The SEC has published final rules requiring that companies and soliciting persons offer the notice and access method of distribution for all proxy solicitations (other than with respect to business combinations) (the “universal e-proxy rules”). After the new rules go into effect, companies and other soliciting persons may elect to use either a notice only or a full set delivery option to distribute proxy materials to shareholders. Under both options, companies and other soliciting persons must deliver to shareholders a Notice of Internet Availability of Proxy Materials in the form specified by the SEC (the “Notice”) and post proxy materials on a publicly accessible website. Under the full set delivery option, companies and other soliciting persons may also initially provide paper or e-mail copies of proxy materials in addition to the Notice and website posting. Companies and soliciting persons do not have to choose one option as the exclusive means for providing proxy materials to shareholders. Instead, they may use one option for some shareholders and the other option for other shareholders.
Large accelerated filers (other than registered investment companies) must comply with the universal e-proxy rules for solicitations commencing on or after January 1, 2008. Registered investment companies, soliciting persons other than the company and non-large accelerated filers (i) may comply with these rules for solicitations commencing on or after January 1, 2008, and (ii) must comply with these rules for solicitations commencing on or after January 1, 2009. To view the final universal e-proxy rules, see http://sec.gov/rules/final/2007/34-56135.pdf.
The Notice Only Option
Companies and other soliciting persons who choose the notice only option will follow the same process that was approved by the SEC earlier this year when it adopted the voluntary version of these e-proxy requirements. The only differences between the existing e-proxy procedure and the new notice only option under the universal e-proxy rules are certain technical clarifications made by the SEC based on comments received to date, including the following:
- The requirement that the Notice include a “clear and impartial identification of each separate matter intended to be acted on and the soliciting person’s recommendation regarding those matters” is not a requirement that a recommendation be made for every matter, but only that disclosure is required where the company or other soliciting person chooses to make a recommendation; and
- Requests for paper copies of proxy materials received after the end of a shareholder meeting need not be fulfilled via first-class mail or within three business days.
For more detail on the notice only option, see Exhibit A.
Full Set Delivery Option
For companies wishing to initially furnish a full set of proxy materials in paper to shareholders under the full set delivery option, the only new obligations that these rules add to the current paper or e-mail delivery process are requirements to post the proxy materials on a website and include a Notice with (or incorporate the Notice into) the full sets of materials. The requirements for the Notice and website posting are the same as those in the notice only option except as follows:
- A company may accompany the Notice with a copy of the proxy statement, annual report (if required by Rule 14a-3(b)) and a proxy card;
- A company need not prepare a separate Notice if it incorporates all of the Notice information into the proxy statement and proxy card;
- Because shareholders will not need extra time to request paper or e-mail copies, the company need not send the Notice and full set of proxy materials at least 40 days before the meeting date. Also, because under current rules the company does not have to post proxy materials on the specified website until the date that they are sent to shareholders, the company would also not be required to post the materials on a public website at least 40 days before the meeting date if they are not sent then;
- Because the company already has provided shareholders with a full set of proxy materials, it need not provide the shareholder with copies of proxy materials upon request;
- Because the full set of proxy materials includes a proxy card or request for voting instructions, the company need not provide another means for voting at the time the Notice is provided unless it chooses to do so; and
- The company need not include the part of the prescribed legend relating to shareholder requests for copies of the documents and instructions on how to request a copy of the proxy materials in its notice of internet availability.
Other soliciting persons and intermediaries follow a similar process as companies when using the full set delivery option.