SEC Proposes Amendments to E-Proxy Rules
October 26, 2009
On October 14, 2009, the SEC proposed amendments to the e-proxy rules that are designed to improve informed shareholder participation, particularly by retail shareholders, in the proxy voting process. The SEC notes that while issuers may experience cost savings, it is concerned by the low shareholder response rates when the notice and access model for distribution of proxy materials is used. The proposed amendments include the following:
Improve Clarity of the Notice of Internet Availability of Proxy Materials – Rather than requiring specific language in the notice, the proposed amendments would require that the notice address certain topics, without specifying the exact language to be used. The SEC hopes that the flexibility will allow issuers and other soliciting persons to develop a more effective explanation of the importance of the notice and provide clearer guidance for shareholders as to how to access the proxy materials online and vote their shares. The SEC also noted that it is not necessary that the notice directly mirror the proxy card, but just that the notice identify each matter that will be considered at the meeting. Further, the proposed rules would permit issuers and other soliciting persons to include with the notice explanatory materials regarding the process of receiving and reviewing proxy materials and voting. The SEC strongly encourages issuers and other soliciting persons to better inform shareholders about the notice and access model to reduce confusion and increase retail shareholder participation.
Shorten Deadline for Sending Notice for Non-Issuers– Under the current rules, if a soliciting person other than the issuer chooses to use the notice and access model, it must send the notice to shareholders by the later of (i) 40 calendar days before the meeting, or (ii) 10 calendar days after the issuer first sends its notice to shareholders. Due to SEC review of contested proxy solicitations, soliciting persons have been unable to meet the 10-calendar-day deadline since they must provide a means to vote at the time they send the notice. Any means to vote must be accompanied by a definitive proxy statement, which may not be available due to the SEC review process, within the 10-calendar-day period. Under the proposed rules, if a non-issuer soliciting person chooses to use the notice and access model, the soliciting person would be required to:
- file its preliminary proxy statement within 10 days after the issuer files its definitive proxy statement
- send its notice to shareholders no later than the date it files its definitive proxy statement
This revised time period would provide sufficient time for a soliciting person to prepare its proxy statement and respond to any staff comments.
Comments on the proposed rules must be received by November 20, 2009.
http://www.sec.gov/rules/proposed/2009/33-9073.pdf
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