The SEC recently introduced a proposal aimed at correcting an unintended reduction in shareholder voting that appears to have stemmed from Rule 14a-16 (internet availability of proxy materials). Rule 14a-16 allows issuers a choice of sending a full set of proxy materials (including the notice), or only the notice of internet availability of proxy materials to shareholders (the Notice). The rule, however, currently imposes strict requirements regarding the content of such notices, and mandates that the Notice be presented in a prescribed format. Those strict requirements prompted some in the industry to complain that the SEC’s rigid format does not permit issuers to provide enough information to shareholders for purposes of casting their votes on the internet.

After Rule 14a-16 was adopted, the industry experienced a decline in shareholder voting. In response to the apparent shareholder confusion and reduction in voting, the SEC has proposed to revise its rules to provide issuers and other soliciting persons with additional flexibility in formatting and selecting the language used in Notices. Specifically, the SEC has proposed that the information appearing in the Notice address certain topics, such as how to request paper copies of proxy materials, without specifying the exact language to be used. The SEC has also proposed revisions to its rules to permit issuers and other soliciting persons to accompany the Notice with a further explanation of the notice and access model. The proposed amendments, if adopted, will allow registered investment companies to better tailor their Notices to the informational needs of their shareholders and potentially lead to an increase in shareholder voting. The comment period for the proposed amendments closed on November 20th.

A copy of the release proposing the amendments is available at