SEC OKs E-Proxy Rule Amendments

December 15, 2006 ( - The Securities and Exchange Commission has voted to adopt amendments to its proxy rules that would allow companies to furnish proxy materials to shareholders through a "notice and access" model using the Internet.

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.

Notice Requirements

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.

Other Solicitors

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.