenting transfer
agent, orally OT in writiwl, why performance of the
registrar function Is delayed or may not be
completed."
«lid.

Federal Register I Vol. 45, No. 178 I Thursday, September 11, 1980 I Rules and Regulations 	59849
presenting transfer agent the completed
certificate or certificates.
Rule 17Ad-1(c)(3) provides that an
item is "made available," in the case of
an item for whJch an outside registrar
has completed processing, when "the
outside registrar dispatches or mails the
item to, or the item is awaiting pick-up
by, the presenting transfer agent." The
understanding between the outside
registrar and the presenting transfer
agent will govern which of the
alternative methods permitted by Rule
17Ad-1(c)(3) will be used. If the parties
have agreed that the presenting transfer
agent will "pick-up" the processed item
and that the outside registrar will notify
the transfer agent when the item is
available for pick-up, then the item is
processed when the outside registrar
completes the registrar function and
notifies the presenting transfer agent
that the completed certificate is in fact
awaiting pick-up.
The outside registrar must be
consistent in clocking the completion of
its processing with the alternative
agreed upon-in this case, notification
that the item is awaiting pick-up. To
accomplish processing, notification that
an item is awaiting pick-up must be
given to and received by the presenting
transfer agent no later than the time
period within which processing must be
accomplished under Rule 17Ad-2(b).
Thus, in the case of an item received at
or before noon on a business day,
notification that the item is awaiting
pick-up must be given byihe opening of
business on the next business day; and,
in the case of an item received after
noon on a business day, by noon of the
next business day.
(58) Question: Within what time
period must the remaining 10% of items
be processed?
Answer: Rule 17Ad-2(e) requires that
items not processed within the periods
prescribed by Rule 17Ad-2(b) shall be
processed "promptly," which in usual
circumstances means by the end of the
business day following the day of
receipt. 41
D. Notice of Non-Compliance-Rule
17Ad-Z(c}: Any registered transfer agent
which fails to comply with paragraph (a)
of Rule 17Ad-2 with respect to any
month shall, within ten business days
following the end of such month, file
with the Commission and the transfer
agent's appropriate regulatory agency, if
it is not the Commission, a written
notice in accordance with paragraph (h)
of Rule 17Ad-2. Such notice shall state
the number of routine items and the
number of non-routine items received
for transfer during the month, the
41 See Release No. 13636. (SEC Docket. at 859).
number of routine items which the
registered transfer agent failed to turn
around in accordance with the
requirements of paragraph (a) of Rule
17Ad-2, the percentage that such routine
items represent of all routine items
received during the month, the reasons
for such failure, the steps which have
been taken, are being taken or will be
taken to prevent a'future failure, and the
number of routine items, aged in
increments of one business day, which
as of the close of business on the last
business day of the month have been in
its possession for more than four
business days and have not been turned
around.
(59) Question: For purposes of the
notice requirement, must routine items
not turned around within the prescribed
time period and in a transfer agent's
possession be reported only in the
month they were received, or must they
be reported on a cumulative basis?
Answer: Rule 17Ad-2(c) requires a
registered transfer agent that does not
comply with Rule 17Ad-2(a) with
respect to any 'month to file a written
notice stating, among other things, "the
number of routine items which the
registered transfer agent failed to turn
around" in accordance with Rule 17Ad
2(a). This requirement applies only to
routine items received for transfer
during that particular month which were
not turned around in three business
days; it does not refer to all outstanding
items, regardless of the month in which
they were received,
However, Rule 17Ad-2(c) also
requires i.Uat the notice state "the
number of routine items, aged in
increments of one business day, which
as of the close of business on the last
business day of the month, have been in
(the transfer agent's) possession for
more than four business days and have
not been turned around." 42 If routine
items received for transfer in a previous
month and not turned around within
three business days are still in the
transfer agent's possession as of the
close of business on the last business
day of the current month, 43 those items
42Thls requirement of Rule 17Ad-2(c) should be
read in conjunction with Rule 17Ad-6(a}(Z}(vi}.
which requires a registered transfer agent to make
and keep current a record showing for each month
"the number of routine items that. as of the close of
business on the last business day of each month,
have been in such registered transfer agent's
possession for more than four business days. aged
in increments of one business day (beginning on the
fifth business day)." In this case. a cumulative
record of aged items must be made of aU routine
items not turned around within three business days
during all months in which those items were
outstanding. See Release No. 13636, n. 18. (SEC
Docket, at 864 n. 18).
43 11 should be noted, however. that Rule 17Ad
2(e) requires all routine items not turned around
must»e included in the current month's
notice of non-compliance. Accordingly,
this aspect of the notice is cumulative.
Illustration: Facts: Ten routine items
are received for transfer in January.
Eight of those items are turned around
within three business days.
Interpretation: A written notice,
reporting the two items, is required to be
filed for the month of January.
Facts: In February, ten routine items
are received for transfer. Eight of those
items are turned around within three
busines days. However, as of the close
of business on the last business day in
February, the transfer agent had not
turned around within three business
days the remaining two items received
in February, and, when aged in
increments of one business day, had
them in its possession for more than four
business days. In addition, the transfer
agent had not yet turned around the two
items received in January.
Interpretation: The transfer agent has
not met turnaround under Rule 17Ad
2(a) and must file for the month of
February a notice of non-compliance
which will include the two outstanding
routine items for February. In addition.
the notice of non-compliance filed for
the month of February must include. as
aged items. the two items received in
January but not yet turned around. In
such a case, however, the transfer agent
has violated Rule 17Ad-2(e). 44
E. Turnaround and Processing of
Remgjning-Routine and All Non-Routine
Items-Rule 17Ad-Z(e}: All routine
items not turned around within three
business days of re aeipt and all items
not processed withm the periods
prescribed by paragraph (b) of Rule
17Ad-2 shall be turned around or
processed promptly, and all non-routine
items shall receive diligent and
continuous attention and shall be turned
around as soon as possible.
(60) Question: What are the time
requirements regarding the turnaround
of "non-routine" items?
Answer: The turnaround rules do not
impose a specific time period within
which turnaround of non-routine items
must occur. However, Rule 17Ad-2(e)
requires that all "nol-routine items shall
receive diligent and continuous
attention and shall be turned around as
soon as possible." This is a flexible
standard dependent on the facts and
circumstances of each case. If
experience indicates that a specific
standard is necessary, the Commission
within three business days of receipt to be turned
around ''promptly,'' which. in the usual case. means
within one additional business day. Accordingly,
routine Items received in the previous month must
be given precedence over. and turned around
before, items received in the current month.

59850 	Federal Register I Vol. 45, No. 178 I Thursday, September 11, 1980 I Rules and ~egulations
will consider proposing such a
requirement.
F. Receipt of Items Off the Transfer
Premises-Rule 17Ad-2fO: A registered
'transfer agent which receives items at
locations other than the premises at
which it performs transfer agent
functions shall have appropriate
procedures to assure, and shall assure,
that items are forwarded to such
premises promptly.
(61) Question: When the named
transfer agent for an issue contracts
with a service bureau, which is also a
registered transfer agent, to perform for
it the transfer '8gency functions, when is
the item considered received for
transfer?
Answer: Items are received for
transfer when they arrive at the
premises of the service bureau. even if
the items were first sent to the named
transfer agent. However. both the
named transfer agent and the service
bureau. as registered transfer agents,
must have appropriate procedures to
assure that items which are received by
the named transfer agent are forwarded
promptly to the service bureau.
m. Rule 17Ad-4: Exemptions From
Certain Turnaround Rules.
A. Exempt Transfers-Rule 17Ad
4(a}:Rules17Ad-2.17Ad-3 and 17Ad
6(a) (1) through (7) and (11) shall not
apply to interests in limited
partnerships, to redeemable securities of
investment companies registered under
Section 8 of the Investment Company
Act of 1940. or to interests in dividend
reinvestment programs.
(62) Question: If the issuer acts as its
own transfer agent for its only issue of
securities. which are interests in joint
ventures. are transfers of those interests
exempt from the turnaround rules under
Rule 17Ad-4(a)? 	.
Answer: Yes. Rules 17Ad-2. 17Ad-3
and 17Ad-6(a) (1) through (7J"and (11)
do not apply to the transfer of interests
in joint ventures; provided that the
certificates are legended and there are
restrictions on transferability. such as
the existence of stop-transfer
instructions on the shareholder records
and the requirement of consent by the
issuer or other authorized person before
transfer can be effected. so that no such
item would be routine as defined in Rule
17Ad-l(i); and provided that the
securities are neither traded on any
securities exchange or in the over-the
counter market nor ilie subject of
market-making activity by any broker
dealer. However, transfers of interests
in joint ventures remain subject to Rules
17Ad-l; 17Ad-4: 17Ad-5; 17Ad-6(a) (8).
(9) and (10); 17Ad-6 (b) and (c); and
17Ad-7.45
(63) Question: Does the issuance.
redemption or transfer of interests in a
unit investment trust registered under
Section 8 of the Investment Company
Act of 1940 fall within the exemption
provided in Rule 17Ad-4(a)?
Answer. Yes. The exemption
contained in Rule 17Ad-4(a) includes
the issuance, redemption or transfer of
redeemable securities of registered unit
investment trusts.46
B. Exempt Transfer Agents-Rule
17Ad-4(b}: Except as provided in
paragraph (c) of Rule 17Ad-4. Rules
17Ad-2 (a), (b). (c). (d) and (h), 17Ad-3
and 17Ad-6(a)(2) through (7) and (11)
shall not apply to any registered transfer
agent (1) which during any six
consecutive months shall have received
fewer than 500 items for transfer and
fewer than 500 items for processing and
(2) which. within ten business days
following the close of the sixth such
consecutive month, shall have filed with
its appropriate regulatory agency 47 a
notioe certifying to that effect
(hereinafter an "exempt transfer agent").
(64) Question: Based on the number of
Certificates received for transfer. maya
registered transfer agent for an issue
obtain an exemption under Rule 17Ad
4(b). even though the outside registrar
for that same issue remains ineligible for
the exemption?
Answer: Yes. To qualify for an
exemption. a transfer agent must receive
fewer than 500 items for transfer and
fewer than 500 items for processing. An
"item" with respect to an outside
registrar is dermed in Rule 17Ad-1(a) as
"each certificate to be countersigned."
An "item" with respect to a transfer
agent that performs transfer activities,
however. is defined. in pertinent part. as
"a certificate or certificates of the same
issue of securities covered by one ticket
(or. if there is no ticket, presented by
one presentor) presented for transfer
* * *." Consequently. in order to qualify
for an exemption under Rule 17Ad-4(b).
an outside registrar must receive fewer
than 500 certificates for countersigning
and for processing during any
consecutive six month period. However.
the transfer agent for the same issue
may have received fewer than 500 items
covering more than 500 certificates
during the consecutive six month period
and. accordingly, qualify for the
exemption.
(65) Question: Maya registered
transfer agent qualify as an "exempt
45 See generally Release No. 13636. (SEC Docket,
at 855 and 862).
46 See Release No. 13636. (SEC Docket. at 861).
47Rule 17Ad-2(hj states with which regulatory
agency the notice must be filed.
transfer agent" when it performs both
the transfer agent activities for some
issues and the processing activities as
an outside registrar for other issues?
Answer: Yes. If. during any
consecutive six month period. a transfer
agent receives fewer than 500 items for
transfer for those issues for which it
performs transfer activities and fewer
than 500 certificates for countersigning
and processing for those issues for
which it acts as an outside registrar. it
will qualify as an "exempt transfer
agent:'
(66) Question: Maya transfer agent
that has recently assumed the transfer
agent function& for an issue be eligible
for an exemption under Rule 17Ad-4(b).
even though it has not performed the
transfer agent functions for the requisite
six month period. by tacking onto its
period of performapce the performance
by the prior transfer agent for that issue?
Answer: Yes. The new transfer agent
qualifies as an exempt transfer agent
under Rul~ 17Ad~(b}. provided it can
demonstrate. throUgh appropriate
records and documentation, that the
previous transfer agent in fact received
fewer than 500 items for transfer and
fewer than 500 items for processing
during the immediately preceding six
consecutive months.48
Illustration: Facts: For the period
December 1 through May 31. an issuer's
transfer agent received 60 items for
transfer. On June 1. after its registration
as a transfer agent became effective. the
issuer assumed· the transfer agent
functions for its securities. On June 7,
the issuer-transfer agent filed with the
Commission a notice certifying that it
received fewer than 500 items for
transfer and fewer than 500 items for
processing for the six consecutive
months ending May 31 and. accordingly.
that the issuer qualified as an exempt
transfer agent. Interpretation: Since the
previous transfer agent received fewer
than 500 items for transfer and fewer
than 500 items for processing during the
preceding six month period. the issuer
qualifies as an exempt transfer agent
under Rule 17Ad-4(b}, provided it can
demonstrate through appropriate
records and documentation that the
prior transfer agent received. in fact.
fewer than 500 items for transfer during
December 1. through May 31.
(67) Question: In order not to exceed
the requirement in Rule 17Ad-4(b} that
the transfer agent receive fewer than 500
48 Although such tacking is permitted. if the
number of items received for transfer by the transfer
agent lleeking to qualify as an exempt transfer agent
together with the number of items received by the
prior transfer agent exceeds 500 for the preceding
six consecutive month period. exempt status would
not be available.

Federal Register I Vol. 45. No. 178 I Thursday. September 11. 1980 I Rules and Regulations 	59851
items for tra~sfer and processing, maya
transfer agent combine several items of
the same issue received from several
presentors in order to qualify as an
exempt transfer agent?
Answer: No. If there is no ticket. an
"item" is defmed by Rule 17Ad-1(a) to
mean certificates of the same issue of
securities presented for transfer at the
same time by one presentor. Thus.
certific..tes of the same issue presented
by several presentors must be treated as
separate items and must not be
combined when determining the
availability of the exemption under Rule
17Ad-4(b), even though all certificates
relate to the same issue of securities.
(68) Question: For purposes of
determining whether a transfer agent
qualifies as an exempt transfer agent.
must a transfer agent. which has
satellite offices located throughout the
country, aggregate the total number of
items received for transfer and fer
processing by all of its offices. even if
one or more satellite offices perform
transfer agent or registrar activities only
for securities which are not qualifYing
securities?
Altswer: Y'es. A transfer agent must
aggregate the total number of items
received by all of its offices when
computing volume for purposes of Rule
17Ad-4(b).49 Once a transfer agent
becomes registered with its appropriate
regulatory agency, the turnaround rules
apply to all of its transfer and
processing activities, including those
involving non-qualifying securities.
Accordingly. the term "item" includes
both qualifying and non-qualifying
securities.50 Thus. a registered transfer
agent must aggregate the total number of
items (inc!uding both qualifying
securities and non-qualifying securities)
received by it and its satellite offices for
purposes of determining whether it
qualifies as an "exempt transfer agent."
C. Loss of Exempt Transfer Agent
Status-Rule 17Ad-4(c}: Within five
business days follOwing the close of
each month. every exempt transfer agent
shall calculate the number of items
which it received during the preceding
six months. Whenever any exempt
transfer agent receives 500 or more
items for transfer or 500 or more items
for processing during any six
consecutive months. it shall. within ten
business days after the end of such
month. file with its appropriate
regulatory agency a notice to that effect.
Thereafter. beginning with the fll'st
month following the month in which
such notice is required to be filed. the
registered transfer agent shall no longer
49 See Question (49) supra.
&OSee Question (1) supra.
be exempt under paragraph (b) of Rule
l~Ad-4 from the requirements of Rules
17Ad-2 (a). (b). (c), (d). and (h). 17Ad-3
and 17Ad-6(a) (2) through (7) and (11).
Any registered transfer agent which has
ceased to be an exempt transfer agent
shall not qualify again for exemption
untU it has conducted its transfer agent
operati9ns pursuant to the foregoing
rules for six consecutive months
following the month in which it filed the
notice r,quired by this paragraph.
(69) Question: Must a registered
transfer agent. which has filed the
appropriate ~otlce certifying that it is an
exempt transfer agent under Rule 17Ad
4(b). file on a monthly basis additional
notices to retain its exempt status?
Answer: No. A transfer agent that has
filed a notice certifying its exempt status
under Rule 17Ad-4(b) should not file
any additional exemption notices, as
long as it continues to receive fewer
than 500 items for transfer and fewer
than 500 items for processing during any
consecutive six-month period.
However. Rule 17Ad-4(c) requires
every exempt transfer agent to test
continuously for the availability of the
exemption by determining, within the
first five business days of each month,
the number of items received for
transfer and the number of items
received for processing during the
immediately preceding six months.
Whenever any exempt transfer agent
has received 500 or more items for
transfer or 500 or more items for
processing during any six consecutive
months, Rule 17Ad-4(c) requires it to file
a notice to that effect within ten
business days after the end of the sixth
month. Thereafter. beginning with the
first month following the month in which
such notice is required to be filed. the
transfer agent no longer is exempt.
Illustration: A transfer agent that has
submitted by July 15, 1980 (the tenth
business day in July) an exemption
notice based upon its operations from
January 1st through June 30th. must
determine by August 7th (the fifth
business day in August) the number of
items received for transfer and the
number of items received for processing
for the period February 1st through July
31st; and by September 8th (the fifth
business day in September). it must
make the same determination for the
period March 1st through August 31st;
and so on.
If the calculation performed by August
7th demonstrates that the transfer agent
received during the six-month period.
from February 1st through July 31st, 500
or more items for transfer or 500 or more
items for processing. the transfer agent
would be required to file the requisite
notice by August 14th (the tenth
business day after July 31st). Finally. its
exempt status would terminate as of the
close of business on August 31st.
(70) Question: What is the definition
of "item" for purposes of determining
under Rule 17Ad-4(c) the continuing
availability of the Rule 17Ad-4(b)
exemption tQ a transfer agent that does
not act as an outside registrar?
Answer: A transfer agent that does
not act as an outside registrar does not
receive items for "processing," as that
term is defined in Rule 17Ad-l(f).
Accordingly, for purposes of
determining the continuing availability
of exempt transfer agent status under
Rules 17Ad-4 (b) and (c), such a transfer
agent need only compute whether fewer
than 500 items have been received for
transfer during the preceding six
consecutive months.
(71) Question: Does an exempt
transfer agent lose its exempt status by
issuing a stock dividend of original issue
securities. if the additional certificates
issued increase the number of items to
more than 500 for a six consecutive
month period? 	.
Altswer: No. Since stock dividends of
original issue securities are not items
received for transfer. 51 the issuance of
the new certificates is not included in
the calculation of items transferred and
processed for purposes of Rule 17Ad
4(c).
IV. Rule 17Ad-5: Written Inquiries and
Requests.
A. General.52
(72) Question: If a co-transfer agent
receives a written inquiry or request
5ubject to Rule 17Ad-5 to which the
principal transfer agent is responsible
for responding, and the co-transfer agent
promptly forwards such communication
to the principal transfer agent. when is
the inquiry or request considered
''received''?'
Altswer: For purposes of determining
the required time period within which a
response must be made under the
various paragraphs of Rule 17Ad-5.a
written inquiry or request is "received,"
under Rule 17Ad-l(g). when it arrives at
the premises of the transfer agent
responsible for making the response 53_
in this case. the principal transfer agent.
(73) Question: If a transfer agent,
which is not the issuer, receives a
written inquiry subject to Rule 17Ad-5
and refers the inquiry to one of its
special departments or to the issuer for
&1 See Question (12) supra.
&2The following questions and answers have
general application to some or all of the provisions
in Rule 17Ad-S. The various paragraphs in Rule
17Ad-s are set forth below preceding the
interpretations thereunder.
&3 See also Questions 28 and Z9 supra.

&98SZ 	Federal Rqlster I Vol. 45. No. 178 I ThW'Sday. September 11, 1980 I Rules and Regulations
response, has the transfer agent met its
obligations under Rule 17Ad-5?
Answer. No. A response has not been
made and the requirements of Rule
17Ad-5 have not been satisfied, when
the transfer agent sends, In accordance
with its Intemal procedures, the Inquiry
out of the transfer department to
another department or to the issuer for
response. Rather, the tJ.·ansfer agent still
must make the required response within
the time periods specified in Rule
17Ad-5.
(74) Question: In countins the number
of business days in wbich a transfer
agent is required to respond 10 written
inquiries and requests under Rule 17Ad
S, should the transfer agent treat
inquiries received at or before noon on a
business day as havins been received at
noon on that day, and treat inquiries
received after noon OD, a business day or
received on a non-business day as
having been received ,It noon on the
next business day?
Answer. No. The noon-ta-noon cut-oH
applicable for computing tumaround
under Rule 17Ad-2 is not relevant to the
calculation of time peJrlods under Rule
17Ad-S. Rather, timel), compliance is
measured in terms of business days, as
defined in Rule 17Ad-·1(h).
(75) Question: If an inquiry relates to
activities of a prior trlmsfer agent whose
duties have recently been assumed by
the successor transfer agent, and if the
successor transfer agent is unable to
respond because it does not have the
necessary records, how can it comply
.with Rule 17Ad-5?
Answer. The successor transfer agent
complies with Rule 17Ad-5 when it
responds, within the required time
period, that it has recently been
appointed the transfer agent for the
issue and that additional time is
necessary to research and answer the
question. Once the transfer agent is able
to respond, it must do so as promptly as
possible."
However, registered transfer agents
are immediately subject to the
turnaround rules upon appointment and
should remind others of the obligations
imposed on them by these rules.
Accordingly, appointment should not be
made effective until the transfer agent
has possession of all necessary
records.6S
B. Requests Regarding Status 01 Items
Presented for Transfer-Rule 17Ad-S(a):
When any person makes a written 	.
inquiry to a registered transfer agent
concerning the status of an item
presented for transfer during the
preceding six months by such person or
1I4 See also Question (76) infra.
6& See Question (SO) supra.
anyone acting on his behalf, which
inquiry identifies the issue, the number
of shares (or principal amount of debt
securities or number of units ifrelating
to any other kind of security) preslBnted,
the approximate date of presentment
and the name in which it is registered,
the registered transfer agent shall,
within five business days followir18
receipt of the inquiry, respond, statins
whether the item has been received; if
received, whether it has been 	•
transferred; if received and not
transferred, the reason for the delay and
what additional matter, if any, is
necessary before transfer may be
effected; and, ifreceived and
transferred, the date and manner In
which the completed item was made
available, the addressee and address to
which it was made available and the
number of any new certificate which
was registered and the name in which it
was registered. If a new certificate is
dispatched or mailed to the presentor
within five business days following
receipt of an inquiry pertaining to that
-certificate, no further response to the
inquiry shall be required pursuant to this
paragraph.
(76) Question: When a registered
transfer agent does not know why
transfer of an item has been delayed,
may it respond by stating that it will
research the question and respond after
an answer can be determined?
Answer. No. Such a response does not
satisfy the requirements of Rule 17Ad
5(a), which requires, in the case of an
item received but not transferred, a
statement of "the reason for the delay
and what additional matter, if any, is
necessary before transfer may be
effected * * *." However, if the transfer
agent, after a good faith and diligent
effort to research the question, must
respond in order to meet the time
requiremenet of five business days, no
violation of the rule will occur from the
occasional response that further
research is necessary: provided, the
transfer agent does, in fact, send within
a reasonable time follow-up
correspondence containing an
appropriate and complete response: and
further provided, this is not a recurring
practice of the transfer agent.
C. Certain Broker-Dealer Requests
Rule 17Ad-6(b): When any broker
dealer requests in writing that a
registered transfer agent acknowledge
the transfer instructions and the
possession of a security presented for
transfer by such broker-dealer or
revalidate a window ticket "with
"The Commission understands that the phrase
"revalidate a window ticket" bas a generally
accepted meaniDl in the industry. "A transfer agent
respect to such security and th request
identifies the issue, the number of
shares (or principal amount of debt
securities or number of units if relating
to any other kind of security). the
approximate date of presentment, the
certificate number and the name in
which it is registered, every registered
transfer agent shall within five business
days following receipt of the request, in
writing, confirm or deny possession of
the security, and, if the registered
transfer agent has possession, (1)
acknowledge the transfer instructions or
(2) revalidate the window ticket. If a
new certificate is dispatched or mailed
to the presentor within five business
days following receipt of a reque .. :
pertaining to that certificate, no further
response to the inquiry shall be required
pursuant to this paragraph.
(77) Question: Does Rule 17Ad-5(b)
apply to a bank which submits a written
inquiry requesting the transfer agent
either to acknowledge the transfer
instructions and the possession of a
security presented for transfer or to
revalidate a window ticket with respect
to that security?
Answer. No. Rule 17Ad-5(b) is limited
to written requests received specifically
from broker-dealers. However, Rule
17Ad-5(a) covers the type of inquiry in
question; it applies to "any person,"
including a bank.
(78) Question: Must a registered
transfer agent respond in writing within
five business days following receipt of a
broker-dealer's request to acknowledge
transfer instructions and possession of a
security or to revalidate a window
ticket, regardless of the fee arrangement
between the transfer agent and the
broker-dealer for providing such
information?
Answer: Yes. Rule 17Ad-5(b) does not
authorize a registered transfer agent
either to charge a fee or to condition its
response upon receipt or assurance of
payment of a fee.67 Thus, a registered
transfer agent must make a timely
written response whether or not it has
charged or received a fee.68
i8 requested to 'revalidate a window ticket' when
the presentor desires acknowledgment in some
fasbion (e.g., by tlme-8tamplng again a copy of the
window ticket) that the item is in the transfer
agent'8 possession pursuant to the presentor's
transfer instructions." Release No. 13636, II. 17. (SEC
Docket, at 863 11.17).
'7References to a fee appear in Rule 17Ad-5(c)
and (d) (17 CFR 240.17Ad-5(c) and (d)). See also
Release No. 13638. (SEC Docket. at 863).
"Registered transfer agenta should be aware of a
broker-dealer's obligations under Rule 15c9-3(c)f3)
17 CFR 24O.15c3-3(c)(3)). regarding a brokeMiealer'8
control of customer securities. and Rule 17a-13(b)(3)
17 CFR 240.17a-13(b)(3)), regarding quarterly
security counts by broker-dealers. Rule 17Ad-5(b)
was written to complement those rules.

Federal Resister I Vol. 45, No. 178 I Thursday, September 11, 1980 I Rules and Regulations 	59853
D.Inquiries or Requests Which May
Not Meet Rule 17Ad-5(a) through (dj
Rule 17Ad-5(e): When any person
makes a written inquiry or request
which would qualify under paragraph
(a), (b), (c) or (d) of Rule 17Ad-5 except
that it fails to provide all of the
information specified in those
paragraphs, or requests information
which refers to a time earlier than the
time periods specified in those
paragraphs, a registered transfer agent
shall confirm promptly receipt of the
inquiry or request and shall respond to it
as soon as possible.59
(79) Question: Does Rule 17Ad-5(e)
apply to a written inquiry or request that
would otherwise satisfy the
requirements of a particular paragraph
of Rule 17Ad-5, but concerns an issue
for which the entity no longer acts as 	•
transfer agent?
Answer: Yes. In these cases, Rule
17Ad-5(e) requires that the registered
transfer agent promptly confirm receipt
of the inquiry or request and respond as
soon as possible that it no longer acts as
transfer agent for the issue.
V. Rule 17Ad-8: Recordkeeping.
A. Certain Records Required to
Monitor Complionce-Rule 17Ad~(a):
(Every registered transfer agent is
required by Rule 17Ad-6(a) to ''make
and keep current" the records
enumerated in subparagraphs (lHl1)).
(80) Question: What types of
recordkeeping system and forms are
required under Rule 17Ad-6?
Answer: No specific type of system
and no particular forms are required,60
as long as all the information required
under Rule 17Ad-6 is captured. Thus,
each registered transfer agent may
adopt a recordkeeping and record
retention system suitable to its own
operations, provided that the records
contain the requisite information.
(81) Question: Maya registered
transfer agent that acts in its own name
as a transfer agent on behalf of issuers
and that also performs contractual
services for other transfer agents
maintain separate records of its
performance for each contractual
arrangement?
Answer: No. The records and
performance statistics of a registered
transfer agent. whether acting in its own
name or under contract (e.g., a "private
label service"), must be aggregated for
all purposes under the turnaround rules.
(82) Question: Does Rule 17Ad-6
require a registered transfer agent to file
"Rule 17Ad-S(e) was adopted by the
Commission in Securities Exchange Act Release No.
14219 (December 1. 1977) (42 FR 62129).
10 See Release No. 13838. (SEC Docket. at 863).
any notice with its appropriate
regulatory authority that it is fulfilling its
obligations under the turnaround rules?
Answer: No. Rule 17Ad-6 does not
require a registered transfer agent to file
any notice stating, or any records
showing, that it is complying with the
turnaround rules.
1. Records Showing Dote of Receipt
and Availability of Items-Rule 17Ad
6(0)(1): Every registered transfer agent
shall make and keep current a receipt,
ticket, schedule, log or other record
showing the business day each routine
item and each non-routine item is (i)
received from the presentor and, if
applicable, from the outside registrar
and (ii) made available to the presentor
. and, if applicable, to the outside
registrar. 	G
(83) Question: What type of receipt or
ticket is required?
Answer: No particular form of receipt
or ticket is required, provided the ticket
identifies the item involved and the
relevant business day (i.e., the year,
month, and day, as determined under
Rule 17Ad-l(h)) the item was received
and made available. A transfer agent
that uses a batch method for handling
transfer items would use an "other
record" by recording the required
information for each batch of items.61
(84) Question: Does Rule 17Ad-6{a)(1)
require that a registered transfer agent
be able to identify the specific dates on
which a particular item is received and
made available? 	,
Answer: Yes. A transfer agent's
records must show the business day
each item is received from and made
available to the presentor and the
outside registrar, if applicable, and the
entries on such records must be
traceable to the specific item.
(85) Question: How many dates must
be recorded on a Rule 17!.d-6(a)(1)
record when an outside registrar is
involved?
Answer: Four, in the usual case.62 The
record must state the business day each
item was (i) received from the presentor,
(ii) made available to the outside
registrar, (iii) received from the outside
registrar and (iv) made available to the
presentor.
(86) Question: How should a transfer
agent indicate on its Rule 17Ad-6(a)(1)
records receipt of items tendered in
connection with a record date?
Answer: In order to record accurately
receipt of an item under Rule 17Ad
6(a)(1)(i) while still complying with
record date requirements, the ticket,
receipt or other record should include
61 Release No. 13636. (SEC Docket. at 863).
..But Bee Question (53) BUpro.
the calendar date and time the item was
actually received.
(87) Question: May the records
required by Rule 17Ad-6(a)(1) be
maintained in a fragmentary manner
for example, partially in a log and
partially on tickets?
Answer: No. Either all the information
for a particular item should be compiled
in one record or all the pieces of paper
capturing the required information
should be attached together. Thus, even
though Rule 17Ad-6 neither requires a
particular recordkeeping system nor
prescribes a particular form of records, a
registered transfer agent must establish
a recordkeeping system and develop
forms of records that integrate and
centrally locate all the information
required by Rule 17Ad-6.
2. Monthly Records Relating to
Transfer Agent Turnaround-Rule
17Ad~(a)(2):Every registered transfer
agent must make and keep current a log,
tally, journal, schedule or other record
showing for each month:
(i) The number of routine items
received;
(ii) The number of routine items
received during the month that were
turned around within three business
days of receipt;
(iii) The number of routine items
received during the month that were not
turned around within three business
days of receipt;
(iv) The number of non-routine items
received during the month;
(v) The number of non-routine items
received during the month that were
turned around;
(vi) The number of routine items that,
as of the close of business on the last
business day of each month, have been
in such registered transfer agent's
possession for more than four business
days, aged in increments of one
business day (beginning on the fifth
business day); and
(vii) The number of non-routine items
in such registered transfer agent's
possession of the close of business on
the last business day of each month.
(88) Question: Are the records
required by Rule 17Ad-6 (a)(2)(vi) and
(a)(2)(vii) cumulative in nature?
Answer: Yes. These records contain
cumulative information. Thus, any item
recorded on the previous month's log
that is still in the transfer agent's
possession as of the last business day of
the current month must be shown on the
current month's log.63
a See Release No. 13636, D. 18. (SEC Docket. at
864 n. 18). Footnote 18 in Release No. 13636 contains
two typographical errors; the referenced paragraphs
should be (a)(Z)(vi) and (a)(Z)(vii). See also Question
(59) BUpro•

59854 	Federal Register I Vol. 45. No. 178 I Thursday. September 11. 1980 I Rules and Regulations
(89) Question: Does Rule 17Ad
6(a)(2J(vii) require aging of non-routine
items in a transfer agent's possession?
Answer.' No. Rule 17Ad-6(a)(2J(vii)
requires only that the numbe! and not
'the age of such items be recorded."
I 3. Records of Outside Registrar-Rule
:17Ad-6(a)(3): Every registered transfer
'agent shall make and keep current. with
:respect to items for which it acts as an
loutside registrar:
I 	(i) A receipt. ticket, schedule. log or
lother record showing the date and time:
(A) Each item is (1) received from the
Ipresenting transfer agent and (2) made
available to the presenting transfer
agent;
(B) Each written or oral notice of
refusal to perform the I'egistrar function
is made available to the presenting
transfer agent (and the substance of the
notice); and
(ii) A log. tally. journal. schedule or
other record showing fQr each month:
(A) The number of items received;
(B) The number of items processed
within the time required by Rule 17Ad
2(b): and
(e) The number of items not
processed within the time.required by
Rule 17Ad-2(b).
(90) Question: Must items processed
within one-half day of receipt be
recorded on the records required to be
maintained by Rule 17Ad-6(a)(3J(ii)(B)?
Answer.' Yes. The record required by
Rule 17Ad-6(a)(3)(ii)(B) includes the
number of items processed within the
time periods specified in Rule 17Ad
2(b). including items processed in a
shorter period of time. That is. Rule
17Ad-2(b) prescribes a maximum period
within which items must be processed.
(91) Question: Where are items
processed more quickly than required by
Rule 17Ad-2(b) recorded?
Answer: In addition to the record
required by Rule 17Ad-6(a)(3)(ii)(B),
such items are recorded on the records
required to be maintained by Rule
17Ad-6(a)(4) regarding calculations of
processing performance under Rule
17Ad-2(b).
4. Calculations of Performance-Rule
17Ad-6(a)(4): Every registered transfer
agent shall make and keep current a
record of calculations demonstrating the
registered transfer agent's monitoring of
its perfoll'lDance under Rule 17Ad-2 (a)
and (b).
(92) Question.' Is there any particular
form which must be used to record
calculations of turnaround or processing
performance?
Answer: No. No specific form of
record is required, provided the
calculations monitoring performance are
..See Release No. 13638. (SEC Docket. at 884).
actually shown.65 For example. a record
indicating the total number of routine
items received in a month and turned
around within three business days of
receipt divided by the total number of
routine items received in that month is
sufficient.86
5. Written Inquiries-Rule 17Ad
6(a)(6): Every registered transfer agent.
shall make and keep current any written
inquiry or request. including those not
subject to the requirements of Rule
17Ad-5. concerning an item. showing the
date received; a copy of any written
response to an inquiry or request.
showing the date dispatched or mailed
to the presentor: if no response to an
inquiry or request was made. the date
the certificate involved was made
available to the presentor: or. in the case
of an inquiry or request under Rule
17Ad-5(a) responded to by telephone. a
telephone log or memorandum showing
the date and substance of any telephone
response to the inquiry.
(93) Question: Under Rule 17Ad
6(aU6). is a transfer agent required to
keep only those inquiries subject to Rule
17Ad-5?
. Answer: No. Rule 17Ad-6(aJ(6)
specifically requires that a transfer
agent keep all written inquiries or
reqUiests received concerning an item.
regardless of whether the inquiry falls
within the parameters of Rule 17Ad-5.
(94) Question: Does Rule 17Ad-6(aJ(6)
require a named transfer agent that
utilizes a service bureau. which is a
registered transfer agent, to keep a copy
of all written inquiries or requests?
Answer: Yes. The named transfer
agent must keep a copy of all written
inquiries and requests received.
including those not subject to the
requirements of Rule 17Ad-5, even
though it forwards such requests and
inquiries to a service bureau for
response.
6. Records Concerning the
Appointment of a Transfer Agent-Rule
'17Ad-6(a)(8): Every registered transfer
agent shall make and keep current any
document, resolution. contract,
appointment or other writing. and any
supporting document. concerning the
appointment and the termination of such
appointment of such registered transfer
agent to act in any capacity for any
issue on behalf of the issuer, on behalf
of itself as the issuer or on behalf of any
person who was engaged by the issuer
to act on behalf of the issuer.
(95) Question: Must an issuer that
only maintains the official
securityholder records and. accordingly.
..See Release No. 13838 (SEC Docket. at 863) and
Question (80) supra.
68See Release No. 13638 (SEC Docket. at 884) .
is a registered transfer agent make and
keep current the records required by
Rule 17Ad-6(aJ(8)?
Answer: Yes. Rule 17Ad-6(aJ(8)
specifically applies to a registered
transfer agent acting "on behalf of itself
as the issuer." An issuer that maintains
the official securityholder records is
acting on its own behalf. Therefore. it
must make and keep current the records
required by Rule 17Ad-6(aJ(8).
7. Records of Restrictions on
Transfer-Rule 17Ad-6(a)(9): Every
registered transfer shall make and keep
current any record of an active (i.e.•
unreleased) stop order. notice of adverse
claim or any other restriction on
transfer.
(96) Question: Maya registered
transfer agent remove. on instruction
.from the issuer. stops or other
restrictions on transfer of a security
merely because the security has a de
minimus market value?
Answer: No. The market value of a
security subject to a stop is not a
decisive factor in determining whether
to permit removal thereof. A stop or
other restriction on transfer remains
active until a transfer agent receives
instructions from an authorized persOD
to release it.S7
8. Journals-Rule 17Ad-6(a)(10):
Every registered transfer agent shall
make and keep current a copy of any
transfer journal and registrar journal
prepared by such registered transfer
agent.
(97) Question: Is a registered transfer
agent required. under Rule 17Ad
6(a)(10). to prepare a transfer or
registrar journal?
Answer: No. Rule 17Ad-6(a)(10) does
not require that a registered transfer
agent prepare any transfer or registrar
journal. However. if a registered transfer
agent. in fact. maintains such a journal.
Rule 17Ad-6(a) requires that it be kept
current.
9. Special Event Documentation
Rule 17Ad-6(a)(11).· Every registered
transfer agent shall make and keep
current any document upon which the
transfer agent basel its determination
that an item received for transfer was
received in connection with a
reorganization. tender offer. exchange.
redemption, liquidation. conversion or
the sale of securities registered pursuant
to the Securities Act of 1933 and,
accordingly. was not routine under Rule
17Ad-l(iJ(5) or (8).
.7 An unauthorized removal of a restrictive legend
could lead to a violation of the Securities Act of
1933 and could expose the transfer agent to further
liability. Also. an unauthorized removal of a stop
transfer instruction could be inconsistent with the
Commission'S Lost and Stolen Securities Program.
See Rule 17f-1 (17 CFR 24O.17f-1).

Feclenil,Registero{ Vol. 45, No.l?8) 'Thursday, September 11, 1980/ Rules 'and Regulations 	59855
(98) Question: Does Rule 17Ad
8(a)(111require,that the documents,
upon which the detemlination is made
that an item received for tranSfer is non
routine under Rule 17Ad-l(i)(5) or (8), be
traceable to'the particular certificates
involved? 	'
Answer: Yes. The documents required
by Rule 17Ad-6(a)(11) must be traceable
to the particular item received for'
transfer. Although the transfer agent
need not explain on the certificate why
the item has been determined to be non
routine, two suggested methods for
complying with Rule 17Ad-8(a)(11) are:
(1) Attaching the ticket and any
. appropriate documentation (e.g.,
shareholder transmittal form) to the
item; or (2) referring directly on the
.ticket to the document which served as
. the basis for a determination that the
item was non-routine.
Illustration: Facts: An issuer engages
in a registered exchange offer.
Shareholders tender their certificates
. together with·a letter of transmittal to
the issuer's exchange agent, a registered
transfer agent. Based on the letter of
transmittal, the transfer'agent
determines that the item is non-routine
under Rule 17Ad-l(i)(5).lnterpretation: '
To ensure proper accountability under
Rule 17Ad-6(a)(l1). the transfer agent
should leave the letter ·of transmittal
attached to the certificates tendered and
subsequently cancelled. 	.
B. Records Regarding Control Logs for
Each Issue-Rule 17Ad:...tJ(b): Every
registered transfer agent which, under
the terms of its agency,' maintains
security-holder records for an issue or
, which acts as a registrar for an issue
, shall,'with respect to such issue, obtain
from the issuer or its transfer agent and
retain documentation setting forth (1)
the total number of shares or principal
amount of debt securities or total
number of units ifrelating to any other
kind of security authorized and (2) the
total issued and outstanding'pursuant to
issuer authorization.
(99) Question: Where the issuer as a
registered transfer agent maintains
securityholder records only, and the
. service bureau, which also is a 	.
registered transfer agent. cancels and
issues certificates as well as performs
, the registrar function. must the issuer-
transfer agent retain the documentation .
required by Rule 17Ad-8(b) and (c)?
Answer: Yes. However, for purposes
of the turnaroundrules, the issuer need
not keep documents (e.g., certificate of
incorporation or amendmentstheretol
concerning the matters covered by Rule
11Ad-6(b}.68 Instead. the issuer must
retain a record setting forth the total
.. See Release No. 13638. (SEC Docket, at 8M-6S).
number of s9curitiesauthorized, issued
and outstanding, as well as copies of
each cancelled registered security
referred to inRule 17Ad-6(c) with
accompanying documentation (except
legal papers returned to the presentor).
C. Cancelled Registered CertIficates
and Accompanying Documentation
Rule 17Ad~(c):Every registered
transfer agent which, under the terms of
its agency, maintains securityholder
records for an issue shall, with respect
to such issue, retain (1) eacbcancelled
registered bond, debenture, share,
warrant or right, other registered
evidence of indebtedness, or other
certificate of ownership and' (2) all
accompanying documentation, except
legal papers returned to the presentor.
(1001 Question: Does Rule 17Ad-6(c)
apply only to registered bonds, .
debentures. shares, warrants, rights,
other evidences of indebtedness and
other certificates of ownership, which
have been cancelled? .
Answer.·Yes. Rule 17Ad-6(c)
specifically applies to "registered"
securities; the word "registered" does
not modify the word "bond" only.
VI. Rule 17Ad-7: Record Retention.
A. Retention Periods for Records
. Regarding Transfer Agent's .
Appointment, Stops, Journals, and
Control Logs"-Rule 17Ad-7(c}: The .
records required by Rule 17Ad-6(a)(8),
(9) and (10) and 17Ad-6(b) shall be
maintained in an easily accessible place
during the continuance of the transfer
agency and shall be maintained for one
year after termination of the trans(er
agency.
(101) Question: Does the language .
"continuance of the transfer agency and
* * * one year after termination of the .
transfer agency" refer to the transfer
agent's period of appointment for a
particular issue of securities?
Answer. Yes. This language refers to
the period of .time during which a
transfer agent is appointed to perform
transfer agent activities for a particular
issue. The rule does not refer to the
period of time during wltich a transfer
agent is registered with its appropriate
. regulatory agency.
B. Retention Periods for Cancelled
Certificates and Accompanying
Documentation-Rule 17Ad-7(d}: The
records required by Rule l1Ad-6{c) shall
be Qlaintained for a period of not less 	.
than six years, the first six months in an
easily accessible place.
(102) Question: Maya registered
transfer agent destroy cancelled share
certificates after they have been
retained for a period of six years?
Answer.' Rule 17Ad-7( d) establishes a
minimum retention period of six years
under the federal securities laws. Rule
l1Ad-7{d) does not grant a registered
transfer agent the right to destroy
cancelled certificates after they have
been retained for six years. Varying
circumstances, other federal and state
statutory provisions, as well as the by
laws of the issuing corporation, may
require retention of cancelled
certificates beyond six years. 	.
C. Microfilming of Records--Rule
17Ad-7£D: The records required to be
maintained pursuant to Rule 17Ad-6
may beprodilced or reproduced on
microfilm and be preserved in that form
for the time required by Rule 17Ad-7. If
such microfilm substitution for hard
copy is made' by a registered transfer
agent, it shall:
(1) At all times have available for
examination by the Commission and the
appropriate regulatory agency for such
transfer agent, facilities for immediate,
easily readable projection of the
microfilm and for producing easily 	,
readable facsiJDileenlargements;
(2) Arrange the records and iildex and
file the films in such a manner as to .
pel'lIlitthe immediate location of any
particular record:
(3) Be ready at all times to provide,
and immediately provide, any facsimile
enlargement which the Commission and
the appropri.ate regulatory agency by
their examiners or other representatives
may request; and
(4) For the period for which the
microfilmed records are required to be
maintained, store separately from the
. original microfilm records a copy of the .
microfilm records. 	.
(103) Question: Has a registered
transfer agent complied with Rules
17Ad-6{c) and 17Ad-7{d) when it
releases cancelled certificates if it
maintains microfilm substitution for
hard copies of the cancelled certificates
in compliance with Rule 17Ad-7(f)?
Answer: Yes. Rule 17Ad-6{c) requires
that the transfer agent retain cancelled
certificates for which it maintains
securityholder records under its agency
agreement, and Rule 17Ad-7( d) requires
that such certificates be maintained for
a periodof.at least six years, the first six
months in an easily accessible place.
. However, Rule 17Ad-7{f) provides that
records, which must be maintained
pursuant to Rule .17Ad-6 (e.g., cancelled
certificates), 'may be microfilmed and
preserved in that form for the 	.
appropriate period under Rule 17Ad-7,
provided all four conditions o~ rule
17Ad-7(f) (1)-(4) are me~. Thus,
microfilm substitution for bard copy of
the cancelled certificates, if all
. 'conditions of Rule 17Ad-7(f) are met,
satisfies the recordkeeping requirement
of Rule .17Ad-6{c) and, if preserved in

59856 	Federal Register I Vol. 45, No. 178 I Th~rsday, September 11, 1980 I Rules and Regulations
that form for at least six years, satisfies
Rule 17Ad-7(d).
(104) Question: Does Rule 17Ad-7(f)(4)
require that a' transfer agent keep the
copy of microfilmrecords on premises
that are physically separated from the
location of the original microfilm
records?
Answer: No. The rationale for
requiring separate storage for the two
sets of microfilm records· is to minimi~e
the possibility that a localized fire or
other occurrence might destroy both sets
of microfilm records. Consequently,
compliance with Rule 17Ad-7(f)(4) .
depends upon the! design .and safeguards
of the particular premises iJ1lvolved. If a
separate building is available, the
original and the copy of microfilm
records should be stored in separate
buildings. If there is only one building,'
such records should be stored on 	.
separate floors or in separate parts of
the building.
D. Records Maintained by a Third
Party on Behalf of a Tran~fer Agent
Rule 17Ad-7{g): If the records reqUired
to be maintained arid preselJ'Ved by a
registered transfer agent pursuant to the
requirements of Rules 17Ad-6 and
17Ad-7 are maintained and preserved
on behalf of the registered transfer agent
by an outside service bures,u, other
recordkeeping service or the issuer, the
registered transfer agent shall obtain,
from such outside service bureau, other
recordkeeping service or the issuer, an
agreement, in writing, to the effect tJiat:
(1) Such records are subject at any
time, or from time to time, t.o reasonable
periodic, special or other examinations
by representatives of the Commission
and the appropriate regulatory aKency
for such registered transfer agent, if it is
not the Commission; snd
(Z) The outside service bureau,
recordkeeping service or illsuer will
furnish to the Cl)mmission, and the
appropriate regulatory agency, upon
demand, at either the principal office or
at any regional office. complete, correct
and current hard copies oJr any and all
such records. 	,
(105) Question: When certain records
are maintained and prese:rved on behalf
of the registered transfer 11gent 'by an
outside service bureau, other
recordkeeping servic~ or !the issuer, does
the production and furnishing by such
entity of an easily readable facsimile
enlargement in paper copy form, which
is reproduced from microfilm as
permitted !by Rule 17Ad"~'(f), violate the
"hard copy" requirement of Rule 17Ad
7(g)(2)? 	.
Answer: No. Rule 17Ad.-7(f) provides
that records required to be maintained
under Rule 17Ad-6 by a transfer agent
may be repro,duced on IDllcrofilm and
preserved in that form for the, time
period required by Rule 17Ad:-7,
provided that, among other things, el;lsily
readable facsimil~ enlarg!i!ments are .
producible therefrom. 	.
Pursuant to Rule 17Ad-7(g)(Z),the 	'.
registered transfer agent must obtain a
written agreement from such entity that
it will furnish, upon demand,"complete,
correct and current hard copies of any
and all such records," The purpose of
Rule 17Ad-7(g) is to extend the record
retention requirements of registered
transfer agents to entities maintaining
and preserving records on behalf of the
registered transfer agent. The words
"hard copy'; in Rule 17Ad-7(g)(Z) neither
expand upon that re&ponsibility nor
increase the requirements of Rule 17Ad
7(f). Thus, an easily readable facsimile
enlargement of records in paper copy
form, which is reproduced from
microfilm in accordance with Rule
17Ad,:",7(f) by an outside service bureau,
other recordkeeping service or the
issuer, satisfies Rule 17Ad-(g)(Z)~
Illustration: Facts: Pursuant to an
agreement with the issuer, the registered·
transfer agent forwards, six months or
more after ca~ellation, cancelled share
certificates to the issuer. Upon receipt of
the cancelled certificates, the issuer
microfilms and then destroys the
certificates. The issuer retains the
microfilm copy for a period of not less
than'six years, as required under Rules
17Ad-6(c) and 17Ad-7(d). If the
Commission 9r the transfer agent's
appropriate regulatory agency requests
a hard copy of a destroyed cancelled
certificate, the issuer has agreed in
writing to reproduce a paper copy
thereof from the microfilm.
Interpretation: This paper copy will .
satisfy the '~hard copy" requirement of
Rule 17Ad-7(g)(Z). 	.
E. Transfer Agents that Cease to
Perform .Transfer Agent Functions
Rule 17Ad-7(h}: When a registered
transfer agent ceases to perform transfer
agent functions for an issue, the·
responsibility ,of such transfer agent 	.
under Rule 17Ad';"7 to retain the r.ecords
required to be made and kept current
under Rule 17Ad-6(a) (1), (6), (9), (10)
and (11), (b) andlc) shall end upon the
delivery of such records to the successor
transfer agent.
(106) Question: What are the record
retention requirements for a registered
transfer agent that is in the process of
terminating all of its stock transfer 	'
activities but has not yet withdrawn
from registration as a transfer agent
with.its appropriate reg1ilatory agency?
Answer: Rules 17Ad..a and 17Ad-7 set
forth, respectively, the recordkeeping
and record retention requirements for
registered transfer agents. In addition,
.. Rule 17b-l(g) prescribes record
retention requirements in cODIlecUon
with the Commission's Lost and Stolen
Securities.Program. A registered transfer
agent that is ceasing to perform transfer
agent functions for either a particular
issue or entirely may fulfill its
obligations by delivering, pursuant to
Rule 17Ad-7(g) or 17Ad-7(h), the
records required to be ntaintained by the
above rules to the issuer for which it
was a transfer agent, to an outside
service bureau, or to a successor
transfer agent. If a transfer agent
determines to fulfill its obligations by
delivering such records to ,the issuer or
an outside service bureau, it must obtain
a written agreement from the issuer or
the outside service bureau stating that
the records will be retained for the
required tilne periods and will be made
available to the Commission and the
appropriate regulatory agency for
examination in accordance with Rule
17Ad-7(g).If the records are delivered to
a successor transfer· agent, however, no
such written agreement is required by
Rule 17Ad-7(h).
(107) Question: What obligations are
imposed by the federal securities laws
on transfer agents to retain transfer·
agent records after a transfer agent's
withdrawal from registration with the
Commission has become effective?
Answer: Rule 17Ac3-1 69 and related
Form TA-W 70 presribe the procedure to
be followed by transfer agents 	.
withdrawing from registration as
transfer agents with the Commission.
Pursuant to the terms of withdrawal
stated therein, the withdrawing transfer
agent undertakes to preserve those
records which it would otherwise be
reqUired to make and keep pursuant to
Rules 17Ad-6 and 17f-Z for the
remainder of the time periods specified
in Rule 17Ad-7.
Illustration: Facts: A transfer agent,
whose withdrawal froID-registration
with the Commission has become
effective, is storing cancelled
certificates, transmittal letters and
transfer journals. How long must the
transfer agent continue to store these
records? Interpretation: Pursuant to Rule
17Ad"';7(d), cancelled certificates and
transmittal letters are required to be
retained for six years. Accordingly, the
transfer agent must retain theserecorcis
for the ~emainder of the six year period;
PursuanttoRuie 17Ad-7(c), transfer
journals must be retained during the
continuance of the transfer agency and
for one year after termination thereof.
Accordingly, the transfer agent must
retain its transfer journals for one year
ItSee 17 CFR 240.17Ac3-1.
~o See 17CFR 249b.101.

. Federal Register 1 Vol. 45, No. 178 I. Thursday, September 11, 1980 1 Rules and Regulations 	59857
from the date of termination of its
transfer agency with respect to that
issue of securities.
(108) Question: After a transfer
agent's withdrawal from registration
with the Commission becomes effective,
what records may be delivered to the
issuer or the successor transfer agent?
Answer: Any records enumerated in
Rules 17Ad-a and 17Ad-7 may be
delivered til the issuer pursuant to Rule
17Ad-7(g) or to the successor transfer
agent pursuant to Rule 17Ad-7(h).
If the transfer agent chooses to deliver
these records to the issuer, it should
obtain a written agreement, in
accordance with the transfer agent's
undertaking in Form TA-W, that the
issuer will retain the records for the
applicable time periods and make· them
available to the Commission.
Accordingly, 17 CFR Part 241 is
amended by adding thereto this
interpretative release, R~gulation of
Transfer Agents.
By the Commission.
George A. Fitzsimmons,
Secretary. 	_
September 2. 1980.
(FR Doc. 8G-27812 F\led 9-1ll-l1ll; 8:45 am)
BILLING CODE 8010-01-M
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 282
[Docket No. RM79-48; Order No~ 96]
Section 206(d) Exemption for Small
Industrial Boller Fuel Facilities From
the Incremental Pricing Provisions of
the Natural Gas Polley Act of 1978;
Correction·
September 3, 1980.
AGENCY: FederalEnergy Regulatory
Commission, DOE.
ACTION: Correction notice to final rule.
SUMMARY: This notice contains a
correction to the final regulations
promulgated in Order No. 96, issued July
29,1980 (45 FR 52359, August 7, 1980)
whic~ exempts certain small industrial
boiler fuel facilities from incremental
pricing.
EFFECTIVE DATE: September 5, 1980, or
such later date as rep~esents the first
day following 30 days of continuous
session of the Congress, if not
disapproved by either House.
FOR FURTHER INFORMATION CONTACT:
Alice Femandez. Office of Pipeline and
'ProducerRegulation, Federal Energy
Regulatory Commission, 825 North
CapitofStreet NE, Washington, D.C.
20426. (202)357-9095,or
Carol M. Lane, Office of the General .
Counsel, Federal Energy Regulatory,
Commission, 825 North Capitol Street
NE, Washington, D.C. 20426, (202)
357-8114. 	.
Kenneth F. Plumb,
.Secretary.
On mimeo page 18, 45 CFR 52363, in
the first column, change § 282.203(a)(2)
from: "(2) all gas used for an agricultural
use;"
to: "(2) all gas consumed in an
agricultural use unless by rule or order
the Commission determines that there is
an alternative fuel; or feedstock for the
agricultural use that is economically
practicable and reasonably available;"
(FR Doc. 8G-27574 Filed 9-1ll-l1ll; 8:45)
BILLING CODE 6450-85-M
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
Office of Assistant Secretary for
Housing-Federal Housing
Commissioner
24 CFR Part 200
[DocketNo.R-8o-&33]
Revision to Thermal Requirements for
HUD Minimum Propttrty Standards
(MPS) for One- and Two-Family
Dwellings
AGENCY: Department of Housing and
Urban Develflpment (HUD).
ACTION: Final rule.
SUMMARY: This rule incorporates
modified interim regulations for thermal
requirements into the HUD MPS for
One- and Two-Family Dwellings. 4900.1.
This role modifies the thermal
requirements published in 44 FR 22444,
April 16, 1979, effective as an Interim
Rule May 16,1979. These modifications
are in response to a legislative mandate
contained in House of Representatives
Report No. 96-706, December 13,1979,
accompanying H.R. 3875, enacted as
Section 322 of the Housing and
Community Development Amendments
of 1979. Public Law 96-153, December
21, 1979, and other comments made on
the Interim Rule.
EFFECTIVE DATE: October 1, 1980.
FOR FURTHER INFORMATION CONTACT:
Mr. Mervin Dizenfeld. Office of 	.
Architecture and Engineering Standards,
Room 6170, Department of Housing and
Urban Development, Washington. D.C.
20410, (202) 755-6590. (This is not a toll
free number.
SUPPLEMENTARY·INFORMATION: HUD
Minimum Property Standards are
published in Handbooks, MPS for One
and Two-Family Dwellings 4900.1, MPS _
for Multifamily Housing 4910.1, and MPS
for Care-Type Housing 4920.1. The MPS
are the standards for all new
construction in HUD associated
programs. The MPS are incorporated by
reference into 24 CFR 200.919.
All substantive changes in the MPS
_ are required by 24 CFR 200.933 to be
published in the Federal Register using
the same procedure as for the
publication of regulations. The MPS for
which these changes are proposed are
available for examination in all HUD
Field Offices and in Room 6170 of the
Headquarters at the above address
during business hours.
On April16. 1979 (44 FR22444) HUD
published Increases in Thermal
Requirements for HUD Minimum
Property Standards. Interested persons
were given until June 15. 1979 to
comment" on the amendment. House of
Representatives Report No. 96-706 of
December 13, 1979 accompanying H.R.
3875 contained a disapproval of the
thermal standards as applied to .
masonry and included the following:
The objective of the provision is not to
exempt the masonry components of .
construction from increased thermal energy
requirements. Rather, the conferees expect
the Secretary of HUD. after consulting with
the Farmers Home Administration and the
Department at Energy. and after carefully
reviewing data that has become available
since the interim rule was published, and
other data developed pursuant to the recent
National Bureau of Standards cost-benefit
analysis. to move iIiunediately to issue final
thermal standards for the masonry
components of construction no later than one
month after enactment of this Act. During the
interim period and prior to the issuance of the
revised standards. masonry components shall
comply with those thermal requirements
existing prior to April 16. 1979. except that
any local acceptable standard exemptions
granted by HUD as of June 8. 1979. may
remain in effect until the revised standards
becomefmaI.
The conferees believe that the three
agencies involved in developing conservation
standards for new and rehabilitated
residential construction-the Department of
Housing and Urban Development. the
Farmers Home Administration and the
Department of Energy-should develop
standards for various programs that are
consistent. In order for the Federal
Government to develop a rational and
consistent approach to energy conservation.
these three agencies should work closely
together and reach a consensus on the
assumptions and data used in various
residential conservation standards.
.Forty-one comments were received
from other sources. These comments
dealt with the requirement for an