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SEC adopts major amendments to proxy rules for public companies

So often, our messages about regulatory changes are accompanied by loud sighs of dismay, followed shortly by questions about the additional costs to your business. However, on December 13, 2006, the Securities and Exchange Commission (SEC) adopted a proposed amendment to the proxy rules for public companies which are expected to result in significant savings for every public company.

Under the amendments, a company may, but is not required to, furnish proxy materials to shareholders through a new “notice and access” model for all solicitations not related to a business combination transaction in the future. A company choosing to follow the new method will post its proxy materials on an internet website and send a Notice of Internet Availability of Proxy Materials (Notice) to shareholders at least 40 days before the meeting date. This process should significantly reduce the excessive postage and printing costs associated with proxy solicitation. Under the new rule, a proxy card may not accompany the Notice. However, 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; a clear and impartial description of the matters to be considered at the meeting and list a website where the proxy materials can be viewed in full. It must also contain a toll-free telephone number, e-mail address and a website that shareholders may use to request paper copies of the proxy materials without charge. If so requested, companies must send a paper copy of the proxy materials to shareholders within three business days. This new method will be available for proxy solicitations occurring on or after July 1, 2007.

  • Partner

    Chris is a member of the Business Services Department and Chair of the Private Equity/Mergers & Acquisitions Practice Group.  He practices in the areas of mergers and acquisitions, health care, securities, private equity ...

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