In announcing the proposal, the SEC said that the new model was intended to “substantially decrease” the expense incurred by issuers to comply with the proxy rules and provide persons “other than the company with a more cost-effective means to undertake their own proxy solicitations.”
The SEC also voted to propose rule changes that would require companies and soliciting persons to follow the notice and access model for “all solicitations not related to a business combination transaction in the future.”
Under the new proxy rules, companies may, but are not required to, furnish proxy materials to shareholders through a “notice and access” model. To do so, a company must post its proxy materials on an Internet Web site and send a Notice of Internet Availability of Proxy Materials to shareholders at least 40 days before the meeting date. A proxy card may not accompany this notice, but a company may send a paper proxy card accompanied by another copy of the notice 10 days or more after sending the initial notice.
The notice must: be written in plain English and contain a prominent legend that advises shareholders of:
- the date, time, and location of the meeting;
- the availability of the proxy materials at a specified Web site address;
- a toll-free phone number, e-mail address and a website that shareholders may use to request copies of the proxy materials; and
- a clear and impartial description of the matters to be considered at the meeting.
The company must send a copy of the materials within three business days after receiving a request from a shareholder, and a shareholder may make a permanent election to receive all proxy materials in paper or by e-mail with respect to future proxy solicitations.
A soliciting person other than the company may follow the notice and access model in substantially the same manner, but its notice must be sent to shareholders by the later of 40 days before the meeting or 10 days after the company filed its proxy materials. That solicitation may be limited to shareholders who have not previously requested paper or e-mail copies. But if the soliciting person sends a notice to a shareholder, it must send that shareholder a paper or e-mail copy upon request.
The compliance date for the amendments is July 1, 2007 – and “No person may comply with the notice and access model before that date,” according to the SEC. Comments on these proposals should be received by the Commission within 60 days of their publication in the Federal Register.