BackText onlyPrint

You need the Flash plugin.

Download Macromedia Flash Player



  • ARTICLE IV BOARD OF DIRECTORS

    • General Powers

      Sec. 4.1  The property, business, and affairs of FINRA Regulation shall be managed by or under the direction of the Board. The Board may exercise all such powers of FINRA Regulation and have the authority to perform all such lawful acts as are permitted by law, the Restated Certificate of Incorporation, these By-Laws, or the Delegation Plan to assist FINRA in fulfilling its self-regulatory responsibilities as set forth in Section 15A of the Act, and to support such other initiatives as the Board may deem appropriate. To the fullest extent permitted by applicable law, the Restated Certificate of Incorporation, and these By-Laws, the Board may delegate any of its powers to a committee appointed pursuant to Section 4.13 or to FINRA Regulation staff in a manner not inconsistent with the Delegation Plan.
      Amended by SR-FINRA-2009-020 eff. Aug. 20, 2009.
      Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      Selected Notice: 09-39.

    • Number of Directors

      Sec. 4.2  The Board shall consist of no fewer than five and no more than seventeen Directors, the exact number of Board members will be determined by resolution adopted by the stockholder of FINRA Regulation from time to time. Any new Director position created as a result of an increase in the size of the Board shall be filled pursuant to Section 4.4.
      Amended by SR-FINRA-2015-034 eff. Dec. 20, 2015.
      Amended by SR-FINRA-2009-020 eff. Aug. 20, 2009.
      Amended by SR-NASD-2001-57 eff. Sept. 12, 2001.
      Amended by SR-NASD-00-43 eff. July 21, 2000.
      Amended by SR-NASD-99-10 eff. Feb. 8, 1999.
      Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      Selected Notices: 09-39, 16-04.

    • Qualifications

      Sec. 4.3  (a) The Board shall consist exclusively of members of the FINRA Board. The number of Public Directors shall exceed the number of Industry Directors. The Chairman of the FINRA Board and the Chief Executive Officer of FINRA shall be ex-officio non-voting members of the Board. At least two, and not less than 20%, of the Directors shall be Small Firm, Mid-Size Firm, or Large Firm Governors. The terms "Small Firm Governor," "Mid-Size Firm Governor," and "Large Firm Governor" are defined as specified in the FINRA By-Laws. Ex-officio non-voting members of the Board shall not be counted as Board members for purposes of this section.
      (b) Contemporaneous with the annual election of Directors, the stockholder of FINRA Regulation shall designate from the elected Directors a Chair and such other persons having such titles as it shall deem necessary or advisable to serve until the next annual election or until their successors are chosen and qualify. The persons so elected shall have such powers and duties as may be determined from time to time by the Board. The Board, by resolution adopted by a majority of Directors then in office, may remove any such person from such position at any time.
      Amended by SR-FINRA-2009-020 eff. Aug. 20, 2009.
      Amended by SR-NASD-2007-023 eff. July 30, 2007.
      Amended by SR-NASD-2001-57 eff. Sept. 12, 2001.
      Amended by SR-NASD-99-10 eff. Feb. 8, 1999.
      Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      Selected Notice: 09-39.

    • Election

      Sec. 4.4  Except as otherwise provided by law, these By-Laws, or the Delegation Plan, Directors of FINRA Regulation shall be elected each year at the annual meeting of the stockholder, or at a special meeting called for such purpose in lieu of the annual meeting. If the annual election of Directors is not held on the date designated therefor, the Directors shall cause such election to be held as soon thereafter as convenient.
      Amended by SR-FINRA-2009-020 eff. Aug. 20, 2009.
      Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      Selected Notice: 09-39.

    • Resignation

      Sec. 4.5  Any Director may resign at any time either upon written notice of resignation to the Chair of the Board or the Secretary. Any such resignation shall take effect at the time specified therein or, if the time is not specified, upon receipt thereof, and the acceptance of such resignation, unless required by the terms thereof, shall not be necessary to make such resignation effective.
      Amended by SR-FINRA-2009-020 eff. Aug. 20, 2009.
      Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      Selected Notice: 09-39.

    • Removal

      Sec. 4.6  Any or all of the Directors may be removed from office at any time, with or without cause by the stockholder of FINRA Regulation.
      Amended by SR-FINRA-2009-020 eff. Aug. 20, 2009.
      Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      Selected Notice: 09-39.

    • Disqualification

      Sec. 4.7  The term of office of a Director shall terminate immediately upon a determination by the Board, by a majority vote of the remaining Directors, that: (a) the Director no longer satisfies the classification for which the Director was elected; and (b) the Director's continued service as such would violate the compositional requirements of the Board set forth in Section 4.3. If the term of office of a Director terminates under this Section, and the remaining term of office of such Director at the time of termination is not more than six months, during the period of vacancy the Board shall not be deemed to be in violation of the provisions of Section 4.3 requiring that the number of Public Directors exceed the number of Industry Directors by virtue of such vacancy and no violation of the provisions of Section 4.3 regarding the number of Small Firm, Mid-Size Firm, and Large Firm Governors shall be deemed to have occurred.
      Amended by SR-FINRA-2009-020 eff. Aug. 20, 2009.
      Amended by SR-NASD-98-56 eff. Oct. 30, 1998.
      Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      Selected Notice: 09-39.

    • Filling of Vacancies

      Sec. 4.8  If a Director position becomes vacant, whether because of death, disability, disqualification, removal, or resignation, the Nominating Committee shall nominate, and the FINRA Board shall, by majority vote, cause the election of a person satisfying the qualifications for the directorship as provided in Section 4.3 to fill such vacancy, except that if the remaining term of office for the vacant Director position is not more than six months, no replacement shall be required.
      Amended by SR-FINRA-2009-020 eff. Aug. 20, 2009.
      Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      Selected Notice: 09-39.

    • Quorum and Voting

      Sec. 4.9  (a) At all meetings of the Board, unless otherwise set forth in these By-Laws or required by law, a quorum for the transaction of business shall consist of a majority of the Board, including not less than 50 percent of the Public Directors. In the absence of a quorum, a majority of the Directors present may adjourn the meeting until a quorum is present.
      (b) The vote of a majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board.
      Amended by SR-FINRA-2009-020 eff. Aug. 20, 2009.
      Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      Selected Notice: 09-39.

    • Regulation

      Sec. 4.10  The Board may adopt such rules, regulations, and requirements for the conduct of the business and management of FINRA Regulation not inconsistent with the law, the Restated Certificate of Incorporation, these By-Laws, the Delegation Plan, the Rules of the Corporation, or the By-Laws of FINRA, as the Board may deem proper. A Director shall, in the performance of such Director's duties, be fully protected in relying in good faith upon the books of account or reports made to FINRA Regulation by any of its officers, by an independent certified public accountant, by an appraiser selected with reasonable care by the Board or any committee of the Board or by any agent of FINRA Regulation, or in relying in good faith upon other records of FINRA Regulation.
      Amended by SR-FINRA-2015-034 eff. Dec. 20, 2015.
      Amended by SR-FINRA-2009-020 eff. Aug. 20, 2009.
      Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      Selected Notices: 09-39, 16-04.

    • Meetings

      Sec. 4.11  (a) An annual meeting of the Board shall be held for the purpose of organization, election of officers, and transaction of any other business. If such meeting is held promptly after and at the place specified for the annual meeting of the stockholder, no notice of the annual meeting of the Board need be given. Otherwise, such annual meeting shall be held at such time and place as may be specified in a notice given in accordance with Section 4.12.
      (b) Regular meetings of the Board may be held at such time and place, within or without the State of Delaware, as determined from time to time by the Board. After such determination has been made, notice shall be given in accordance with Section 4.12.
      (c) Special meetings of the Board may be called by the Chair of the Board or by at least one-third of the Directors then in office. Notice of any special meeting of the Board shall be given to each Director in accordance with Section 4.12.
      (d) A Director or member of any committee appointed by the Board may participate in a meeting of the Board or of such committee through the use of a conference telephone or similar communications equipment by means of which all persons participating in the meeting may hear one another, and such participation in a meeting shall constitute presence in person at such meeting for all purposes.
      Amended by SR-FINRA-2009-020 eff. Aug. 20, 2009.
      Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      Selected Notice: 09-39.

    • Notice of Meetings; Waiver of Notice

      Sec. 4.12  (a) Notice of any meeting of the Board shall be deemed to be duly given to a Director if: (i) mailed to the address last made known in writing to FINRA Regulation by such Director as the address to which such notices are to be sent, at least seven days before the day on which such meeting is to be held; (ii) sent to the Director at such address by electronic transmission not later than the day before the day on which such meeting is to be held; or (iii) delivered to the Director personally or orally, by telephone or otherwise, not later than the day before the day on which such meeting is to be held. Each notice shall state the time and place of the meeting and the purpose(s) thereof.
      (b) Notice of any meeting of the Board need not be given to any Director if waived by that Director in writing or by electronic transmission whether before or after the holding of such meeting, or if such Director is present at such meeting, subject to Article XII, Section 12.3(b).
      (c) Any meeting of the Board shall be a legal meeting without any prior notice if all Directors then in office shall be present thereat, subject to Article XII, Section 12.3(b) of these By-Laws.
      Amended by SR-FINRA-2009-020 eff. Aug. 20, 2009.
      Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      Selected Notice: 09-39.

    • Committees

      Sec. 4.13  (a) The Board may, by resolution or resolutions adopted by a majority of the whole Board, appoint one or more committees. Except as herein provided, vacancies in membership of any committee shall be filled by the vote of a majority of the whole Board. The Board may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another Director to act at the meeting in the place of any such absent or disqualified member. Members of a committee shall hold office for such period as may be fixed by a resolution adopted by a majority of the whole Board. Any member of a committee may be removed from such committee only after a majority vote of the whole Board, after appropriate notice, for refusal, failure, neglect, or inability to discharge such member's duties.
      (b) The Board may, by resolution or resolutions adopted by a majority of the whole Board, delegate to one or more committees the power and authority to act on behalf of the Board in carrying out the functions and authority delegated to FINRA Regulation by FINRA under the Delegation Plan. Such delegations shall be in conformance with applicable law, the Restated Certificate of Incorporation, these By-Laws, and the Delegation Plan. Action taken by a committee pursuant to such delegated authority shall be subject to review, ratification, or rejection by the Board. In all other matters, the Board may, by resolution or resolutions adopted by a majority of the whole Board, delegate to one or more committees that consist solely of one or more Directors the power and authority to act on behalf of the Board in the management of the business and affairs of FINRA Regulation to the extent permitted by law and not inconsistent with the Delegation Plan. A committee, to the extent permitted by law and provided in the resolution or resolutions creating such committee, may authorize the seal of FINRA Regulation to be affixed to all papers that may require it.
      (c) Except as otherwise permitted by applicable law, no committee shall have the power or authority of the Board with regard to: amending the Restated Certificate of Incorporation or the By-Laws of FINRA Regulation; adopting an agreement of merger or consolidation; recommending to the stockholder the sale, lease, or exchange of all or substantially all FINRA Regulation's property and assets; or recommending to the stockholder a dissolution of FINRA Regulation or a revocation of a dissolution. Unless the resolution of the Board expressly so provides, no committee shall have the power or authority to authorize the issuance of stock.
      (d) Each committee may adopt its own rules of procedure and may meet at stated times or on such notice as such committee may determine. Each committee shall keep regular minutes of its proceedings and report the same to the Board when required.
      (e) Unless otherwise provided by these By-Laws, a majority of a committee shall constitute a quorum for the transaction of business, and the vote of a majority of the members of such committee present at a meeting at which a quorum is present shall be an act of such committee.
      (f) The Board may appoint an Executive Committee, which shall, to the fullest extent permitted by Delaware law and other applicable law, have and be permitted to exercise all the powers and authority of the Board in the management of the business and affairs of FINRA Regulation between meetings of the Board, and which may authorize the seal of FINRA Regulation to be affixed to all papers that may require it. The Executive Committee shall consist of three or four Directors. The number of Public Directors shall exceed the number of Industry Directors. An Executive Committee member shall hold office for a term of one year. At all meetings of the Executive Committee, a quorum for the transaction of business shall consist of a majority of the Executive Committee, including not less than 50 percent of the Public Directors. In the absence of a quorum, a majority of the committee members present may adjourn the meeting until a quorum is present.
      (g) The Board may appoint a Finance Committee. The Finance Committee shall advise the Board with respect to the oversight of the financial operations and conditions of FINRA Regulation, including recommendations for FINRA Regulation's annual operating and capital budgets and proposed changes to the rates and fees charged by FINRA Regulation. The Finance Committee shall consist of three or four Directors. A Finance Committee member shall hold office for a term of one year.
      (h) Upon request of the Secretary of FINRA Regulation, each prospective committee member who is not a Director shall provide to the Secretary such information as is reasonably necessary to serve as the basis for a determination of the prospective committee member's classification as an Industry, Non-Industry or Public Member. The Secretary of FINRA Regulation shall certify to the Board each prospective committee member's classification. Such committee members shall update the information submitted under this Section at least annually and upon request of the Secretary of FINRA Regulation, and shall report immediately to the Secretary any change in such classification.
      Amended by SR-FINRA-2009-020 eff. Aug. 20, 2009.
      Amended by SR-NASD-2001-57 eff. Sept. 12, 2001.
      Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      Selected Notice: 09-39.

    • Conflicts of Interest; Contracts and Transactions Involving Directors

      Sec. 4.14  (a) A Director or a National Adjudicatory Council or committee member shall not directly or indirectly participate in any adjudication of the interests of any party if that Director or National Adjudicatory Council or committee member has a conflict of interest or bias, or if circumstances otherwise exist where his or her fairness might reasonably be questioned. In any such case, the Director or National Adjudicatory Council or committee member shall recuse himself or herself or shall be disqualified in accordance with the Rules of the Corporation.
      (b) No contract or transaction between FINRA Regulation and one or more of its Directors or officers, or between FINRA Regulation and any other corporation, partnership, association, or other organization in which one or more of its Directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason if: (i) the material facts pertaining to such Director's or officer's relationship or interest and the contract or transaction are disclosed or are known to the Board or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested Directors; (ii) the material facts are disclosed or become known to the Board or committee after the contract or transaction is entered into, and the Board or committee in good faith ratifies the contract or transaction by the affirmative vote of a majority of the disinterested Directors; or (iii) the material facts pertaining to the Director's or officer's relationship or interest and the contract or transaction are disclosed or are known to the stockholder entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholder. Only disinterested Directors may be counted in determining the presence of a quorum at the portion of a meeting of the Board or of a committee that authorizes the contract or transaction. This subsection shall not apply to a contract or transaction between FINRA Regulation and either FINRA or FINRA CAT, LLC.
      Amended by SR-FINRA-2019-015 eff. Apr. 24, 2019.
      Amended by SR-FINRA-2015-034 eff. Dec. 20, 2015.
      Amended by SR-FINRA-2009-020 eff. Aug. 20, 2009.
      Amended by SR-NASD-2006-104 eff. Dec. 20, 2006.
      Amended by SR-NASD-2006-135 eff. Dec. 20, 2006.
      Amended by SR-NASD-2004-110 eff. Dec. 31, 2004.
      Amended by SR-NASD-98-56 eff. Oct. 30, 1998.
      Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      Selected Notice: 09-39, 16-04.

    • Action Without Meeting

      Sec. 4.15  Any action required or permitted to be taken at a meeting of the Board or of a committee may be taken without a meeting if all Directors or all members of such committee, as the case may be, consent thereto in accordance with applicable law.
      Amended by SR-FINRA-2009-020 eff. Aug. 20, 2009.
      Amended by SR-NASD-97-71 eff. Jan. 15, 1998.

      Selected Notice: 09-39.

    • Communication of Views Regarding Contested Election or Nomination

      Sec. 4.16  (a) FINRA Regulation, the Board, any committee, the National Adjudicatory Council, and FINRA Regulation staff shall not take any position publicly or with a FINRA member or person associated with or employed by a member with respect to any candidate in a contested election or nomination held pursuant to these By-Laws or the FINRA By-Laws. A Director, committee member (other than the Nominating Committee) or National Adjudicatory Council member may communicate his or her views with respect to a candidate if such Director or committee or National Adjudicatory Council member acts solely in his or her individual capacity and disclaims any intention to communicate in any official capacity on behalf of FINRA Regulation, the Board, the National Adjudicatory Council, or any committee (other than the Nominating Committee). Except as provided herein, any candidate and his or her representatives may communicate support for the candidate to a member or person associated with or employed by a member.
      (b) In a contested election, the Nominating Committee may support its nominee by sending to members eligible to vote up to two mailings of materials in support of its nominees in lieu of mailings sent by its candidates pursuant to these By-Laws. In addition to such mailings, in the event of mailings or other communications to members by or on behalf of a candidate by petition in a contested election, the Nominating Committee may respond in-kind, but shall not take a position unresponsive to the contesting candidate's communications.
      Amended by SR-FINRA-2011-011 eff. April 28, 2011.
      Amended by SR-FINRA-2008-046 eff. Nov. 6, 2008.
      Amended by SR-NASD-97-71 eff. Jan. 15, 1998.