On January 18, the Securities and Exchange Commission released amendments to the proxy rules under the Securities Exchange Act of 1934 intended to facilitate greater online interaction among shareholders in shareholder forums. The amendments clarify that participation in electronic shareholder forums that could constitute a solicitation under the proxy rules is exempt from most of the proxy rules if certain conditions are met.
The conditions for exemption (contained in amendments to Rule 14a-2) require solicitations via an electronic shareholder forum to occur either (i) 60 or more days prior to the date announced by the company for its annual or special meeting of shareholders or (ii) if the company announces the date for either an annual or special meeting less than 60 days prior to such meeting, no more than 2 days after company’s announcement of the meeting’s date. A person who makes a solicitation outside of this window or is directly or indirectly seeking the power to act as a proxy for another security holder would be required to comply with Regulation 14A.
In addition, new Rule 14a-17 clarifies that a shareholder or company (or third party acting on their behalf) who establishes, maintains or operates an electronic shareholder forum will not be liable for statements made by another person participating in such forum. A person making statements on such a forum will, however, remain liable for the content of their statements under traditional liability theories under federal securities laws, including liability for participation in fraud, deception or manipulation.