The SEC adopted amendments to the proxy rules under the Securities Exchange Act of 1934 that provide an alternative method for issuers and other persons to furnish proxy materials to shareholders by posting them on an Internet Web site and providing shareholders with notice of the availability of the proxy materials. Issuers must make copies of the proxy materials available to shareholders on request, at no charge to shareholders.

Under the new proxy rules, an issuer may satisfy its obligation to shareholders by posting its proxy materials on a publicly-accessible Internet Web site (other than the SEC’s EDGAR Web site) and sending a Notice of Internet Availability of Proxy Materials (“Notice”) to shareholders at least 40 calendar days before the shareholder meeting date, indicating that the proxy materials are available and explaining how to access those materials.

Shareholders must have a means to execute a proxy as of the time on which the Notice is sent. The Notice also must explain how a shareholder can request a copy of the proxy materials, and how a shareholder can indicate a preference to receive a paper or e-mail copy of any proxy materials distributed under the Notice and access model in the future. An issuer may not send a proxy card along with the Notice; however, 10 calendar days or more after sending the Notice, the issuer may send a proxy card to shareholders. If an issuer chooses to send a proxy card without a copy of the proxy statement under this provision, a copy of the Notice must accompany the proxy card so that recipients will be notified again about the Web site on which the proxy statement is accessible. Finally, the Notice and access model may not be used in conjunction with a proxy solicitation related to a business combination transaction.

Shareholders and other persons conducting their own proxy solicitations may rely on the Notice and access model under requirements substantially similar to the requirements that would apply to issuers. However, unlike the requirements for an issuer, a soliciting person other than the issuer may selectively choose the shareholders from whom it desires to solicit proxies without the need to send an information statement to all other shareholders.

The SEC stated that no issuer may send a Notice to shareholders before July 1, 2007. It noted that issuers and intermediaries typically hire third parties to handle the logistics of proxy distribution. These companies will require time to adjust their systems to accommodate the Notice and access model. Therefore, an issuer may not use the new model for meetings before August 10, 2007 because of the 40-day deadline. Similarly, if an issuer’s meeting will be on or after August 10, 2007, it may only send the Notice on or after July 1, 2007, even if the issuer wishes to send the Notice more than 40 days prior to the meeting date.