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Prior approval by corporate members of trade associations

Request for corporate member approval: Prior approval process

In addition to soliciting noncorporate members and its own personnel, a trade association may solicit the restricted class of member corporations ( i.e., their executive and administrative personnel, stockholders and the families of both groups). Solicitation of a corporate member’s restricted class is a two-step process. First, the trade association must obtain the corporate member’s written approval for solicitation; second, and only after the corporate member’s prior approval has been granted, the association may conduct the solicitation.

Requirements for prior approval request

Before beginning its solicitation of the restricted class of a corporate member, a trade association must make a written request to the member corporation for permission to solicit the member’s restricted class. This request, known as a request for “prior approval” is sent to the corporate representative with whom the association normally conducts its activities. Any request for prior approval must inform the member corporation that:

  • Corporate approval is necessary before the trade association or its SSF may conduct a solicitation; and
  • The corporation may not approve solicitations by another trade association for the same calendar year.

Optional information

The trade association may enclose a copy of proposed solicitation materials in its request for approval. Moreover, the trade association may note that it intends to limit the scope of the solicitation (e.g., to just executive and administrative personnel but not stockholders).

Format for prior approval request

Because the request for prior approval is not considered a solicitation, it may be distributed to corporate members using a variety of formats. For example, a trade association may:

  • Post an electronic request for prior approval on its website;
  • Publish in its magazine or newsletter a form for obtaining solicitation approval from corporate members; and
  • Operate a booth at which it requests solicitation approvals at its convention, annual meeting or similar event. 

The trade association may also receive written solicitation approvals at the convention as long as they are signed by persons authorized by the corporations to make such approvals. See Solicitations at conventions or meetings.

No matter what format is used when making the request for prior approval, the approval form must be written (or electronic) and include all the required information described.

Written approval by corporate member

As noted, the approval granted by the member corporation must be made in writing (or electronically; see “Use of electronic signatures”). Because the representative of the member corporation grants approval on behalf of the corporation, the approval form should also indicate that the signatory is doing so on behalf of the specific-named corporation, e.g., [the signature], for ABC Corp.” (Normally, the representative is the person with whom the trade association normally conducts the association’s activities.)

Corporate approval of trade association solicitations in no way limits the corporation’s right to solicit contributions for its own SSF.

There is no limit on the number of member corporations from which a trade association can obtain solicitation approvals. In a particular calendar year, however, a corporation may authorize only one trade association to solicit its restricted class. Thus, the corporate member must designate the calendar year for which the solicitations are authorized; the authorization automatically expires on December 31 of the designated year.

Multiple-year approvals

A member corporation may grant its approval for several years in advance; however, the company must provide the trade association with a separate approval (in the form of a separate signature line) for each year.

Approval extended to affiliated nonconnected PAC

Any solicitation approval granted by a corporate member of a trade association also covers solicitations from a nonconnected PAC affiliated with the trade association’s SSF.

Use of electronic signatures

A trade association SSF may accept corporate members' electronic signatures as written prior authorization to solicit the restricted class of their corporate members. The electronic authorization may be obtained through email or a website. In either case, the trade association must verify that:

  • The prior approval forms were available only to representatives of corporate members; and
  • Each electronic signature came from the specific corporate representative.

Furthermore, a copy of the electronic approval had to be maintained, in a readily available form, for three years. 

Content of approval

Scope

A corporation's authorization may limit the scope of the solicitations to particular members of the restricted class (for example, stockholders only). Note that trade associations may not solicit persons outside of the member corporation’s restricted class.

Frequency

The corporate approval may also limit the number of times solicitations may take place during the calendar year. Unless otherwise specified in the approval, the trade association may conduct unlimited solicitations.