On November 28, the Securities and Exchange Commission adopted amendments to the federal proxy rules under the Securities Exchange Act of 1934 to facilitate the use of electronic shareholder forums.

The amendments are designed to clarify that participation in an electronic shareholder forum, which could potentially constitute a solicitation subject to the current proxy rules, will be exempt from most of the proxy rules if the conditions to the exemption are satisfied. In summary:

  • Any participant in an electronic shareholder forum will be able to rely on the new exemption so long as his or her communications occur more than 60 days prior to the date announced by the company for its annual or special meeting of shareholders, and the communicating party does not solicit proxy authority while relying on the exemption. A participant in an electronic shareholder forum will be eligible to solicit proxy authority after the date that the exemption is nolonger available, provided that the solicitation is conducted in accordance with Regulation 14A. 
  • Where the company announces a meeting of shareholders less than 60 days before the meeting date, the solicitation could not occur more than two days following the company's announcement. 

In addition, new Rule 14a-17 under the Exchange Act provides that a shareholder, company, or third party acting on behalf of a shareholder or a company, that establishes, maintains or operates an electronic shareholder forum will not be liable under the federal securities laws for any statement or information provided by another person participating in the forum.

The rule amendments will take effect 30 days after they are published in the Federal Register.

The full text of the detailed release concerning the rule amendment will be posted to the SEC website as soon as possible.  http://www.sec.gov/news/press/2007/2007-247.htm