On February 22, 2010, the SEC adopted amendments to the e-proxy rules that are intended to provide companies with additional flexibility in drafting the Notice of Internet Availability of Proxy Materials (and communicating with shareholders to explain the e-proxy process).

The amendments include the following:

Improves Clarity of the Notice of Internet Availability Rather than requiring specific language in the Notice of Internet Availability, the amendments require that the Notice address certain topics, without specifying the exact language to be used. Specifically, the issuer would be required to indicate that the notice is not a form for voting. The SEC believes that this flexibility should discourage boilerplate disclosure in the notice. The SEC reiterated their position 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.

Permits the Inclusion of Explanatory Materials The amended rules permit issuers and other soliciting persons to include with the Notice of Internet Availability explanatory materials regarding the process of receiving and reviewing proxy materials and voting and the reasons for the use of the notice and access rules. Materials designed to persuade shareholders to vote in a certain matter or change the method of the delivery of proxy materials would not be permitted.

Shortens Notice Deadline for Non-Issuers Under the prior rules, if a soliciting person other than the issuer chose to use the notice and access model, it was required to 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. Under the amended 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

The SEC believes that this revised time period would provide sufficient time for a soliciting person to prepare a proxy statement and respond to any staff comments.

The amendments become effective on March 29, 2010.