Rule: Securities: Proxy Materials Internet Availability

Monday,
January 29, 2007
Part III
Securities and
Exchange
Commission
17 CFR Parts 240, 249, and 274
Internet Availability of Proxy Materials;
Final Rule
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4148 Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations
SECURITIES AND EXCHANGE • Use the Federal eRulemaking Portal adding new Rule 14a–16 under the
COMMISSION (http://www.regulations.gov). Follow the Exchange Act.
instructions for submitting comments.
17 CFR Parts 240, 249 and 274 Table of Contents
Paper Comments I. Introduction
[Release Nos. 34–55146; IC–27671; File No. II. Description of the Amendments
S7–10–05] • Send paper comments in triplicate A. The Notice and Access Model for
to Nancy M. Morris, Secretary, Issuers
RIN 3235–AJ47 Securities and Exchange Commission, 1. Notice of Internet Availability of Proxy
100 F Street, NE., Washington, DC Materials
Internet Availability of Proxy Materials 20549–1090. a. Householding
b. Security and Privacy on the Internet
AGENCY: Securities and Exchange All submissions should refer to File i. Theft of Identification or Control
Commission. Number S7–10–05. To help us process Numbers
ACTION: Final rule; request for comment and review your comments more ii. Phishing
efficiently, please use only one method. iii. Misuse of Information by Issuers and
on Paperwork Reduction Act burden Other Soliciting Persons
estimates. The Commission will post all comments
2. Proxy Card
on its Internet Web site (http:// 3. Internet Web Site Posting of Proxy
SUMMARY: We are adopting amendments www.sec.gov/rules/final.shtml). Materials
to the proxy rules under the Securities Comments also are available for public 4. Period of Reliance
Exchange Act of 1934 that provide an inspection and copying in the 5. State Law Notices
alternative method for issuers and other Commission’s Public Reference Room, 6. Additional Soliciting Materials
persons to furnish proxy materials to 100 F Street, NE., Washington, DC 7. Requests for Copies of Proxy Materials
shareholders by posting them on an 20549. All comments received will be B. The Role of Intermediaries
Internet Web site and providing posted without change; we do not edit 1. Background
2. Discussion of the Amendments
shareholders with notice of the personal identifying information from 3. Request for Copies by Beneficial Owners
availability of the proxy materials. submissions. You should submit only C. Soliciting Persons Other Than the Issuer
Issuers must make copies of the proxy information that you wish to make 1. Mechanics of Proxy Solicitations by
materials available to shareholders on publicly available. Persons Other Than the Issuer
request, at no charge to shareholders. 2. Timeframe for Sending Notice of
FOR FURTHER INFORMATION CONTACT:
The amendments put into place Internet Availability of Proxy Materials
processes that will provide shareholders Raymond A. Be, Special Counsel, Office 3. Content of the Notice of Internet
with notice of, and access to, proxy of Rulemaking, Division of Corporation Availability of Proxy Materials of a
materials while taking advantage of Finance, at (202) 551–3430, Securities Soliciting Person Other Than the Issuer
technological developments and the and Exchange Commission, 100 F 4. Shareholder Lists and the Furnishing of
Street, NE., Washington, DC 20549– Proxy Materials by the Issuer
growth of the Internet and electronic 5. The Role of Intermediaries With Respect
communications. Issuers that rely on the 3628.
to Solicitations by Persons Other Than
amendments may be able to SUPPLEMENTARY INFORMATION: We are the Issuer
significantly lower the costs of their amending Rules 14a–2,1 14a–3,2 14a–4,3 D. Business Combination Transactions
proxy solicitations that ultimately are 14a–7,4 14a–8,5 14a–12,6 14a–13,7 14b– E. Compliance Date and Monitoring
borne by shareholders. The amendments IV. Conforming and Correcting Revisions to
1,8 14b–2,9 14c–2,10 14c–3,11 14c–5,12
also might reduce the costs of engaging the Proxy Rules
14c–7,13 Schedule 14A,14 Schedule V. Paperwork Reduction Act
in a proxy contest for soliciting persons 14C,15 Form 10–K,16 Form 10–KSB,17 A. Background
other than the issuer. The amendments Form 10–Q,18 and Form 10–QSB,19 B. Summary of Amendments
do not apply to business combination under the Securities Exchange Act of C. Comments on PRA Estimates
transactions. The amendments also do 1934 20 and Form N–SAR 21 under the VI. Cost-Benefit Analysis
not affect the availability of any existing Exchange Act and the Investment A. Background
method of furnishing proxy materials. Company Act of 1940.22 We also are B. Summary of Amendments
DATES: Effective Date: March 30, 2007. C. Benefits
Compliance Date: Persons may not 1 17
D. Costs
CFR 240.14a–2.
VII. Consideration of Burden on Competition
send a Notice of Internet Availability of 2 17 CFR 240.14a–3.
and Promotion of Efficiency,
Proxy Materials to shareholders prior to 3 17 CFR 240.14a–4.
Competition and Capital Formation
July 1, 2007. 4 17 CFR 240.14a–7.
VIII. Final Regulatory Flexibility Analysis
5 17 CFR 240.14a–8.
Comment Due Date: Comments on the A. Need for the Amendments
6 17 CFR 240.14a–12.
Paperwork Reduction Act burden 7 17 CFR 240.14a–13.
B. Significant Issues Raised by Public
estimate should be received on or before 8 17 CFR 240.14b–1.
Comment
March 30, 2007. 9 17 CFR 240.14b–2.
C. Small Entities Subject to the
Amendments
ADDRESSES: Comments may be 10 17 CFR 240.14c–2.
D. Reporting, Recordkeeping and Other
submitted by any of the following 11 17 CFR 240.14c–3.
Compliance Requirements
methods: 12 17 CFR 240.14c–5.
E. Agency Action To Minimize Effect on
13 17 CFR 240.14c–7.
Electronic Comments 14 17 CFR 240.14a–101.
Small Entities
IX. Statutory Basis and Text of Amendments
• Use the Commission’s Internet
15 17 CFR 240.14c–101.
comment form (http://www.sec.gov/

16 17 CFR 249.310.
I. Introduction
17 17 CFR 249.310a.
rules/final.shtml); or 18 17 CFR 249.308a. On December 8, 2005, we proposed

• Send an e-mail to rule- 19 17 CFR 249.308b. amendments to update the proxy rules
comments@sec.gov. Please include File 20 15 U.S.C. 78a et seq. to take greater advantage of
Number S7–10–05 on the subject line; 21 17 CFR 249.330 and 274.101. communications technology by
or 22 15 U.S.C. 80a–1 et seq. supplementing the existing regulatory
Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations 4149
framework with an alternative ‘‘notice • The level of security and privacy on Although there was a mixed reaction
and access’’ proxy model that could the Internet; 26 to the proposal,33 we believe that
reduce significantly the printing and • The extent of potential savings to current levels of access to the Internet
mailing costs associated with furnishing issuers and those conducting proxy merit adoption of the notice and access
proxy materials to shareholders.23 contests that choose to rely on the model as an alternative to the existing
Under the notice and access model that proposed model; 27 and proxy distribution system. In this
we proposed, an issuer would be able to • Whether the proposed model may regard, we note that more than 10.7
satisfy its obligations under the make the proxy delivery system, million beneficial shareholders already
Commission’s proxy rules by posting its particularly as it relates to beneficial have given their affirmative consent to
proxy materials on a publicly-accessible owners holding in street name through electronic delivery of proxy materials
Internet Web site (other than the their brokers or other intermediaries, too and approximately 87.8% of shares
Commission’s EDGAR Web site) and complex.28 voted were voted electronically or
providing shareholders with a notice Several commenters suggested telephonically during the 2006 proxy
informing them that the materials are revisions related to the proposed notice season.34 Moreover, research submitted
available and explaining how to access and access model, including the to us during the comment period
those materials. Under the proposal, an following: indicates that approximately 80% of
issuer relying on the model would be • The proposed rules should allow a investors in the United States have
required to provide a requesting shareholder to make an election to access to the Internet in their homes, a
shareholder with a copy of the proxy receive paper copies of the proxy greater percentage than we estimated at
materials in paper or by e-mail, at no materials with respect to any future the proposing stage.35 Several
charge to the shareholder. We proposed solicitations that would remain in place commenters expressed the view that the
that soliciting persons other than the until subsequently revoked by the current level of Internet usage is
issuer also would be able to rely on the shareholder; 29 sufficiently high to warrant adoption of
notice and access model. • An issuer should have to make the the proposed notice and access model.36
We received approximately 140 proxy card available to shareholders Although some commenters did not
comment letters on the proposed notice through the same medium it uses to think that Internet access is sufficiently
and access model from a variety of make the proxy statement available to widespread, particularly among
interested parties, including issuers and them; 30 seniors,37 to warrant implementation of
their agents, shareholders, • The Commission should review and the proposed model at this time,38 the
intermediaries and their agents, simplify the proxy delivery system as a requirement that any shareholder
financial printers, manufacturers of whole rather than addressing the issue lacking Internet access, or preferring
mailing products, and academics. There of electronic delivery of proxy materials delivery of a copy of the proxy
was significant disagreement among the in isolation; 31 and materials, can make a permanent
commenters regarding these key issues • The New York Stock Exchange request to receive a copy of the proxy
raised by the proposed model: (‘‘NYSE’’) should review its current materials (and all future proxy
• The sufficiency of current Internet schedule of maximum fees that its materials) at no charge should
access among the U.S. population such member firms may charge issuers to substantially mitigate the concern about
that the proposed model would be forward issuers’ proxy materials to Internet access.
desirable; 24 beneficial owners.32 Therefore, we are adopting the
• The effect that the proposed notice proposal substantially as proposed. The
and access model might have on levels Fund of Stockowners Rights (Stockowners Rights), final rules are intended to allow issuers
of proxy voting by shareholders; 25 IR Web Report, and Securities Industry Association
(SIA). However, other commenters believed the
and other soliciting persons to establish
rules may increase shareholder voting by procedures that will promote use of the
23 Release No. 34–52926 (Dec. 8, 2005) [70 FR
facilitating the voting process. See, for example, Internet as a reliable and cost-efficient
74597]. For purposes of this release only, the term letters from AFL–CIO, Robert Atkinson,
‘‘proxy materials’’ includes proxy statements on
means of making proxy materials
Institutional Shareholder Services (ISS), Proxinvest,
Schedule 14A, proxy cards, information statements and Society of Corporate Secretaries and
33 It appeared that many commenters opposing
on Schedule 14C, annual reports to security holders Governance Professionals (SCSGP).
required by Rules 14a–3 and 14c–3 of the Exchange 26 See, for example, letters from James Angel, adoption mistakenly believed that they would lose
Act, notices of shareholder meetings, additional the ability to receive paper copies. Others objected
Todd Collier, James Davis, William LaFollette,
soliciting materials, and any amendments to such to having to request paper copies under the notice
Matthew McGuire, and USPS.
materials. For purposes of this release, the term and access model. See, for example, letters from
27 See, for example, letters from ADP and
does not include materials filed under Rule 14a–12. Arthur Comings, Dave Few, George Liddell, Robert
24 See, for example, letters suggesting that current
Computershare. Link, and Chloris Wolski.
28 See letter from ABA. 34 According to data available on the Web site of
rates of Internet access are sufficient from American
29 See letters from American Business Council
Bar Association (ABA), America’s Community ADP. See www.ics.adp.com/release11/public_site/
Bankers (ACB), Association of Ameritech SBC (ABC), AFL–CIO, James Angel, CALSTRS, Florida about/stats.html.
Retirees (SBC Retirees), Business Roundtable (BRT), State Board, Ohio Public Employees Retirement 35 See letter from ADP. At the proposing stage, we
Computershare Ltd. (Computershare), Proxinvest, System (OPERS), San Diego City Employees’ estimated that 75% of people in the United States
Gary Tannahill, Hermes, Investment Company Retirement System (San Diego Retirement), SIA, had Internet access, but we did not have an estimate
Institute (ICI), Securities Transfer Association William Sjostrom, Stocklein Law Group, Swingvote, for the percentage of investors with Internet access.
(STA), and Sullivan & Cromwell. But also see, for and Paul Uhlenhop. 36 See, for example, letters from ABA, ACB, BRT,
30 See letters from ACB, AFL–CIO, Amalgamated
example, letters from Association of BellTel Computershare, Hermes, ICI, Proxinvest, SBC
Retirees (BellTel Retirees), Todd Collier, Joel Bank of LongView Funds (Amalgamated Bank), Retirees, STA, Sullivan & Cromwell, and Gary
Brown, James Davis, Donna Garal, Clark Green, BellTel Retirees, Council of Institutional Investors Tannahill.
Heather Harper, Frank Inman, William Lafollette, (CII), Florida State Board, Carl Hagberg, 37 See, for example, letters from American
James Phipps, Beth Spletter, Megan Stroinski, and International Brotherhood of Teamsters (Teamsters), Association of Retired Persons (AARP), BellTel
the United States Postal Service (USPS) suggesting National Retiree Legislative Network (NRLN), San Retirees, Timothy Buchman, Todd Collier, NRLN,
that those rates are not sufficient. Diego Retirement, and Swingvote. Printing Industries of America (PIA), Stockowners
31 See, for example, letters from BRT, Committee

25 Some commenters believed that the proposed Rights, and Telephone Pioneers of America.
model might result in a decline in voting by of Concerned Shareholders (Concerned 38 See, for example, letters from BellTel Retirees,
shareholders. See, for example, letters from Shareholders), Computershare, Carl Hagberg, Joel Brown, Todd Collier, James Davis, Donna
Automatic Data Processing, Inc. (ADP), James Mellon, and STA. Garal, Clark Green, Heather Harper, Frank Inman,
Angel, Timothy Buchman, State Board of 32 See letters from BRT, Computershare, and William Lafollette, James Phipps, Beth Spletter,
Administration of Florida (Florida State Board), SCSGP. Megan Stroinski, and USPS.
available to shareholders. Among those proxy statement under this provision, a adopting a requirement that issuers and
shareholders who access the proxy copy of the Notice must accompany the other soliciting persons send the Notice
materials electronically, the rules also proxy card so that recipients will be to shareholders at least 40 calendar days
may increase the use of the Internet for notified again about the Web site on before the shareholder meeting date,
voting proxies. An issuer’s or other which the proxy statement is accessible. rather than 30 calendar days before the
soliciting person’s election to follow the Finally, the notice and access model meeting, as proposed. We are making
notice and access model will be may not be used in conjunction with a this change so that issuers and other
voluntary.39 proxy solicitation related to a business soliciting persons will still have at least
Under the final rules, as discussed in combination transaction. a 30-day period in which they can send
more detail below, an issuer may satisfy Shareholders and other persons a proxy card to shareholders if they
its obligation under the Commission’s conducting their own proxy choose to do so.
proxy rules to furnish proxy materials to solicitations may rely on the notice and Third, in addition to the proposed
shareholders in connection with a proxy access model under requirements requirement that a shareholder be able
solicitation by posting its proxy substantially similar to the requirements to request a paper or e-mail copy of the
materials on a publicly-accessible that would apply to issuers. As a result, proxy materials for a particular meeting,
Internet Web site (other than the these rules may have the effect of the final rules require an issuer to allow
Commission’s EDGAR Web site) and reducing the cost of engaging in a proxy shareholders to elect to receive paper or
sending a Notice of Internet Availability contest. However, unlike the e-mail copies of proxy materials that the
of Proxy Materials (‘‘Notice’’) to requirements for an issuer, a soliciting issuer will distribute in the future in
shareholders at least 40 calendar days person other than the issuer may reliance on the notice and access model.
before the shareholder meeting date selectively choose the shareholders from Similarly, intermediaries must allow
indicating that the proxy materials are whom it desires to solicit proxies beneficial owners to elect to receive
available and explaining how to access without the need to send an information paper or e-mail copies of any proxy
those materials.40 Shareholders must statement to all other shareholders. materials that will be distributed in the
have a means to execute a proxy as of The new rules do not affect the future in reliance on the notice and
the time on which the Notice is sent.41 availability of other means of providing access model with respect to all
The Notice also must explain how a proxy materials to shareholders, such as securities held in the beneficial owner’s
shareholder can request a copy of the obtaining affirmative consents for account. Fourth, under the new rules,
proxy materials and how a shareholder electronic delivery pursuant to existing an intermediary must prepare its own
can indicate a preference to receive a Commission guidance.43 Thus, an issuer Notice for distribution to beneficial
paper or e-mail copy of any proxy may rely on affirmative consents to owners.
materials distributed under the notice furnish proxy materials to some Fifth, the intermediary’s Notice sent
and access model in the future. An shareholders, and rely on the notice and to a beneficial owner will direct the
issuer may not send a proxy card along access model to furnish the materials to owner to request paper or e-mail copies
with the Notice; however, 10 calendar others. from his or her intermediary, rather than
days or more after sending the Notice, We are making several significant from the issuer. Finally, the final rules
the issuer may send a proxy card to revisions to the proposed notice and do not permit soliciting persons other
shareholders.42 If an issuer chooses to access model in response to than the issuer to engage in a
send a proxy card without a copy of the commenters’ concerns. First, the final conditional solicitation as proposed
39 In a companion release, the Commission is
rules do not permit a proxy card to and, therefore, the rules require such
proposing to require issuers and other soliciting accompany the Notice as we originally persons to send a copy of the proxy
persons to follow a substantially similar model. See proposed, although the rules do permit materials upon request from a
Release No. 34–55147. an issuer or other soliciting person to shareholder to whom they have sent a
40 An issuer or other soliciting person also must
send a proxy card 10 calendar days or Notice.
continue to comply with Exchange Act Rules 14a–
6 [17 CFR 240.14a–6] and 14c–5 [17 CFR 240.14c– more after it sends the Notice, provided
II. Description of the Amendments
5], which require the issuer or other soliciting that a copy of the Notice accompanies
person to file its proxy statement (or information the proxy card.44 Second, we are A. The Notice and Access Model for
statement) and additional soliciting material with
the Commission. An issuer also must continue to
Issuers
43 Release No. 33–7233 (Oct. 6, 1995) [60 FR
comply with Exchange Act Rules 14a–3(c) [17 CFR The notice and access model that we
240.14a–3(c)] and 14c–3(b) [17 CFR 240.14c–3(b)], 53458] (the ‘‘1995 Interpretive Release’’) provided
which require an issuer to submit copies of its guidance on electronic delivery of prospectuses, are adopting provides an alternative
annual report to security holders to the annual reports to security holders and proxy means for an issuer to furnish proxy
Commission. The rules that we are adopting in this solicitation materials under the Securities Act of materials to its shareholders. These
release do not affect any current Commission filing 1933 [15 U.S.C. 77a et seq.], the Securities Exchange
Act of 1934, and the Investment Company Act of proxy materials include:
requirement, except that an issuer or other
soliciting person following the notice and access 1940. Release No. 33–7288 (May 9, 1996) [61 FR • Notices of shareholder meetings;
model would be required to file the Notice as 24644] (the ‘‘1996 Interpretive Release’’) provided • Schedule 14A proxy statements and
additional soliciting material under Exchange Act guidance on electronic delivery of required consent solicitation statements;
Rule 14a–6(b) [17 CFR 240.14a–6(b)]. information by broker-dealers and transfer agents
41 As discussed in more detail in Section II.A.2 under the Securities Act, the Exchange Act, and the • Forms of proxy (i.e., proxy cards);
of this release, an issuer or any other soliciting Investment Company Act. Release No. 33–7856 • Schedule 14C information
person must provide a means for executing proxies (Apr. 28, 2000) [65 FR 25843] (the ‘‘2000 statements;
available at the time the Notice is sent. It may not Interpretive Release’’) provided guidance on the use • Annual reports to security
wait until it sends a paper or e-mail copy of the of electronic media to deliver documents under the
proxy card 10 calendar days or more after sending federal securities laws, an issuer’s liability for Web holders; 45
the Notice to provide shareholders with a means to site content, and basic legal principles that issuers
execute a proxy. and market intermediaries should consider in person sends a proxy statement with, or before, the
42 An issuer may send a proxy card to conducting online offerings. proxy card and by the same medium as the proxy
shareholders before the conclusion of the 10-day 44 An issuer or other soliciting person may, in the card is sent.
period if the proxy card is accompanied or course of a solicitation, send several proxy cards to 45 The requirement in Exchange Act Rules 14a–
preceded by a copy, via the same medium, of the a shareholder. Under the notice and access model, 3(b) and 14c–3(a) to furnish annual reports to
proxy statement and annual report to security the Notice must accompany each proxy card sent security holders does not apply to registered
holders if required by Rule 14a–3(b). to a shareholder unless the issuer or other soliciting investment companies [17 CFR 240.14a–3(b) and
• Additional soliciting materials; 46 state law notice unless state law taken by written consent, the earliest
and prohibits such combination. date on which the corporate action may
• Any amendments to such materials We have extended the proposed 30- be effected;
that are required to be furnished to day deadline for delivery of the Notice • A clear and impartial identification
shareholders. to a 40-day deadline to provide issuers of each separate matter intended to be
with time to encourage shareholders acted on and the issuer’s
In the proposing release, we sought
who have not executed a proxy to recommendations regarding those
comment on whether reliance on the
participate in the voting process and to matters, but no supporting statements;
notice and access model should be
provide shareholders with sufficient • A list of the materials being made
limited to particular types of issuers,
time to receive the Notice, request available at the specified Web site;
shareholders, or transactions. The only
copies of the materials, if desired, and • (1) A toll-free telephone number; (2)
restriction that we proposed was that
review the proxy materials prior to an e-mail address; and (3) an Internet
the rules should not apply to business
executing a proxy. Under the new rules, Web site address where the shareholder
combination transactions. Commenters
an issuer may send a proxy card 10 can request a copy of the proxy
in favor of the notice and access model
calendar days or more after sending the materials, for all meetings and for the
generally supported broad availability of Notice. If an issuer chooses to send a
the notice and access model.47 particular meeting to which the Notice
proxy card under this provision, a proxy relates;
Therefore, the new rules permit any statement and annual report need not
issuer to use the notice and access • Any control/identification numbers
accompany the proxy card.51 However, that the shareholder needs to access his
model to disseminate its proxy materials if a copy of the proxy statement and
to all types of shareholders, whether or her proxy card;
annual report do not accompany or • Instructions on how to access the
registered or beneficial owners, and precede the proxy card, a copy of the
with respect to any solicitation except proxy card, provided that such
Notice must accompany the proxy card instructions do not enable a shareholder
those related to business combination so that shareholders can access the
transactions. to execute a proxy without having
specified Web site without referring to access to the proxy statement and
1. Notice of Internet Availability of the earlier Notice. This 10-day waiting
annual report; and
Proxy Materials period is designed to provide
• Information on how to obtain
shareholders with sufficient time to
To notify shareholders of the directions to be able to attend the
access the proxy materials, or request a
availability of the proxy materials on an meeting and vote in person.
copy of the proxy materials, before the
Internet Web site, an issuer relying on In response to commenters, we have
issuer sends a proxy card without an
the notice and access model must send accompanying proxy statement and added certain items to this list of
a Notice to shareholders 40 calendar annual report. permissible Notice information. First,
days 48 or more in advance of the If an issuer chooses to follow the we are clarifying that the Notice must
shareholder meeting date or, if no notice and access model, the Notice of contain instructions on how to access
meeting is to be held, 40 calendar days Internet Availability of Proxy Materials the proxy card. Such information
or more in advance of the date that must include the following information should include any control or
consents or authorizations may be used in clear and understandable terms:52 identification numbers necessary for the
to effect the corporate actions.49 We • A prominent legend in bold-face shareholder to execute a proxy, but may
believe that it is important for the type that states: not include a means to execute a proxy,
Notice to be furnished in a way that such as a telephone number, which
‘‘Important Notice Regarding the Availability
brings it to each shareholder’s attention. of Proxy Materials for the Shareholder would enable the shareholder to execute
Therefore, no other materials may Meeting To Be Held on [insert meeting date]. a proxy without having access to the
accompany the Notice except for the • This communication presents only an proxy statement and annual report.
notice of a shareholder meeting required overview of the more complete proxy A shareholder’s execution of a proxy
under state corporation law.50 An issuer materials that are available to you on the via an Internet voting platform indicates
also may combine the Notice with the Internet. We encourage you to access and that the shareholder has access to the
review all of the important information Internet and, as such, is able to access
contained in the proxy materials before the proxy materials electronically under
240.14c–3(a)]. The rules that we are adopting do not voting.
apply to the requirement in Section 30(e) of the the new rules. Similarly, if a
• The [proxy statement] [information
Investment Company Act of 1940 [15 U.S.C. 80a–
statement] [annual report to security holders] shareholder executes a proxy via a
29(e)] and the rules thereunder that every registered telephone number placed on the
investment company transmit reports to [is/are] available at [Insert Web site address].
shareholders at least semi-annually. • If you want to receive a paper or e-mail Internet Web site which provides
46 Our rules permit, but do not require, delivery copy of these documents, you must request electronic access to the proxy materials,
of additional soliciting materials. See Rule 14a–6(b). one. There is no charge to you for requesting that indicates the shareholder has access
47 See, for example, letters from ABC, ACB, a copy. Please make your request for a copy to the Internet. However, if a telephone
Association of Corporate Counsel (ACC), as instructed below on or before [Insert a number for executing a proxy is placed
Proxinvest, SCSGP, STA, and Sullivan & Cromwell. date] to facilitate timely delivery.’’
48 For purposes of determining this 40-day period on the Notice, there can be no assurance
under the new rules, the first day of this period
• The date, time, and location of the that a shareholder executing a proxy by
would be the day on which the issuer sends the meeting or, if corporate action is to be means of that telephone number has
Notice. The 40th day would be the day prior to the access to the Internet Web site.
meeting date or date of the corporate action. 51 Of course, an issuer still would be obligated to
49 The Notice could be sent electronically to
Accordingly, placing such a telephone
send a copy of the proxy statement and annual
shareholders who have previously provided report if a shareholder requests a copy. An issuer
number on the Notice is not permitted.
affirmative consent, or other evidence to show also may send a proxy card before the end of the A telephone number for executing a
delivery, pursuant to our earlier guidance on 10-day period if it is accompanied by the proxy proxy may, however, be provided on a
electronic delivery. See the 1995 Interpretive statement and annual report. proxy card sent to shareholders 10
Release and the 2000 Interpretive Release. 52 Appropriate changes must be made to the
50 The rules also permit a reply card for Notice if the issuer is providing an information
calendar days or more after the Notice
requesting a paper or e-mail copy of the proxy statement pursuant to Regulation 14C or seeking to was sent because, by that time, a
materials to accompany the Notice. effect a corporate action by written consent. shareholder is likely to have had
sufficient time to access the materials on proxy statement and annual report to b. Security and Privacy on the Internet
the Internet or request copies. security holders represent the Several commenters were concerned
Also, in response to comments, we information necessary to make an about security and confidentiality of
have revised the rules to require an informed voting decision. The Notice is shareholder information that may be
issuer or other soliciting person to intended merely to make shareholders transmitted over the Internet.63 We
include instructions in the Notice about: aware that these proxy materials are believe that the final rules ameliorate
(1) How a shareholder can request available on an Internet Web site; it is many of these concerns. We address
delivery of copies of proxy materials in not intended to serve as a stand-alone those concerns below.
paper or by e-mail in the future; 53 and basis for making a voting decision.
(2) how to attend the shareholder Because the disclosures in the proxy i. Theft of Identification or Control
meeting and vote in person. The new statement and annual report represent Numbers
rules also require the Notice to include the information necessary for a voting Some commenters were concerned
an Internet Web site on which a decision, we do not believe it is that computer hackers may use any
shareholder can request a copy of the appropriate to permit issuers and other identifying information sent to
proxy materials, in addition to a toll-free soliciting persons to present only shareholders to access their accounts.64
telephone number and an e-mail selected information from the proxy The Notice may contain identification
address for that purpose. statement or annual report to security or control numbers for executing
The Notice may include only the holders in the Notice. proxies or providing voting instructions,
information specified above, unless it is The form of the Notice will constitute if an issuer or intermediary uses such
being combined with the state law other soliciting material that the issuer numbers. We understand that these
meeting notice, in which case any or other soliciting person must file with numbers, which are in common use
information required by state law also the Commission pursuant to Rule 14a– today, usually provide the user only
may be included in the Notice. While 6(b) 57 no later than the date on which with access to execute proxies or
not required, to reduce the chance of it is first sent or given to shareholders.58 provide voting instructions; they do not
parties creating false Notices to extract enable the user to buy or sell securities
a. Householding
confidential information from in a shareholder’s account or transfer
shareholders, the Notice also may Consistent with the proposal, the final funds from that account. Thus, more
contain a statement advising rules permit an issuer to ‘‘household’’ sensitive activities, such as trading
shareholders that they are not required the Notice pursuant to Rule 14a–3(e).59 securities or transferring funds, could
to provide any personal information, Accordingly, an issuer could send a
not be performed by someone who has
other than the identification or control single copy of the Notice to one or more
stolen this identifying information.
number provided in the Notice (if such shareholders residing at the same
Finally, we note that 85% of shares
a number is used), to execute a proxy. address if the issuer satisfies all of the
voted already are voted electronically
To ensure that the Notice is clear and Rule 14aπ3(e) conditions.60 An issuer is
using such identification or control
understandable, it must meet not required to re-solicit specific
numbers.
substantially the same plain English consent regarding the householding of
principles as apply to key sections of the Notice from shareholders if it has ii. ‘‘Phishing’’
Securities Act prospectuses pursuant to obtained their consent to householding One commenter expressed concern
Securities Act Rule 421(d).54 Both of proxy materials in the past. However, that, if Notices are sent electronically,
commenters remarking on the plain an issuer following the notice and shareholders may be tricked into
English aspect of the proposal access model must allow each disclosing personal information to
supported such a requirement.55 householded account to execute persons fraudulently purporting to be
Several commenters recommended separate proxies. Therefore, the issuer issuers or intermediaries by fake
that issuers should be able to include must provide separate identification or ‘‘phishing’’ e-mails purporting to be
more information in the Notice than we control numbers, if it uses such official Notices, but designed to extract
proposed. They suggested that the rules numbers, to each account at the shared personal information from a
should allow the Notice to incorporate address, as required by the current shareholder.65 We do not believe that
information from the proxy statement householding rule.61 Alternately, an the rules would provide significant
and annual report that those issuer also may send separate Notices opportunity for abuse through phishing
commenters believe is the most for each householded account in a for the following reasons.
important information contained in single envelope. Commenters generally First, an issuer may send a Notice by
those documents. They believed that supported this aspect of the proposal.62 e-mail only if the shareholder has
presenting this information on the affirmatively consented to such
57 17 CFR 240.14a–6(b).
Notice would enable shareholders to delivery. Second, the Notice is not
58 See Rule 14a–16(i) [17 CFR 240.14a–16(i)].
make an informed decision based on the 59 17 CFR 240.14a–3(e).
permitted to request any confidential
Notice alone.56 We believe that the 60 If the Notice is sent via e-mail, the information from the shareholder.
householding rules do not permit the sending of Rather, the only confidential
53 See letters from ABA, Mellon Investor Services
only one copy of the Notice to all shareholders in information that a shareholder must
(Mellon), and SCSGP. the household. Instead the Notice must be
54 17 CFR 230.421(d).
provide to access the proxy card would
separately e-mailed to each shareholder. See Rule
55 See letters from Florida State Board and 14a–3(e)(1)(ii)(B)(4) [17 CFR 240.14a– be a confidential identification or
Proxinvest. 3(e)(1)(ii)(B)(4)].
56 See letters from Carl Hagberg, Hermes, and 61 Issuers also are required to share a listing of the 63 See, for example, letters from James Angel,
James Reed. For example, one commenter suggested shareholders that have consented to householding Todd Collier, James Davis, William LaFollette,
that each proposal be accompanied by the ‘‘pros with soliciting shareholders, or afford the benefit of Matthew McGuire, and USPS.
and cons’’ associated with that proposal. See letter such consents to a soliciting shareholder if the 64 Record holders could not be subject to such
from James Reed. Another commenter issuer is mailing proxy materials on the manipulation because they do not hold their
recommended that the president’s letter, shareholder’s behalf. See Rule 14a–7(a)(2) [17 CFR securities in a trading account with the company in
Management’s Discussion and Analysis and 240.14a–7(a)(2)]. the same sense as beneficial owners hold their
selected financial information be included. See 62 See letters from BRT, Computershare, securities in a brokerage account.
letter from Carl Hagberg. Proxinvest, and SCSGP. 65 See letter from William LaFollette.
control number used by many issuers any purpose other than to send a copy statement, particularly with respect to
and intermediaries to track votes. As of those materials to that shareholder. shareholder proposals.75 Others,
noted above, this number does not Finally, an issuer may not transfer a however, believed that separating the
provide access to a shareholder’s shareholder’s e-mail address to other card from the proxy statement would
brokerage or bank account or permit the persons without the shareholder’s not lead to such problems.76
transfer of funds from a shareholder’s express consent, except in connection We note these concerns and have
account. Therefore, the shareholder’s with the distribution of proxy materials, revised the rules to require the proxy
account number and other personal such as an agent handling the proxy card to be accessible on the Internet
financial information would not be in distribution on the issuer’s behalf.71 along with the proxy statement and any
jeopardy of being stolen. The rules do annual report when the Notice is sent.
2. Proxy Card The issuer may not send a proxy card
permit an issuer or other soliciting
person to include on the Notice a Under the notice and access model with its initial Notice. However, we
protective warning to shareholders, that we are adopting, an issuer is not recognize that an issuer may wish to
advising them that no personal permitted to furnish the proxy card undertake subsequent soliciting
information other than the identification together with the initial Notice for a activities to encourage shareholders
or control number is necessary to particular solicitation. An issuer who have not executed a proxy to do so.
execute a proxy.66 following the notice and access model Currently, issuers often send
must post the proxy card on the Web replacement proxy cards accompanied
iii. Misuse of Information by Issuers and site with the proxy statement and any by additional soliciting materials to
Other Soliciting Persons annual report no later than the time at shareholders who have not yet voted. To
Other commenters were concerned which the Notice is sent to shareholders facilitate this re-solicitation process, the
that issuers themselves, or other so that the documents are electronically rules permit an issuer that is following
soliciting persons, may use shareholder available at the time shareholders the notice and access model to send a
information inappropriately. For receive the Notice.72 In addition, on that proxy card 10 calendar days or more
example, they were concerned that an Web site, the issuer must concurrently after sending the Notice. This 10-day
issuer may use shareholders’ e-mail provide shareholders with at least one waiting period still provides a 30 day
addresses for purposes other than proxy method of executing a proxy vote.73 We period during which an issuer can
communications, such as advertising, or believe that a shareholder who accesses encourage shareholders to execute a
sell the e-mail addresses to third proxy materials on the Internet Web site proxy. Any such subsequent solicitation
parties.67 As a protective measure, one should be able to execute a proxy as efforts may, but need not, include a
commenter suggested that the Internet soon as the shareholder is able to copy of the proxy statement and any
Web site on which the proxy statement electronically access the proxy annual report to security holders.
is posted should not require installation statement. An issuer may provide a However, if the subsequent
of cookies on the shareholder’s means to execute a proxy through a communication includes a proxy card, it
computer as a prerequisite for access to variety of methods, including by also must include either a copy of the
the Web site.68 providing an electronic voting platform proxy statement and any annual report
We agree that shareholder information linked to the Web site where the proxy or a copy of the Notice.77
gathered under the amended rules materials are posted or a telephone
number for executing a proxy. Merely 3. Internet Web Site Posting of Proxy
should be used only for the purposes of Materials
providing a shareholder with a means to
furnishing proxy materials to
request a paper proxy card would not be All proxy materials to be furnished
shareholders. Thus, we have revised the
sufficient because a shareholder would through the notice and access model,
final rules to clarify that an issuer or its other than additional soliciting
not be able to execute a proxy at the
agent must maintain the Internet Web materials, must be posted on a specified
time it accesses the proxy materials.
site on which the proxy materials are We received a significant number of Internet Web site by the time the issuer
posted in a manner that does not comments on the aspect of our proposal sends the Notice to shareholders.78
infringe on the anonymity of a that would have permitted the proxy These materials must remain on that
shareholder accessing that Web site.69 card to accompany the Notice. Web site and be accessible to
For example, it may not track the Numerous commenters were concerned shareholders through the conclusion of
identity of persons accessing that Web that physically separating the card from the related shareholder meeting, at no
site to view the proxy statement.70 In the proxy statement, as originally charge to the shareholder. As discussed
addition, the Web site cannot require proposed, may lead to the type of above, the Notice must identify clearly
the installation of any ‘‘cookies’’ or uninformed voting that the proxy rules the Internet Web site address at which
other software that might collect are intended to prevent.74 Some the proxy materials are available. The
information about the accessing person. commenters were concerned that issuers Internet Web site address must be
Further, the issuer and its agents may may attempt to structure their specific enough to lead shareholders
not use any e-mail address obtained solicitations in a manner that directly to the proxy materials,79 rather
from a shareholder for the purpose of discourages access to the proxy
requesting a copy of proxy materials for 75 See, for example, letters from AFL–CIO, Florida
71 See Rule 14a–16(k)(2) [17 CFR 240.14a– State Board, and Teamsters.
66 See Rule 14a–16(f)(3) [17 CFR 240.14a– 76 See, for example, letters from ABA, ACC, BRT,
16(k)(2)]. Rule 14a–16(k) is not designed to create
16(f)(3)]. new duties in private rights of action under the Computershare, ISS, New York State Bar
67 See letter from Thomas Richardson. federal securities laws. Association (NY State Bar), and Proxinvest.
68 See letter from Bowne & Co. 72 See Rule 14a–16(b)(1) [17 CFR 240.14a– 77 See Rule 14a–16(h) [17 CFR 240.14a–16(h)].
69 See Rule 14a–16(k)(1) [17 CFR 240.14a– 16(b)(1)]. 78 Additional soliciting materials used after the
16(k)(1)]. 73 See Rule 14a–16(b)(4) [17 CFR 240.14a– Notice is sent must be posted on the specified Web
70 Of course, the issuer would be permitted to 16(b)(4)]. site no later than the day on which those materials
track the identity, by means of the shareholder 74 See, for example, letters from ACB, AFL–CIO, are first sent or given to shareholders.
entering an issuer-provided control/identification Amalgamated Bank, BellTel Retirees, CII, Florida 79 This Web site could be a central site with
number, of persons voting on an electronic platform State Board, Carl Hagberg, NRLN, San Diego prominent links to each of the proxy-related
in order to validate the election results. Retirement, Swingvote, and Teamsters. Continued
than to the home page or other section improve shareholders’ ability to print 5. State Law Notices
of the Web site on which the proxy copies and read copies on their screens. State business and corporation laws
materials are posted, so that Finally, to the extent a shareholder may typically set forth shareholder meeting
shareholders do not have to browse the need additional software to view the requirements, including meeting notice
Web site to find the materials. The document, the Web site must contain a and voting requirements. The new rules
Internet Web site that an issuer uses to link to enable the shareholder to obtain are not intended to affect any applicable
electronically furnish its proxy the software free of charge.83 state law requirement concerning the
materials to shareholders must be a delivery of any document related to a
4. Period of Reliance
publicly accessible Internet Web site shareholder meeting or proxy
other than the Commission’s EDGAR The decision by an issuer or other solicitation. Thus, to the extent that
Web site.80 Commenters agreed that soliciting person to follow the notice state law requires a notice of
simply providing a link to the proxy and access model is effective only with shareholder meeting and proxy
materials on EDGAR was insufficient.81 respect to a particular meeting. An materials to be delivered by a particular
Commenters were divided with issuer’s choice to rely on the notice and means, the rules do not alter those
respect to the type of document format access model for one meeting therefore requirements.87 For example, if the state
that issuers or other soliciting persons does not affect its determination of in which an issuer is incorporated
should be required to use to post proxy whether to rely on the model for requires notices of shareholder meetings
materials on the Web site. This subsequent meetings.84 Similarly, a and proxy materials to be transmitted
disagreement centered on whether most shareholder that does not request a directly to shareholders in paper, the
shareholders would prefer to be able to paper or e-mail copy of the proxy notice and access model does not
print out the document and read the materials for one meeting is not bound provide an issuer with an option to
hard copy version or read the document by that decision with respect to any satisfy its state law obligations by
online. The final rules require the other shareholder meeting. Each time an posting those materials on an Internet
electronically posted proxy materials to issuer chooses to rely on the notice and Web site.
be presented on the Internet Web site in access model for a shareholder meeting,
a format, or formats, convenient for both it must comply anew with all of the 6. Additional Soliciting Materials
printing and viewing online.82 Under requirements under that model, New Rule 14a–16 and revised Rules
technology commonly in use today, this including delivery of the Notice and the 14c–2 and 14c–3 require an issuer to
may require posting the materials in two 40-day notice period. post any additional soliciting materials
different formats. First, the materials We are adopting one important required to be filed under Rule 14a–6(b)
should be posted in a format that exception to this general principle. on the same Internet Web site on which
provides a version of those materials, Numerous commenters were concerned the proxy materials are posted no later
including all charts, tables, graphics, that a shareholder desiring a paper or e- than the day on which the additional
and similarly formatted information, mail copy would have to request such soliciting materials are first sent to
that is substantially identical to the a copy every year from each issuer in shareholders or made public.88 Beyond
paper version of the materials. which he or she owns securities.85 We the posting of the additional soliciting
In addition, to take better advantage of agree with commenters that this could materials on the Internet Web site,
the capabilities of the Internet, the be unduly burdensome for a shareholder issuers may decide which additional
materials also must be presented in a who owns numerous securities. The means, if any, are most effective for
readily searchable format, such as commenters recommended that a disseminating these materials (e.g.,
HTML. This type of format would make provision be made that permits a direct mail, e-mail, newspaper
the proxy materials easier to read on a shareholder to make a single election to publication, etc.).
computer screen. In addition, such a receive a paper or e-mail copy of the
version may incorporate additional 7. Requests for Copies of Proxy
proxy materials on a continuing basis in Materials
user-friendly features such as the future. We agree with those
hyperlinks from a table of contents to commenters and have revised the rules An issuer that satisfies its requirement
enable shareholders to quickly and to enable shareholders to make a to furnish proxy materials through the
easily navigate through the document. permanent election to receive paper or notice and access model has a separate
Many Internet Web sites today provide e-mail copies from each issuer.86 requirement under Rule 14a–16(j) 89 to
documents in dual formats such as this. deliver a copy of the proxy statement,
We believe this requirement will impose 83 See the 1995 Interpretive Release No. 33–7233, annual report to security holders (if
minimal burden on issuers. We also at n. 24 and the accompanying text; Release No. 33– applicable) and proxy card to a
believe that, as technology progresses, 8128 (Sep. 16, 2002) [67 FR 58480]; Release No. 33– requesting shareholder. Upon receipt of
8230 (May 7, 2003) [68 FR 25788]; and Release No.
new formats may be developed that will 33–8518 (Dec. 22, 2004) [70 FR 1505]. a request from a shareholder for a copy
84 To the extent the Commission adopts the
disclosure documents listed in the Notice, as well universal Internet availability model in companion accept electronic delivery or the notice and access
as proxy materials posted on the Web site after the Release 34–55147, this option will no longer be model.
Notice is sent. available to issuers. 87 See Rule 14a–16(e) [17 CFR 240.14a–16(e)].
80 An issuer must continue to comply with Rules 85 See, for example, letters from ABC, AFL-CIO, Issuers typically include the meeting notices
14a–6 and 14c–5, which require the soliciting James Angel, CALSTRS, Florida State Board, required by state law at the beginning of their proxy
person to file its proxy statement (or information OPERS, San Diego Retirement, SIA, William statements. As discussed previously, the new rules
statement) and additional soliciting material with Sjostrom, Stocklein Law Group, Swingvote, and would permit any information necessary to meet a
the Commission. An issuer also must continue to Paul Uhlenhop. state law requirement to accompany or be combined
comply with Rules 14a–3(c) and 14c–3(b), which 86 A shareholder that elects to receive paper or e- with the Notice.
require an issuer to submit copies of its annual mail copies may, in the future, revoke that election. 88 Exchange Act Rule 14a–6(b) requires an issuer
report to security holders to the Commission. The However, an issuer may continue to request that or other soliciting person choosing to deliver
issuer must comply with these requirements by the shareholder to accept electronic delivery or the additional soliciting materials to file them with the
time it posts the materials on the Web site. notice and access model or seek that shareholder’s Commission, in the same form that they are sent to
81 See letters from James Angel, SCSGP, and shareholders, no later than the date that they are
affirmative consent to electronic delivery. Nothing
Swingvote. in the proxy rules prohibits an issuer from first sent or given to shareholders.
82 See Rule 14a–16(c) [17 CFR 240.14a–16(c)]. structuring incentives to encourage shareholders to 89 17 CFR 240.14a–16(j).
of the proxy statement, annual report, or Further, it is likely that a longer future. This may help issuers to estimate
proxy card, the issuer must send a copy response period that enables an issuer to the number of paper copies that it needs
(in paper or by e-mail, as requested) of better cumulate batches of copies would to print for the solicitation.
those proxy materials to the shareholder reduce the cost of complying with the
B. The Role of Intermediaries
within three business days after rules. However, these concerns must be
receiving the request, even if the request balanced against our view that requests 1. Background
is made after the date of the shareholder for copies be handled promptly. Thus, The process of distributing proxy
meeting or corporate action to which the we have extended the response time to materials to beneficial owners is
proxy materials relate. However, under three business days.95 considerably more complicated than
the final rules, an issuer would be The requirements that an issuer direct delivery of the materials by an
obligated to provide copies of the proxy deliver the Notice at least 40 calendar issuer to its record holders.99 The proxy
materials only up until one year after days before the shareholder meeting rules include four rules, Exchange Act
the conclusion of the meeting or date and respond to a request for a copy Rule 14a–13, Rule 14b–1, Rule 14b–2,
corporate action to which the materials of the proxy materials within three and Rule 14c–7 referred to collectively
relate. When the issuer provides a paper business days are designed to provide a as the ‘‘shareholder communications
copy of the proxy materials in response shareholder with sufficient time to rules,’’ that impose obligations on
to a shareholder request, the issuer must request a copy, receive it, review the issuers and intermediaries to ensure that
use first class mail or other reasonably proxy materials and make an informed beneficial owners receive proxy
prompt means of delivery. voting decision. Several commenters materials and are given the opportunity
A few commenters believed that a believed that placing a deadline on to participate in the shareholder voting
requirement to send copies of the proxy shareholders to request copies would be process. Basically, these rules require
statement after the shareholder meeting appropriate.96 We do not believe such a issuers to send their proxy materials to
has been held would be an unnecessary deadline would be appropriate, intermediaries for forwarding to the
burden.90 However, the proxy statement particularly because the proxy statement beneficial owners.
contains a portion of the total package is part of the ‘‘package’’ of disclosures Exchange Act Rule 14b–1 sets forth
of annual disclosure for public we have deemed important for the obligations of registered brokers and
companies; in fact, many public investors, as discussed above. However, dealers in connection with the prompt
companies satisfy their obligation to under the rules, it is incumbent on the forwarding of certain issuer
include information in Part III of the shareholder to request a copy in communications to beneficial owners.
Form 10–K by including the information sufficient time to receive the copy of the Rule 14b–2 sets forth similar obligations
in their proxy statements and proxy materials, review that copy, and of banks, associations, and other entities
incorporating that information by execute a proxy. The rules require the that exercise fiduciary powers. Under
reference into the Form 10–K.91 Just as issuer to insert a date in the Notice by these rules, upon request by the issuer,
the proxy rules require issuers to which a shareholder should request a these intermediaries are required to
undertake in their proxy statements or copy to ensure timely delivery.97 indicate to the issuer within seven
annual reports to shareholders to Finally, we recognize that some business days of receiving the request:
provide copies of annual reports on issuers may be hesitant to adopt the • The approximate number of
Form 10–K for the most recent fiscal notice and access model because of the customers of the intermediary that are
year to requesting shareholders,92 we potential dangers of significantly beneficial owners of the issuer that are
believe it is appropriate to require underestimating, or overestimating, the held of record by the intermediary;
issuers to provide copies of the proxy number of paper copies of the proxy • If the issuer has indicated pursuant
materials to requesting shareholders materials that will be needed. If an to Rule 14a–13(a) 100 or 14c–7(a) 101 that
even after the shareholder meeting date. issuer underestimates that number, the it will distribute the annual report to
However, because the proxy statement cost of printing additional copies may security holders to beneficial owners
(like the Form 10–K) is filed on EDGAR, be great. Similarly, overestimating that who have not objected to disclosure to
we believe there should be a limit on number would lead to unnecessary cost. the issuer of their names, addresses, and
the length of the period during which a We note that there is nothing in the securities positions, the number of
shareholder may request a copy of the rules that would prevent an issuer from beneficial owners who have objected to
proxy materials from the issuer. sending a shareholder a communication such disclosure; 102 and
Therefore, the final rules require issuers well in advance of a proxy solicitation • The identity of any agents of the
to provide the proxy statement and to determine the shareholder’s interest intermediary acting on the
annual report to security holders only in receiving paper copies.98 Indeed, intermediary’s behalf to fulfill its
for one year after the conclusion of the such a communication may be used to obligations under the rule.
meeting to which those materials start creating a list of shareholders that Pursuant to Rules 14b–1 and 14b–2,
relate.93 wish to receive paper copies in the within five business days of receiving
We agree with the views of
commenters that the proposed two- 95 See letters from Computershare, ICI, and STA. 99 The discussion in this section of ‘‘beneficial
business day timeframe may be too 96 See letters from Computershare, SCSGP, and owners’’ refers to beneficial owners whose names
short for issuers to respond efficiently to Sullivan & Cromwell. and addresses do not appear directly in issuers’
97 See Rule 14a–16(d)(1) [17 CFR 240.14a– stock registers because they hold their securities
paper requests of the proxy materials.94 through a broker, bank, trustee, or similar
16(d)(1)]. This date is intended to be a
recommendation to shareholders to facilitate timely intermediary.
90 See letters from BRT and SCSGP. 100 17 CFR 240.14a–13(a).
delivery, but does not restrict a shareholder’s ability
91 See Instruction G(3) to Form 10–K, referenced to request copies after that date. 101 17 CFR 240.14c–7(a).
in 17 CFR 249.310. 98 A communication to shareholders that is 102 In the case of bank intermediaries, Rule 14b–
92 See Rule 14a–3(b)(10) [17 CFR 240.14a–

limited to explaining the notice and access model 2 requires a bank to disclose the number of
3(b)(10)]. generally and determining whether shareholders customers with accounts opened on or before
93 See Rule 14a–16(j)(3) [17 CFR 240.14a–16(j)(3)].
wish to receive future proxy materials in paper or December 28, 1986, who gave affirmative consent
94 See, for example, letters from BRT, by e-mail would not be associated with a particular to disclosure to the issuer and the number of
Computershare, ICI, NY State Bar, SCSGP, SIA, and solicitation and therefore would not be considered customers with accounts opened after December 28,
Sullivan & Cromwell. a Notice under the new rules. 1986, who did not object to such disclosure.
proxy materials from the issuer, the the best means for distributing its proxy Important Notice Regarding the Availability
intermediary must forward the materials materials, because the issuer ultimately of Proxy Materials for the Shareholder
to beneficial owners who will not pays the costs of that distribution. Meeting to Be Held on [insert meeting
receive those materials directly from the With respect to beneficial owners, an date].114
issuer pursuant to Rule 14a–13(c) 103 or issuer or other soliciting person relying • This communication presents only an
Rule 14c–7(c).104 Beneficial owners on the notice and access model must overview of the more complete proxy
materials that are available to you on the
typically do not execute proxy cards provide the intermediary with all
Internet. We encourage you to access and
because, under most state laws, only the information necessary for the review all of the important information
record owner (i.e., the intermediary) has intermediary to prepare its own Notice contained in the proxy materials before
the authority to vote on matters of Internet Availability of Proxy voting.
presented to shareholders. As a result, Materials in sufficient time for the • The [proxy statement] [information
intermediaries forward the proxy intermediary to prepare and send its statement] [annual report to security holders]
materials, other than the proxy card, Notice to beneficial owners at least 40 [is/are] available at [Insert Web site address].
along with a request for voting days before the meeting date.108 We • If you want to receive a paper or e-mail
instructions. The request for voting understand that issuers, intermediaries copy of these documents, you must request
instructions is similar to the proxy card, one. There is no charge to you for requesting
and their agents currently coordinate a
a copy. Please make your request for a copy
but is prepared by the intermediary similar exchange of information to as instructed below on or before [Insert a
instead of the issuer and the beneficial enable intermediaries to prepare and date] to facilitate timely delivery.’’
owner returns his or her voting print requests for voting instructions
instructions to the intermediary rather ahead of their receipt of the proxy • The date, time, and location of the
than to the issuer or independent vote statement and annual report to security meeting or, if corporate action is to be
tabulator. The intermediary is required holders for forwarding to beneficial taken by written consent, the earliest
to vote the beneficial owner’s shares in owners.109 We expect such coordination date on which the corporate action may
accordance with the owner’s voting to continue to facilitate timely be effected;
instructions when formally executing preparation of the intermediary’s • A clear and impartial identification
the proxy card.105 The intermediary Notice. Therefore, we have not included of each separate matter intended to be
then returns the proxy card to the issuer a specific timeframe in the rules for acted on and the issuer’s or other
or its vote tabulator. delivery of this information.110 Upon soliciting person’s recommendations
receipt of that information, the regarding those matters, but no
2. Discussion of the Amendments supporting statements; and
intermediary or its agent must prepare
Under the amendments, an its own Notice, tailored for the • A list of the materials being made
intermediary may follow the notice and intermediary’s beneficial owner available at the specified Web site.
access model only if the issuer requests customers.111 The intermediary must The intermediary may choose
it to do so and, in such cases, must send this Notice to beneficial owners at whether to direct beneficial owners to
follow that model. The amendments least 40 calendar days before the date of the issuer’s Web site or to its own Web
revise Rules 14b–1 and 14b–2 to require the shareholder meeting.112 site to access the proxy disclosure
brokers, banks, and similar The intermediary’s Notice will materials. If it directs beneficial owners
intermediaries, at the request of an generally contain the same information to its own Web site, access to that
issuer, to furnish proxy materials, as an issuer’s Notice,113 with certain website must be free of charge and may
including a Notice of Internet revisions to reflect the differences not compromise a beneficial owners’
Availability of Proxy Materials, to between registered holders and anonymity. If it directs beneficial
beneficial owners of the issuer’s beneficial owners. Specifically, the owners to the issuer’s Web site, the
securities based on the notice and intermediary’s Notice must contain the intermediary must inform beneficial
access model.106 If an issuer does not following information: owners that they can submit voting
request intermediaries to follow the • A prominent legend in bold-face instructions to the intermediary, but
notice and access model, an type that states: cannot execute a proxy directly in favor
intermediary could, on its own of the issuer unless the intermediary has
initiative, continue to rely on any other 108 See Rule 14a–16(a)(2) [17 CFR 240.14a–
executed a proxy in favor of the
permitted method of furnishing proxy 16(a)(2)]. beneficial owner. In addition, the
109 Our rules set forth a series of timeframes
materials to beneficial owners, intermediary must provide the
regarding distribution of proxy materials to
including the electronic delivery of beneficial owners to facilitate timely delivery of following information in its Notice,
proxy materials by affirmative consents, those materials. which is similar to the information in
but could not follow the notice and 110 Rule 14a–16(a)(2) requires an issuer to provide
the issuer’s Notice, but applicable only
access model on its own initiative. the information to an intermediary ‘‘in sufficient to beneficial owners:
time’’ for the intermediary to prepare its own
Comments varied on whether an Notice. Other soliciting persons would be expected • (1) A toll-free telephone number of
intermediary should be allowed to to provide their information to intermediaries in the intermediary or its agent, (2) an e-
follow the notice and access model on sufficient time to meet their applicable deadlines. mail address of the intermediary or its
its own initiative.107 We believe that the 111 An intermediary’s Notice prepared in
agent, and (3) an Internet Web site of the
issuer should be allowed to determine accordance with this rule would be impartial for
purposes of Rule 14a–2(a)(1) [17 CFR 240.14a– intermediary or its agent where the
2(a)(1)] and need not be filed pursuant to Rule 14a– shareholder can request a copy of the
103 17 CFR 240.14a–13(c).
104 17
6(b) [17 CFR 240.14a–6(b)] unless an intermediary proxy materials, for all meetings and for
CFR 240.14c–7(c). solicits proxies on its own behalf.
105 See Rule 14b–2(b)(3) [17 CFR 240.14b–2(b)(3)]. 112 In the case of a Notice of a soliciting person
the particular meeting to which the
106 See Rules 14b–1(d) and 14b–2(d) [17 CFR other than the issuer, the intermediary must send
Notice relates;
240.14b–1(d) and 240.14b–2(d)]. the Notice to beneficial owners by the later of: (1)
107 See, for example, letters from ABA, ACC, 40 calendar days prior to the meeting; or (2) 10 114 Appropriate changes must be made to the
Computershare, and SCSGP, supporting issuer calendar days after the issuer first sends its proxy Notice if the issuer is providing an information
control, as opposed to the letters from SIA, materials to investors. See Section II.C of this statement pursuant to Regulation 14C or if the
Swingvote, and University Bancorp, urging more release. issuer or other soliciting person is seeking to effect
control by intermediaries. 113 See Rule 14a–16(d) [17 CFR 240.14a–16(d)]. a corporate action by written consent.
• Any control/identification numbers request a paper or e-mail copy directly election for electronic delivery applies
that the beneficial owner needs to from the issuer as originally proposed. to all securities in the beneficial owner’s
access his or her request for voting We are making this revision to the account, rather than to specific issuers.
instructions; proposal for several reasons. First, an To make it clear to beneficial owners
• Instructions on how to access the issuer has no means to track the identity electing to receive copies of the proxy
request for voting instructions on the and preferences of beneficial owners for materials on an ongoing basis, the
Web site of the intermediary or its agent, future solicitations because these intermediary’s Notice must clarify that a
provided that such instructions do not owners are not registered in an issuer’s permanent election to receive copies of
enable a beneficial owner to provide records as shareholders of the company. the proxy materials in paper or e-mail
voting instructions without having This tracking can be performed most will apply to all securities in the
access to the proxy statement and efficiently by the intermediary because beneficial owner’s account.119
annual report; only it maintains records of the One commenter was concerned that
• Information on how to obtain beneficial owner’s security holdings. the notice and access model only
directions to be able attend the meeting Second, the intermediary is able to complicates an already complicated
and vote in person; 115 and apply a beneficial owner’s request for process for transmitting proxy materials
• A brief description, if applicable, of paper or e-mail copies across all of a to beneficial owners and may confuse
the rules that permit the intermediary to beneficial owner’s security holdings on shareholders.120 Other commenters
vote the securities if the beneficial an account-wide basis, making it easier recommended that the Commission
owner does not return his or her voting for beneficial owners to elect to receive review the proxy delivery process as a
instructions.116 such copies with respect to all of the whole, rather than layer this model over
The intermediary’s Notice must securities held by the beneficial owner. the existing distribution regime.121
contain instructions on how to access If a beneficial owner requests a copy Although the Commission is sensitive to
the request for voting instructions on of the materials from the intermediary, these concerns, a complete review of the
the Web site of the intermediary or its the intermediary must in turn request proxy system at this time would only
agent. Such information should include such a copy from the issuer or other delay the potential benefits to issuers
any control or identification numbers soliciting person within three business
necessary for the beneficial owner to and shareholders offered by the notice
days of receiving the request from the and access model. As we gain additional
provide voting instructions. However, beneficial owner. The intermediary also
the intermediary’s Notice cannot experience with these rules, we will
would have to forward the materials to consider whether more extensive
include a means, such as a telephone the beneficial owners within three
number, which would enable the revisions to the proxy rules are
business days after receipt from the warranted.
beneficial owner to provide voting issuer or other soliciting person.117 As
instructions without having access to In summary, the amendments would
originally proposed, the intermediary impose the following responsibilities on
the proxy statement and annual report. will be allowed to charge the issuer or
A telephone number that a beneficial intermediaries that are requested by an
other soliciting person for the cost it issuer to follow the notice and access
owner can use to provide voting
incurs in forwarding the copy of the model:
instructions may be provided on the
proxy materials to the requesting • The intermediary must prepare its
Internet Web site on which the request
beneficial owner.118 own Notice and deliver this Notice to its
for voting instructions is posted (as well We also note that intermediaries
as on a paper request for voting beneficial owners after receiving the
typically keep records of whether a meeting information from the issuer or
instructions sent to shareholders 10 beneficial owner has affirmatively
days or more after the intermediary’s other soliciting person;
consented to electronic delivery of • The intermediary must send its
Notice was sent). Like an issuer, the proxy materials on an account-wide
intermediary cannot include a request Notice to beneficial owners at least 40
basis. That is, a beneficial owner’s days prior to the meeting;
for voting instructions with its Notice.
However, at the issuer’s request, the 117 Thus, the intermediary must request the copy
• The intermediary must post its
intermediary will be required to send a from the issuer within three business days of
request for voting instructions on an
copy of the request for voting receiving the shareholder’s request. Then the issuer Internet Web site;
instructions to beneficial owners, must send the copy to the intermediary, which is • The intermediary must maintain
provided that 10 days have passed since a record holder or respondent bank under the final records of beneficial owners who make
rules, within three business days of receiving the
the intermediary’s Notice was first sent. intermediary’s request. Finally, the intermediary is
a permanent election to receive paper or
A copy of the intermediary’s Notice, or required to forward the copy to the requesting e-mail copies of the proxy materials for
a copy of the proxy statement, must shareholder within three business days of receiving all securities held in the beneficial
accompany that request for voting the copy from the issuer. owner’s account; and
• The intermediary must request a
118 See NYSE Rule 465. We note that a Proxy
instructions. Working Group established by the NYSE is
reviewing the NYSE’s current schedule of the copy of the proxy materials from the
3. Request for Copies by Beneficial issuer or other soliciting person within
specific maximum fees that NYSE member firms
Owners can charge an issuer under our rules requiring three business days after receiving a
The intermediary’s Notice must issuers to reimburse intermediaries for their request from its beneficial owner
reasonable direct and indirect expenses for
provide instructions on how a beneficial forwarding proxy materials. We intend to work customer and must forward that copy to
owner can request a copy of the proxy closely with the NYSE to evaluate the types of the beneficial owner customer within
materials from the intermediary, rather revisions that may be appropriate in light of our three business days after receiving the
than from the issuer. Under the new adoption of the notice and access model, including
revision of existing fees as well as the creation of
rules, a beneficial owner may not any new fees that may be reasonable under the
119 See Rules 14b–1(d)(4)(iii) and 14b–2(d)(4)(iii)
notice and access model. Although NYSE Rule 465 [17 CFR 240.14b–1(d)(4)(iii) and 240.14b–
115 A beneficial owner wishing to attend the
applies only to NYSE member firms, other national 2(d)(4)(iii)].
meeting and vote in person must obtain proxy securities exchanges have a similar rule and fee 120 See letter from ABA.
voting authority from the intermediary through schedule. Non-broker intermediaries, such as banks, 121 See, for example, letters from BRT, Concerned
which he or she owns the security. also rely on the fee schedule as an industry Shareholders, Computershare, Carl Hagberg,
116 See NYSE Rule 452. standard. Mellon, and STA.
copy from the issuer or other soliciting 1. Mechanics of Proxy Solicitations by number of shares). As we discuss in
person. Persons Other Than the Issuer more detail below, we have made
The proxy rules currently treat revisions to Rule 14a–7 that will enable
C. Soliciting Persons Other Than the a soliciting person to distinguish
Issuer persons other than the issuer differently
from the issuer in a significant respect between shareholders who have
Under the amendments, a person regarding the provision of information requested paper copies of the proxy
to shareholders regarding intended materials and those who have not.130
other than the issuer who undertakes
corporate actions. Specifically, an issuer Under the notice and access model, a
his or her own proxy solicitation also
must furnish to each shareholder either soliciting person other than the issuer
can rely on the notice and access model.
a proxy statement, if the issuer is may choose to send a Notice only to
This situation typically would occur in
soliciting proxies or consents from those shareholders who have not
the context of a proxy contest between requested paper copies of the proxy
a shareholder and management. We shareholders, or an information
statement pursuant to Section 14(c) of materials.
anticipate that the notice and access In the proposing release, we proposed
model will provide an alternative that the Exchange Act 128 regarding
a provision that would have permitted
may decrease significantly the printing shareholder meetings where corporate
a soliciting person other than the issuer
and mailing costs associated with a action is to be taken but no proxy
to send a Notice that would condition
proxy solicitation. We also believe that authority or consent is sought.
Soliciting persons other than the the solicitation on a shareholder’s
the same arguments that support willingness to access the proxy
issuer are not subject to the
modifying the existing framework to materials on an Internet Web site. One
requirements of Section 14(c). Thus,
facilitate an alternative dissemination commenter suggested that a soliciting
unlike the issuer, they have no
option for issuers apply equally to person should not be permitted to
obligation to furnish an information
soliciting persons other than issuers. statement to shareholders from whom condition its solicitation in this manner
Several commenters supported no proxy authority is sought. As a and should have to provide a copy of its
extending the notice and access model result, soliciting persons can limit the proxy statement to a requesting
to such parties.122 However, some cost of a solicitation by soliciting shareholder.131 We are persuaded that a
commenters were concerned about the proxies only from a select group of shareholder receiving a Notice
possibility of abuse of the model by shareholders, such as those with large reasonably may conclude that he or she
holdings, without furnishing other is entitled to receive a copy of the
shareholders conducting nuisance
shareholders with any information. This materials. Therefore, the final rules
contests.123 These commenters
enables a person other than the issuer to require a soliciting person other than an
recommended that the availability of the
conduct a proxy contest in a variety of issuer to send a paper or e-mail copy of
model be limited for soliciting persons
ways, some of which are not available the proxy statement to any requesting
other than the issuer.124 The proposed
to an issuer. The amendments that we shareholder to whom it has sent a
limitations included requiring the Notice.132
solicitation of all shareholders,125 are adopting relate only to the means of
requiring soliciting persons other than furnishing information to shareholders, 2. Timeframe for Sending Notice of
the issuer to provide copies of their and thus do not affect a soliciting Internet Availability of Proxy Materials
proxy materials upon request,126 and person’s ability to effect such targeted A solicitation in opposition to the
imposing a minimum shareholding solicitations. issuer’s proposals to be voted on at a
requirement in order for a soliciting Under the new rules, a soliciting shareholder meeting often is not
person to take advantage of the person other than the issuer may follow initiated until after the issuer has filed
model.127 Although the amendments the same procedures as the issuer.129 In its proxy statement. As we noted in the
would reduce the cost of a proxy particular, it may furnish a Notice and proposing release, we therefore believe
contest, they do not eliminate all costs, post the proxy statement on an Internet that it may be unfair to apply the same
such as costs of preparing the soliciting Web site. As with an issuer, such a timeframe for distributing the Notice to
materials, legal fees, proxy solicitor fees, soliciting person may not include a soliciting persons as the timeframe that
proxy card with the Notice. It may, applies to issuers. Therefore, the
and other significant soliciting
however, send a proxy card to the amendments require a soliciting person
expenses. We believe these surviving
shareholders it is soliciting without a other than the issuer that is following
costs should discourage frivolous
proxy statement 10 calendar days or the notice and access model to send out
contests.
more after initially sending the Notice to its Notice by the later of: (1) 40 Calendar
Although the mechanics of a them, if the proxy card is accompanied
solicitation under the notice and access days prior to the meeting; or (2) 10
either by a copy of the proxy statement calendar days after the issuer first sends
model for a person other than the issuer or by another copy of the Notice. out its proxy statement or Notice to
are similar to those incurred by an A soliciting person other than the
shareholders. This is substantially the
issuer, we describe below several issuer may selectively solicit
important differences in the way the shareholders under the notice and 130 17 CFR 240.14a–7.
amendments affect soliciting persons access model, just as it could under the 131 See letter from ABA.
other than the issuer. current proxy rules (e.g., the soliciting 132 The proposing release also discussed the
person could choose to send the Notice possibility of an electronic-only solicitation in

122 See, for example, letters from CALSTRS, only to certain shareholders, such as which the soliciting person publishes a
communication pursuant to Rule 14a–12 [17 CFR
Computershare, and Swingvote. those owning more than a specified 240.14a–12], but does not send any Notices to
123 See, for example, letters from Glen Buchbaum.
124 See, for example, letters from ABA, ACC, BRT,
shareholders. We are not adopting the electronic-
128 15U.S.C. 78n(c). only option that we discussed in the proposing

ICI, ISS, Sullivan & Cromwell, and Swingvote. 129 Aswith the case of an issuer, the soliciting release as part of the notice and access model.
125 See letters from BRT and Swingvote.
person also may solicit shareholders concurrently However, as noted in the final rules, the
126 See letter from ABA.
by any other means, for example, by sending a amendments do not affect the availability of any
127 See letters from ABA, ICI and Sullivan & proxy statement and proxy card to certain existing means by which an issuer or other person
Cromwell. shareholders. may furnish proxy materials under the proxy rules.
same requirement we proposed, except list to a soliciting person, the issuer card to shareholders 10 or more days
that we have changed the proposed 30- would be required to indicate which of after it first sends the Notice, the issuer
day deadline to 40 days to conform it to those shareholders have permanently would be required to forward those
our revision of the deadline for issuers. requested paper copies of proxy proxy cards in a similar fashion.139
materials.135 The proposed rules would
3. Content of the Notice of Internet 5. The Role of Intermediaries With
have required an issuer to share all
Availability of Proxy Materials of a Respect to Solicitations by Persons
information about its shareholders
Soliciting Person Other Than the Issuer regarding electronic delivery. We have Other Than the Issuer
The content of the Notice sent by a decided to limit this requirement. Intermediaries generally furnish
soliciting person other than the issuer One commenter was concerned that a proxy materials to beneficial owners on
could be different from the content of requirement to share information on behalf of soliciting persons other than
the issuer’s Notice. For example, if a affirmative consents may violate the the issuer under the conditions set forth
solicitation in opposition is launched issuer’s privacy policies and the terms in Exchange Act Rules 14b–1 and 14b–
before the issuer has sent its own proxy of the consent agreement between the 2.140 Although intermediaries
statement or Notice, the full shareholder issuer and shareholder.136 The historically have transmitted a soliciting
meeting agenda may not be known to commenter also was concerned about person’s proxy materials in reliance on
the soliciting person at the time it sends divulging employees’ internal company the procedures set forth in Rules 14b–
its Notice to shareholders. In such a e-mail addresses. We agree with this 1 and 14b–2, these two rules do not
case, the soliciting person must include comment and are not adopting that explicitly address an intermediary’s
the agenda items in its Notice only to aspect of the proposal. However, the obligations with respect to the
the extent known.133 new rules do require an issuer to share forwarding of a soliciting person’s proxy
Also, there may be circumstances in information regarding whether a materials. As proposed, the
which a person soliciting proxies in shareholder has made a permanent amendments clarify that intermediaries
opposition to the issuer may provide a election to receive paper copies of the are obligated to send proxy materials on
partial proxy card, that is, a proxy card proxy materials. Such disclosure would behalf of soliciting persons other than
soliciting proxy authority only for the not necessitate disclosure of a the issuer.
agenda items in which the soliciting shareholder’s e-mail address. In
person is interested rather than for all of addition, a shareholder who has made a D. Business Combination Transactions
the items, or presenting only a partial permanent election to receive paper As adopted, the notice and access
slate of directors. Typically, such a copies of the issuer’s proxy materials model is not available with regard to
proxy would revoke any previously- might reasonably expect to receive proxy materials related to a business
executed proxy and the shareholder paper copies of proxy materials from combination transaction, which
may lose his or her ability to vote on other soliciting persons. Once that includes transactions covered by Rule
matters or directors other than those shareholder has made a permanent 165 under the Securities Act,141 as well
presented on the soliciting person’s election, he or she should not be as transactions for cash consideration
card. To prevent a shareholder from required to ask again for a paper copy requiring disclosure under Item 14 of
unknowingly invalidating his or her of proxy materials.137 Schedule 14A. Several commenters 142
vote on those other matters, a person Similarly, if, under Rule 14a–7, the agreed that business combination
soliciting in opposition that is issuer elects to send the soliciting transactions constitute highly
presenting such a card to shareholders person’s proxy materials, the extraordinary events for some issuers
must indicate clearly on its Notice amendments require the issuer to refrain and frequently involve an offering of
whether execution of that card will from forwarding the other soliciting securities that must be registered under
invalidate the shareholder’s earlier vote person’s Notice to any shareholder who the Securities Act and require delivery
on the other matters or directors has made a permanent election to of the prospectus.143 They also typically
reflected on the issuer’s proxy card. receive paper copies.138 If the soliciting involve proxy statements of
person requests that the issuer follow considerable length and complexity.
4. Shareholder Lists and the Furnishing
the notice and access model, the Other commenters nonetheless believed
of Proxy Materials by the Issuer
soliciting person would be responsible that the model should be extended to
Exchange Act Rule 14a–7 sets forth for providing the issuer with copies of such transactions.144 They noted that
the obligation of issuers either to its Notice for all shareholders to whom
provide a shareholder list to a it intends to provide a Notice. In that 139 As noted above, the issuer may alternatively
requesting shareholder or to send the case, the issuer would have to send the provide the other soliciting person with a list of
shareholder’s proxy materials on the soliciting person’s Notice with shareholders pursuant to Rule 14a–7.
140 See Randall S. Thomas & Catherine T. Dixon,
shareholder’s behalf. That rule provides reasonable promptness after receipt Aranow & Einhorn on Proxy Contests for Corporate
that the issuer has the option to provide from the soliciting person. An issuer Control, at § 8.03(C) (3d ed. 2001).
the list or send the shareholder’s could not decide on its own whether to 141 17 CFR 230.165. This prohibition would
materials, except when the issuer is send a soliciting person’s materials in extend to persons who solicit proxies that are not
soliciting proxies in connection with a paper or electronically. If the other parties to the transaction and any proxy materials
going-private transaction or a roll-up in opposition to the transaction.
soliciting person wishes to send a proxy 142 See, for example, letters from ABA, Hermes,
transaction.134 Under the amendments, and Sullivan & Cromwell.
if the issuer is providing its shareholder 135 See proposed Note 3 to Exchange Act Rule 143 The prospectus delivery requirements
14a–7. applicable to business combination transactions
133 See Rule 14a–16(l)(3)(i) [17 CFR 240.14a– 136 See letter from SCSGP.
were not impacted by our securities offering reform
16(l)(3)(i)]. 137 As noted above, this election would be initiative because such transactions were excluded.
134 See Exchange Act Rule 14a–7(b) [17 CFR effective until a shareholder revokes that election. See Release No. 33–8591 (July 19, 2005) [70 FR
240.14a–7(b)]. If the issuer is soliciting proxies in 138 The other soliciting person could, of course, 44271].
connection with a going-private transaction or a provide paper copies of the proxy statement and 144 See, for example, letters from BRT, CALSTRS,
roll-up transaction, the shareholder has the option proxy card to the issuer for forwarding to those Computershare, ICI, ISS, McData Corp, NY State
to request the shareholder list or have the issuer shareholders who have elected to receive paper Bar, Swingvote, SCSGP, William Sjostrom, and
send its materials. copies. University Bancorp.
even more savings may be realized by only paper delivery through the U.S. Regulation 14A (OMB Control No.
extending the model to such larger mail system.145 3235–0059)
documents. The Commission desires to • We clarify that the term ‘‘address’’ Regulation 14C (OMB Control No. 3235–
gain more experience with the notice includes an electronic mail address.146 0057)
and access model before extending it to Furthermore, we clarify the use of the An agency may not conduct or
business combination transactions. term ‘‘annual report(s)’’ in the proxy sponsor, and a person is not required to
Based on our experience with the model rules by changing all references to either respond to, a collection of information
once it is being used for more ‘‘annual report(s) to security holders’’ or unless it displays a currently valid OMB
straightforward corporate actions, we ‘‘annual report(s) on Form 10–K and/or control number.
will consider at a later date whether it Form 10–KSB,’’ as appropriate.147
Finally, we are updating Rule 14a–2 and B. Summary of Amendments
is appropriate to extend the model to
business combination transactions. Forms 10–Q, 10–QSB, 10–K, 10–KSB, The amendments will apply to a
and N–SAR to revise outdated particular issuer or other soliciting
E. Compliance Date and Monitoring references to Exchange Act Rule 14a–11, person only if the issuer or soliciting
No issuer may send a Notice to which the Commission rescinded in person voluntarily chooses to rely on
shareholders before July 1, 2007. Issuers 1999.148 the notice and access model. However,
and intermediaries typically hire third if the issuer or soliciting person opts to
V. Paperwork Reduction Act rely on the new alternative model,
parties to handle the logistics of proxy
distribution. These companies will A. Background compliance with the components of the
require time to adjust their systems to model is mandatory. The Notices, the
The amendments contain ‘‘collection
accommodate the notice and access proxy materials posted on the Web site,
of information’’ requirements within the
model. Therefore, an issuer may not use and copies of the proxy materials sent
meaning of the Paperwork Reduction
the new model for meetings before in response to shareholder requests will
Act of 1995 (PRA).149 We published a
August 10, 2007 because of the 40-day not be kept confidential.
notice requesting comment on the
deadline. Similarly, if an issuer’s The Notice must include the
collection of information requirements
meeting will be on or after August 10, following prominent legend in bold-face
in the proposing release, and submitted
2007, it may only send the Notice on or type and other information described
requests to the Office of Management
after July 1, 2007, even if the issuer below:
and Budget for approval in accordance
wishes to send the Notice more than 40 with the PRA.150 These requests were ‘‘Important Notice Regarding the Availability
days prior to the meeting date. approved by OMB. Some of the of Proxy Materials for the Shareholder
Meeting to Be Held on [insert meeting
We desire to track the industry’s revisions that we are making to the
date].152
experience with the notice and access original proposal affect these collections • This communication presents only an
model to determine whether the rules of information. We will submit requests overview of the more complete proxy
are achieving their intended purposes. for approval of the revisions to OMB. materials that are available to you on the
However, we do not currently intend to We are requesting comment in this Internet. We encourage you to access and
impose a requirement for issuers and release with respect to these revisions. review all of the important information
other parties to provide us with data The titles for the collections of contained in the proxy materials before
information are:151 voting.
and experiences with the model. We
• The [proxy statement] [information
welcome information from issuers and statement] [annual report to security holders]
145 Rules 14a–4(c)(1), 14a–8(e)(2), 14a–8(e)(3),
all other parties involved in the proxy [is/are] available at [Insert Web site address].
14a–8(m)(3), 14a–13(a)(5), 14a–13(c), 14b–
distribution process about their 1(c)(2)(ii), 14b–2(c)(2)(ii), 14c–5(a) and 14c–7(a)(5). • If you want to receive a paper or e-mail
experience with the notice and access Also Note 2 to Rule 14a–13(a), Instruction 2 to copy of these documents, you must request
model on a voluntary basis. Such paragraph (d)(2)(ii)(L) of Item 7 of Rule 14a–101, one. There is no charge to you for requesting
information would include itemized Note 2 to Rule 14c–7(a) and Instruction 1 to Item a copy. Please make your request for a copy
4 of Rule 14c–101. as instructed below on or before [Insert a
costs of proxy solicitation before and 146 Rules 14a–7(f), 14a–13(e), 14b–1(a)(2) and
after adoption of the model, shareholder date] to facilitate timely delivery.’’
14b–2(a)(4).
voting data before and after adoption, 147 Rules 14a–3(b)(1), 14a–3(b)(10), 14a–3(b)(13), • The date, time, and location of the
the number of copies requested, and any 14a–3(e)(1)(i), 14a–3(e)(1)(i)(A), 14a–3(e)(1)(i)(B), meeting or, if corporate action is to be
problems encountered with 14a–3(e)(1)(i)(C), 14a–3(e)(1)(i)(E), 14a– taken by written consent, the earliest
3(e)(1)(ii)(A), 14a–3(e)(1)(ii)(B)(2), 14a–
implementing the program. Although 3(e)(1)(ii)(B)(2)(ii), 14a–3(e)(1)(ii)(B)(2)(iii), 14a– date on which the corporate action may
such information may be aggregated 3(e)(1)(ii)(B)(3), 14a–3(e)(1)(iii), 14a–3(e)(2), 14a– be effected;
with the data and experiences of others 3(e)(2)(i), 14a–3(e)(2)(ii), 14a–12(c)(1), 14b–1(b)(2), • A clear and impartial identification
and presented to the public, we do not 14b–1(c)(2)(ii), 14b–1(c)(3), 14b–2(b)(3), 14b– of each separate matter intended to be
2(c)(2)(ii), 14b–2(c)(4), 14c–2(a)(2), 14c–3(a)(1) and
intend to divulge the identity of 14c–3(c). Also Note to paragraph (e)(1)(i)(B) of Rule acted upon and the issuer’s or other
responding parties. 14a–3, Note D(3) to Rule 14a–101, Note G(1) to Rule soliciting person’s recommendations
14a–101, Instruction 1 to paragraph (d)(2)(ii)(L) of regarding those matters, but no
IV. Conforming and Correcting Item 7 of Rule 14a–101, paragraph (e)(2) of Item 14 supporting statements;
Revisions to the Proxy Rules of Rule 14a–101, Item 23 of Rule 14a–101,
paragraph (a), (b), (c) and (d) of Item 23 to Rule 14a–
The adopted rules reflect numerous 101, Note 1 to paragraph (b)(2) of Rule 14b–1, Note Materials as a new collection of information, rather
1 to paragraph (b)(3) of Rule 14b–2, section heading than a part of our existing collections of information
amendments to terms used in the related to Regulations 14A and 14C. However, we
to Rule 14c–3, Item 5 of Rule 14c–101 and
current proxy rules to explicitly paragraph (a), (b), (c) and (d) of Item 5 of Rule 14c– subsequently submitted to OMB a PRA analysis
accommodate the notice and access 101. based on revisions to the Regulation 14A and
model. The changes are as follows: 148 See Release No. 33–7760 (Oct. 22, 1999) [64 Regulation 14C collections. Based on our burden
FR 61408]. estimates associated with the Notice, the collection

• We substitute the term ‘‘send’’ and 149 44 U.S.C. 3501 et seq. of information approved by OMB related to
other tenses of the verb for the term 150 44 U.S.C. 3507(d) and 5 CFR 1320.11.
revisions to existing collections of information
(Regulations 14A and 14C) and therefore we refer
‘‘mail’’ and its other tenses to avoid any 151 In the proposing release, we described the to those collections of information in this PRA
misunderstanding that ‘‘mail’’ means proposed Notice of Internet Availability of Proxy discussion.
• A list of the materials being made approximately $1,197,300,156 which annual burden of 7,982 hours for all
available at the specified Web site; reflects the outside counsel cost. proxy solicitations.160
• (1) A toll-free telephone number; (2) Although the notice and access model Intermediaries must also maintain
an e-mail address; and (3) an Internet is an alternative to the existing model records to keep track of which beneficial
Web site address where the shareholder for the distribution of proxy materials to owners have made a permanent election
can request a copy of the proxy shareholders, and reliance upon it will to receive proxy materials in paper or by
materials, for all meetings and for the be optional, we based our reporting e-mail. Like issuers, intermediaries
particular meeting to which the Notice burden and cost estimates on the already maintain records of
relates; assumption that all issuers or other shareholders’ affirmative consents to
• Any control/identification number electronic delivery and householding of
soliciting persons in fiscal year 2005
that the shareholder needs to access his proxy materials. In addition,
would have relied on the notice and
or her proxy card; intermediaries maintain records as to
• Instructions on how to access the access model even though we realized
whether their beneficial owner
proxy card, provided that such that this would result in an
customers have objected, or not
instructions do not enable a shareholder overestimation of hour and cost
objected, to disclosure of their identities
to execute a proxy without having burdens. The new alternative is
to the issuer. Like issuers, we believe
access to the proxy statement and voluntary, so the percentage of issuers
this will result in an annual burden of
annual report; and and soliciting persons that will choose
39,910 hours for intermediaries.
• Information on how to obtain to rely on the new model is uncertain. We did not receive any comments on
directions to be able to attend the In response to commenters’ remarks, the percentage of issuers and persons
meeting and vote in person. we revised the proposal to require likely to rely on the notice and access
Intermediaries must provide a similar issuers to permit shareholders to make model, nor did we receive any
notice to beneficial owners. We expect permanent elections to receive proxy comments on our burden and cost
that all of the factual information materials in paper or by e-mail. An estimates associated with preparing the
required to appear in the Notice will issuer must maintain records as to Notice. However, several corporate
become available as part of the ordinary which of its shareholders have made commenters indicated that some issuers
preparations for a shareholder meeting. such an election. Many issuers already might be reluctant to rely on the notice
C. Comments on PRA Estimates maintain similar records to keep track of and access model due to a concern that
their shareholders who have the costs of fulfillment of requests for
We requested comment on the PRA affirmatively consented to electronic paper copies under the model might
analysis contained in the proposing delivery consistent with past offset some of the potential savings that
release. In the proposing release, we Commission guidance,157 as well as they could realize from the model. We
estimated the annual burden for an their shareholders who have consented have revised the proposed model to
issuer or other soliciting person to to householding of proxy materials address some of these concerns about
prepare a Notice to be approximately 1.5 pursuant to Rule 14a–3(e).158 For fulfillment of requests for paper copies,
hours. We estimated that 75% of the purposes of the PRA, we estimate that but it is still difficult to predict the
burden would be prepared by the issuer a typical issuer will spend an additional number of issuers and soliciting persons
and that 25% of the burden would be five hours per year, or a total of 39,910 that will rely on the model. Therefore,
prepared by outside counsel retained by hours for all issuers subject to the proxy we are not revising the original
the issuer at an average cost of rules, to maintain these records.159 estimates that assume that all issuers
approximately $300 per hour.153 Based Because this is an internal and soliciting persons will rely on the
on our receipt of 7,301 filings on recordkeeping requirement, we do not notice and access model. As a result,
Schedule 14A and 681 filings on expect a cost for hiring outside counsel. these burden estimates likely are
Schedule 14C during our 2005 fiscal overstated. We will adjust them after we
The final rules also require an
year, we estimated that 7,982 Notices have actual experience with the notice
intermediary to prepare its own Notice.
would be filed annually, assuming that and access model. We request comment
This Notice would be substantially the
all issuers and other soliciting persons on all of our hourly and cost burden
same as an issuer’s Notice, but will be
elected to follow the proposed notice estimates.
modified by the intermediaries to
and access model.154 We further Any member of the public may direct
provide information that is relevant to
estimated that the total annual reporting to us any comments concerning these
beneficial owners rather than registered
burden would be approximately 8,980 burden and cost estimates and any
holders. According to ADP, it processes
hours.155 Using the revised $400 average suggestions for reducing the burdens
more than 95% of proxy materials that
cost for retaining outside counsel, we and costs. Persons who desire to submit
are sent to beneficial owners on behalf
are adjusting our annual cost estimate to comments on the collections of
of intermediaries, reducing the need to
information requirements should direct
153 For convenience, the estimated PRA hour create multiple intermediary Notices. In their comments to the OMB, Attention:
burdens have been rounded to the nearest whole addition, the issuer or other soliciting Desk Officer for the Securities and
number, and the estimated PRA cost burdens have person will provide the majority of Exchange Commission, Office of
been rounded to the nearest $100. At the proposing information required in the
stage, we used an estimated hourly rate of $300.00 Information and Regulatory Affairs,
to determine the estimated cost to public companies
intermediary’s Notice. Therefore, we Washington, DC 20503, and send a copy
of executive compensation and related disclosure estimate that the burden to prepare an
prepared or reviewed by outside counsel. We intermediary’s Notice will be 160 7,982 notices × 1 hour per notice = 7,982
recently have increased this hourly rate estimate to approximately one hour, or a total hours. We do not include a cost to intermediaries
$400.00 per hour after consulting with several for hiring outside counsel because we expect that
private law firms. The cost estimates in this release the substantive contents of an intermediary’s Notice
156 7,982 notices × $400/hour × 1.5 hours/notice
are based on the $400.00 hourly rate. We request would be provided by the issuer or other soliciting
comment on this estimated hourly rate. × .25 = $1,197,300.
person. The estimates assume that ADP will
154 7,301 notices for 14A filers + 681 notices for 157 See the 1995 Interpretive Release.
continue to process over 95% of the proxy
14C filers = 7,982 total notices. 158 17 CFR 240.14a–3(e).
solicitations on behalf of intermediaries, thereby
155 7,982 notices × 1.5 hours per notice × .75 = 159 7,982 filings with an estimated one filing per eliminating the need for each intermediary to
8,980 hours. issuer or soliciting person × 5 hours = 39,910 hours. prepare a separate Notice.
of the comments to Nancy M. Morris, this alternative model, shareholders 50% of all proxy pieces mailed by ADP
Secretary, Securities and Exchange may request paper or e-mail copies of in 2005 were mailed during the proxy
Commission, 100 F Street, NE., the proxy materials at no charge from season.164 Therefore, we estimate that
Washington, DC 20549–9303, with the issuer. issuers and other persons soliciting
reference to File No. S7–10–05. Under the amendments, an issuer can proxies from beneficial owners spent
Requests for materials submitted to the require intermediaries to follow similar approximately $962.4 million in 2006 in
OMB by us with regard to these procedures when forwarding the printing and mailing costs.165
collections of information should be in issuer’s proxy materials to beneficial Based on the assumption that 19% of
writing, refer to File No. S7–10–05, and owners. In addition, shareholders and shareholders will choose to have paper
be submitted to the Securities and other persons conducting their own copies sent to them when an issuer
Exchange Commission, Records proxy solicitations may follow the relies on the notice and access model,
Management, Office of Filings and alternative model, under the same we estimate that the amendments could
Information Services, 100 F Street, NE., general requirements that apply to produce annual paper-related savings
Washington, DC 20549. Because the issuers. However, such persons will be ranging from $48.3 million (if issuers
OMB is required to make a decision able to limit their solicitations to who are responsible for 10% of all
concerning the collections of shareholders who have not requested proxy mailings choose to rely on the
information between 30 and 60 days paper copies of the proxy materials from notice and access model) to $241.4
after publication, your comments are an issuer in connection with the issuer’s million (if issuers who are responsible
best assured of having their full effect if solicitation. for 50% of all proxy mailings choose to
the OMB receives them within 30 days rely on the notice and access model).166
C. Benefits
of publication. This estimate excludes the effect of the
The benefits to investors of the provision of the amendments that will
VI. Cost-Benefit Analysis amendments include the following: (1) allow shareholders to make a permanent
More rapid dissemination of proxy request for paper copies. That provision
A. Background
information to shareholders using the will enable issuers and other soliciting
The amendments to the proxy rules Internet; and (2) reduced printing and persons to take advantage of bulk
enable issuers to take advantage of mailing costs for issuers, as well as printing and mailing rates for those
technological advances that have other soliciting persons engaging in requesting shareholders, and therefore
occurred in recent years to more proxy contests. We expect that the should reduce the on-demand costs
efficiently furnish proxy materials to reductions in printing and mailing costs reflected in these calculations.167
shareholders. We expect that these and the potential decrease in the costs We estimate that approximately 19%
amendments will lead to significant cost of proxy contests to be the most of shareholders will request paper
reduction for proxy solicitations. The significant sources of economic benefit copies. Commenters provided alternate
costs of solicitations ultimately are to investors of the amendments.
borne by shareholders. We are sensitive In terms of paper processing alone, 164 According to ADP, in 2005, 90,013,175 of
to the costs and benefits that result from the benefits of the rule amendments are 179,833,774, or 50%, of proxy pieces were mailed
our rules. In this section, we examine limited by the volume of paper during the 2005 proxy season.
165 $481.2 million / 50% = $962.4 million.
those costs and benefits. processing that would occur otherwise. 166 This range of potential cost savings depends
Issuers and other persons soliciting As we noted in the proposing release, on data on proxy material production, home
proxies must comply with the rule Automatic Data Processing, Inc. (ADP) printing costs, and first-class postage rates provided
amendments only if they elect to furnish handles the vast majority of proxy by Lexecon and ADP, and supplemented with
proxy materials pursuant to the notice mailings to beneficial owners.161 ADP modest 2006 USPS postage rate discounts. The
fixed costs of notice and proxy material production
and access model. No issuer or person publishes statistics that provide useful are estimated to be $2.36 per shareholder. The
conducting a proxy solicitation will be background for evaluating the likely variable costs of fulfilling a paper requests,
required to follow the notice and access consequences of the rule amendments. including handling, paper, printing and postage, are
ADP estimates that, during the 2006 estimated to be $6.11 per copy requested.
model. We expect that an issuer or other Assumptions about percentages of shareholders
soliciting person will follow the model proxy season,162 over 69.7 million proxy requesting paper copies are derived from Forrester
only if it believes that it will experience material mailings were eliminated survey data furnished by ADP and adjusted for the
cost savings as a result. We expect that through a variety of means, including reported likelihood that an investor will take extra
householding and existing electronic steps to get proxy materials. Our estimate of the
having a choice among alternative total number of shareholders is based on data
models for furnishing proxy materials delivery methods. During that season, provided by ADP and SIA. According to SIA’s
will limit the costs of the amendments ADP mailed 85.3 million paper proxy comment letter, 78.49% of shareholders held their
by enabling issuers and other soliciting items to beneficial owners. ADP shares in street name. We estimate that the total
number of proxy pieces mailed equals the number
persons to choose one that is most estimates that the average cost of of pieces mailed to beneficial shareholders by ADP
efficient and cost effective under the printing and mailing a paper copy of a in 2005 divided by 78.49%, which equals
issuer’s or other soliciting person’s set of proxy materials during the 2006 179,833,774 / 78.49%, or 229,116,797.
particular circumstances. proxy season was $5.64. We estimate 167 ADP commissioned a study by Lexecon to
that issuers and other soliciting persons provide estimates for the total net cost/savings of
B. Summary of Amendments spent, in the aggregate, $481.2 million
the amendments to issuers. Lexecon’s study relied
on 2005 postage rates with no first-class mail
The amendments provide an in postage and printing fees alone to discounts and a higher share of color printing at
alternative notice and access model that distribute paper proxy materials to home than we assume above. It estimated that if all
permits an issuer to furnish its proxy beneficial owners.163 Approximately issuers adopt the notice and access model, if 9% of
shareholders choose to print the materials at home,
materials to shareholders by posting and 19% choose to have paper copies sent to them,
them on a publicly-accessible Internet 161 We expect savings per mailing to record
then the amendments would produce a net savings
Web site (other than the Commission’s holders to roughly correspond to savings per of $205 million for issuers in the aggregate.
mailing to beneficial owners. However, if 20% of shareholders chose to print and
EDGAR Web site) and providing 162 According to ADP data, the 2006 proxy season
39% chose to request paper copies, the
shareholders with a notice informing extended from February 15, 2006 to May 1, 2006. amendments would produce a net cost of $181
them that the materials are available and 163 85.3 million mailings × $5.64/mailing = $481.2 million. See Lexecon comment letter for more
explaining how to access them. Under million. details.
estimates. For example, Computershare, receiving disclosures via the Internet, D. Costs
a large transfer agent, estimated that less the number of paper copies are likely to An issuer’s decision to use the notice
than 10% of shareholders would request decline, as will issuers’ tendency to and access model will introduce several
paper copies.168 According to a survey print many more copies than ultimately new costs into the process of proxy
conducted by Forrester Research for are requested. This will lead to growth distribution, including the following: (1)
ADP, 12% of shareholders report that in paper-related savings from the rule The cost of preparing, producing, and
they would always take extra steps to amendments over time. sending the Notice to shareholders; (2)
get their proxy materials, and as many Additional benefits will accrue from the cost of processing shareholders’
as 68% of shareholders report that they reductions in the costs of proxy requests for copies of the proxy
would take extra steps to get their proxy solicitations by persons other than the materials and maintaining their
materials in paper at least some of the issuer. Under the amendments, persons permanent election preferences; and (3)
time. The same survey also finds that other than the issuer also can rely on the the cost to shareholders of printing
82% of shareholders report that they notice and access model, but will be proxy materials at home that would
look at their proxy materials at least able to limit the scope of their proxy otherwise be printed by issuers.
some of the time. These survey results solicitations to shareholders who have The paper-related savings to issuers
suggest that shareholders may review not requested paper copies of the proxy
proxy materials even if they do not vote. and other soliciting persons discussed
materials. We expect that the flexibility under the benefits section above are
During the 2005 proxy season, only 44% afforded to persons other than the issuer
of accounts were voted by beneficial adjusted for the cost of printing and
under the amendments will reduce the sending Notices. If Notices are sent by
owners. Put differently, 56%, or 84.8 cost of engaging in proxy contests,
million accounts, did not return mail, then the mailing costs may vary
thereby increasing the effectiveness and widely among parties. Postage rates
requests for voting instructions. Our efficiency of proxy contests as a source
estimate that 19% of shareholders will likely would vary from $0.14 to $0.39
of discipline in the corporate per Notice mailed, depending on
request paper copies reflects the diverse governance process.
estimates suggested by the available numerous factors. In our estimates of
data. The effect of the amendments of the paper-related benefits above, we
Although we expect the savings to be lessening the costs associated with a assume that each Notice costs a total of
significant, the actual paper-related proxy contest will be limited by the $0.42 to print and mail. Based on data
benefits will be influenced by several persistence of other costs, even under from ADP and SIA, we estimate that
factors that we estimate will become the notice and access model. One issuers and other soliciting persons
less important over time. First, some commenter noted that a large percentage process a total of 229,116,797 accounts
issuers and other soliciting persons will of the costs of effecting a proxy contest per year.172 The alternative model also
likely not elect to follow the alternative go to legal, document preparation, and requires minimal added disclosures in
model. We estimate that issuers who are solicitation fees, while a much smaller the form of a Notice to shareholders,
responsible for between 10% and 50% percentage of the costs is associated informing them that the proxy materials
of all current proxy mailings will adopt with printing and distribution of are available at a specified Internet Web
the notice and access model during the materials.169 However, other site. For purposes of the PRA, we have
first year of implementation of the commenters suggested that the paper- presented the extremely conservative
amendments. Several commenters noted related cost savings that can be realized estimate that the preparation and filing
that some issuers may not be willing to from the rule amendments are costs of the amendments, assuming that
try the model the first year, but rather substantial enough to change the way all issuers and other soliciting persons
will opt to wait and monitor the many contests are conducted.170 elect to follow the procedures, will be
experience of other issuers that do try Finally, some benefits from the approximately $2,020,475.173 Under the
the model. Second, to the extent that amendments may arise from a reduction alternate scenario presented above,
some shareholders request paper copies in what may be regarded as the these costs could range between
of the proxy materials, the benefits of environmental costs of the proxy $202,048 if 10% of issuers adopt the
the amendments in terms of savings in solicitation process.171 Specifically, model and $1,010,238 if 50% of issuers
printing and mailing costs will be proxy solicitation involves the use of a adopt. The amendments also require
reduced. Issuers are concerned that the significant amount of paper and printing issuers and intermediaries to maintain
cost per paper copy would be ink. Paper production and distribution records of shareholders who have
significantly greater if they have to mail can adversely affect the environment, requested paper and e-mail copies for
copies of paper proxy materials to due to the use of trees, fossil fuels, future proxy solicitations. We estimate
shareholders on an on-demand basis, chemicals such as bleaching agents, that this cost to issuers and
rather than mailing the paper copies in printing ink (which contains toxic intermediaries will be approximately
bulk. Thus, if a significant number of metals), and cleanup washes. To the
shareholders request paper, the savings extent that paper producers internalize 172 See www.ics.adp.com/release11/public_site/
will be substantially reduced. Third, about/stats.html stating that ADP handled

these costs and the costs are reflected in 179,833,774 in fiscal year 2005 and letter from SIA
after adopting the notice and access the price of paper and other materials stating that beneficial accounts represent 78.49% of
model, issuers may face a high degree of consumed during the proxy solicitation total accounts.
uncertainty about the number of process, our dollar estimates of the 173 For PRA purposes, we estimate that issuers
requests that they may get for paper paper-related benefits reflect the would spend a total of $897,975 on outside
proxy materials and may maintain professionals to prepare this disclosure. We also
elimination of these adverse estimate that issuers would spend a total of 8,980
unnecessarily large inventories of paper environmental consequences under the hours of issuer personnel time preparing this
copies as a precaution. As issuers gain amendments. disclosure. We estimate the average hourly cost of
familiarity with the continued use of issuer personnel time to be $125, resulting in a total
paper materials and as shareholders cost of $1,122,500 for issuer personnel time. This
169 See letter from ADP. results in a total cost of $2,020,475 for all issuers.
become more comfortable with 170 See letters from CALSTRS, Computershare, We expect that costs for posting the materials on a
ISS, and Swingvote. Web site will be minimal and are included in this
168 See letter from Computershare. 171 See letter from American Forests. calculation.
$9,977,500 if all issuers adopt the notice the posted materials, which will entail sending information statements
and access model,174 $997,500 if 10% of paper and printing costs. We estimate regarding shareholder meetings.
issuers adopt the model, and $4,988,750 that approximately 10% of all Currently, many issuers must devote a
if 50% of issuers adopt the model. shareholders will print out the posted significant amount of time and
Issuers who adopt the notice and materials at home at an estimated cost resources to proxy mailings. Similarly,
access model and their intermediaries of $7.05 per proxy package. Based on undertaking a proxy contest is often a
will incur additional processing costs. these assumptions, the amendments are very costly endeavor. We expect that the
The amendments will require an estimated to produce annual home amendments will reduce the time and
intermediary such as a bank, broker- printing costs ranging from $16 million resources related to such distributions.
dealer, or other association to follow the (if issuers who are responsible for 10% These costs include reimbursing
notice and access model if an issuer so of all current proxy mailings choose to intermediaries for their part in the
requests. An intermediary that follows rely on the notice and access model) to process.
the notice and access model will be $80 million (if issuers who are As noted elsewhere in this release,
required to prepare its own Notice to responsible for 50% of all current proxy commenters expressed concern that the
beneficial owners, along with mailings choose to rely on the notice amendments might reduce shareholder
instructions on when and how to and access model).175 Investors have the participation in the proxy voting
request paper copies and the Web site option to incur no additional cost by process, making issuers more dependent
where the beneficial owner can access either accessing the proxy materials on broker discretionary voting. Such a
his or her request for voting online or requesting paper copies of the result would affect the efficiency of the
instructions. Since issuers reimburse materials from the issuer. current proxy voting process. We have
intermediaries for their reasonable made revisions to the amendments to
VII. Consideration of Burden on minimize such effect, by making it
expenses of forwarding proxy materials
Competition and Promotion of easier for shareholders to continue to
and intermediaries and their agents
Efficiency, Competition and Capital receive paper copies of the proxy
already have systems to prepare and
Formation materials. Similarly, there was concern
deliver requests for voting instructions,
we do not expect the intermediaries’ Section 23(a)(2) of the Exchange that the amendments would increase the
role in sending their Notices to Act 176 requires us, when adopting rules risk of shareholders conducting
beneficial owners to significantly affect under the Exchange Act, to consider the frivolous proxy contests. We have also
the costs associated with the rule. impact that any new rule would have on revised the final rules to minimize this
Under the notice and access model, a competition. In addition, Section possibility, by eliminating the proposed
beneficial owner must request a copy of 23(a)(2) prohibits us from adopting any conditional solicitation.179
proxy materials from its intermediary rule that would impose a burden on Some commenters were concerned
rather than from the issuer. The costs of competition not necessary or that the added procedures would
collecting and processing requests from appropriate in furtherance of the complicate the proxy distribution
beneficial owners may be significant, purposes of the Exchange Act. Section process, reducing the efficiency of the
particularly if the intermediary receives 3(f) of the Exchange Act 177 and Section process. The final rules are voluntary.
the requests of beneficial owners 2(c) of the Investment Company Act of No issuer or other soliciting person is
associated with many different issuers 1940 178 require us, when engaging in required to rely on the notice and access
that specify different methods of rulemaking that requires us to consider model. Those that choose to rely on the
furnishing the proxy. We expect that or determine whether an action is model presumably have determined that
these processing costs will be highest in necessary or appropriate in the public the additional procedures that they
the first year after adoption but will interest, to consider, in addition to the must follow would reduce their cost of
subsequently decline as intermediaries protection of investors, whether the soliciting proxies, thereby increasing the
develop the necessary systems and action will promote efficiency, efficiency of the process.
procedures and as beneficial owners competition, and capital formation. We We considered the effects that the
increasingly become comfortable with have also discussed other impacts of the amendments would have on capital
accessing proxy materials online. In amendments in our Cost-Benefit, formation. The final rules do not
addition, the final rules permit a Paperwork Reduction Act and Final directly affect the ability of issuers to
beneficial owner to specify its Regulatory Flexibility Act Analyses. raise capital. However, they are
The amendments to the proxy rules intended to reduce the cost of soliciting
preference on an account-wide basis,
are intended to improve efficiency by proxies. In addition, they facilitate
which should reduce the cost of
providing an alternative for issuers and proxy disclosure via the Internet, which
processing requests for copies. These
other soliciting persons that could may improve the manner in which
costs are ultimately paid by the issuer
reduce the cost of soliciting proxies and investors receive those disclosures,
and therefore would be included in an
issuer’s assessment of whether to adopt thereby improving shareholder
175 This range of potential home printing costs
the alternative model. depends on data provided by Lexecon and ADP.
relations.
Shareholders obtaining proxy See letter from ADP. The Lexecon data was We considered the possible effects of
materials online would incur any included in the ADP comment letter. To calculate the amendments on competition. As
necessary costs associated with gaining home printing cost, we assume that 50% of annual noted elsewhere in this release,
report pages are printed in color and 100% of proxy companies in, and related to, the
access to the Internet. In addition, some statement pages are printed in black and white. The
shareholders may choose to print out estimated percentage of shareholders printing at financial printing industry were
home is derived from Forrester survey data concerned about the negative effects
174 For PRA purposes, we estimate that issuers furnished by ADP and adjusted for the reported that the rules may have on that industry.
likelihood that an investor will take extra steps to
and intermediaries would spend a total of 79,820
get proxy materials. Total number of shareholders
Conversely, these rules may create
hours of issuer and intermediary personnel time alternative industries that promote more
maintaining these records. We estimate the average estimated as above based on data provided by ADP
hourly cost of issuer and intermediary personnel and SIA. See letters from ADP and SIA. user-friendly, computer-based systems
176 15 U.S.C. 78w(a)(2).
time to be $125, resulting in a total cost of
177 15 U.S.C. 78c(f).
$9,977,500 for issuer and intermediary personnel 179 See Section III.C.1 of Release No. 34–52926
time. 178 15 U.S.C. 80a–2(c). (Dec. 8, 2005) [70 FR 74597].
for interaction with shareholders, thus Regulatory Flexibility Act Analysis, § 240.17a–5(d); and is not affiliated with
creating new jobs and industries in this including the number of small entities any person (other than a natural person)
field. that would be affected by the proposals, that is not a small business or small
and both the qualitative and organization. As of 2005, the
VIII. Final Regulatory Flexibility
quantitative nature of the impact. We Commission estimates that there were
Analysis approximately 910 broker-dealers that
did not receive comment on the number
This Final Regulatory Flexibility of small entities that would be affected qualified as small entities as defined
Analysis has been prepared in by the proposals. Also, no commenters above.185 Small Business
accordance with 5 U.S.C. 603. It relates noted any difference in the potential Administration regulations define
to amendments to the proxy rules under effect of the amendments on small ‘‘small entities’’ to include banks and
the Exchange Act that will provide an entities as opposed to other entities. savings associations with total assets of
alternative model for issuers and other One commenter remarked that smaller $165 million or less.186 The
persons soliciting proxies to satisfy companies depend more heavily on Commission estimates that the rules
certain of their obligations under the broker discretionary voting than larger will apply to approximately 9,475
Commission’s proxy rules. An Initial companies in order to meet state law banks, approximately 5,816 of which
Regulatory Flexibility Analysis (IRFA) quorum requirements.181 Although the could be considered small banks with
was prepared in accordance with the new rules do not affect the NYSE’s assets of $165 million or less.
Regulatory Flexibility Act in broker discretionary voting rule, that No issuer is required to follow the
conjunction with the proposing release. commenter noted that if the final rules notice and access model. However, we
The proposing release included, and reduce shareholder voting, such smaller expect that many issuers will choose to
solicited comment on, the IRFA. companies would become even more follow the alternative model because of
dependent on broker discretionary the substantial cost savings that they
A. Need for the Amendments may realize. These issuers likely will
voting. As noted elsewhere in this
On December 8, 2005, we proposed release, we have made revisions to the include many small entities. Broker-
amendments to the rules regarding amendments to minimize such effect, by dealer and bank intermediaries are
provision of proxy materials to making it easier for shareholders to required to comply with the notice and
shareholders.180 We are adopting those continue to receive paper copies of the access model if an issuer or other
amendments, substantially as proposed, proxy materials. soliciting person requests such
but with a few modifications in intermediaries to follow the alternative
response to public comment. C. Small Entities Subject to the model.
Specifically, the amendments create an Amendments
alternative notice and access model by D. Reporting, Recordkeeping and Other
Exchange Act Rule 0–;10(a) 182 defines Compliance Requirements
which issuers and other soliciting an issuer to be a ‘‘small business’’ or
persons can electronically furnish their ‘‘small organization’’ for purposes of the If an issuer chooses to follow the
proxy materials to shareholders. The Regulatory Flexibility Act if it had total model, it will be required to prepare,
amendments are intended to put into assets of $5 million or less on the last file, and furnish a Notice to
place processes that will provide day of its most recent fiscal year. We shareholders. Similarly, upon request
shareholders with notice of, and access estimate that there are approximately from an issuer or other soliciting person,
to, proxy materials while taking 2,500 public companies, other than a broker-dealer or bank intermediary
advantage of technological investment companies, that may be will be required to prepare and furnish
developments and the growth of the considered small entities. its own Notice to beneficial owners.
Internet and electronic communications. For purposes of the Regulatory These Notices must include factual
Issuers that rely on the amendments Flexibility Act, an investment company information that is readily available to
may be able to significantly lower the is a small entity if it, together with other the issuer and intermediary. An issuer
costs of their proxy solicitations that investment companies in the same relying on the notice and access model
ultimately are borne by shareholders. group of related investment companies, also will be required to provide copies
The fact that the amendments also apply has net assets of $50 million or less as of the proxy materials to requesting
to a soliciting person other than the of the end of its most recent fiscal shareholders and to maintain a Web site
issuer might help to reduce the costs of year.183 Approximately 157 registered on which to post the proxy materials.
engaging in a proxy contest. investment companies meet this Intermediaries will be required to
The amendments also have the definition. Moreover, approximately 53 forward copies of the proxy materials to
potential to improve the ability of business development companies may requesting beneficial owners and to
shareholders to participate meaningfully be considered small entities. maintain a Web site on which to post its
in the proxy process by reducing the Paragraph (c)(1) of Rule 0–10 under request for voting instructions. Those
cost of undertaking a proxy contest and the Exchange Act 184 states that the term Web sites must be maintained in a
may increase management’s ‘‘small business’’ or ‘‘small manner to ensure that the anonymity of
accountability and responsiveness to organization,’’ when referring to a persons accessing the Web sites is
shareholders due to heightened concern broker-dealer, means a broker or dealer preserved. Finally, issuers and
about the possibility of a proxy contest. that had total capital (net worth plus intermediaries must maintain records
This, in turn, may enhance the value of subordinated liabilities) of less than regarding which shareholders have
shareholders’ investments. $500,000 on the date in the prior fiscal indicated a preference to receive paper
B. Significant Issues Raised by Public year as of which its audited financial
185 These numbers are based on a review by the
Comment statements were prepared pursuant to
Commission’s Office of Economic Analysis of 2005
Financial and Operational Combined Uniform

In the proposing release, we requested 181 Seeletter from ABC. Single (FOCUS) Report filings reflecting registered
comment on any aspect of the Initial 182 17CFR 240.0–10(a). broker-dealers. This number does not include
183 See Rule 0–10 under the Investment Company broker-dealers that are delinquent in their FOCUS
180 Release No. 34–52926 (Dec. 8, 2005) [70 FR Act of 1940 [17 CFR 270.0–10]. Report filings.
74597]. 184 17 CFR 240.0–10(c)(1). 186 13 CFR 121.201.
or e-mail copies of the proxy materials List of Subjects containing the information specified in
in the future. Schedule 14A (§ 240.14a–101); or
17 CFR Parts 240 and 249
(3) A preliminary or definitive written
E. Agency Action To Minimize Effect on Reporting and recordkeeping proxy statement included in a
Small Entities requirements, Securities. registration statement filed under the
Compliance with the alternative Securities Act of 1933 on Form S–4 or
notice and access model is voluntary for 17 CFR Part 274
F–4 (§ 239.25 or § 239.34 of this chapter)
issuers. An issuer that is a small entity, Investment companies, Reporting and or Form N–14 (§ 239.23 of this chapter)
like other types of entities subject to the recordkeeping requirements, Securities. and containing the information
proxy rules, need not elect to follow the specified in such Form.
alternative model. This flexibility to PART 240—GENERAL RULES AND
REGULATIONS, SECURITIES * * * * *
comply with traditional methods of
EXCHANGE ACT OF 1934 (e)(1)(i) A registrant will be
distributing proxy materials to
considered to have delivered an annual
shareholders or to comply with the
■ 1. The general authority citation for report to security holders, proxy
notice and access model will allow a
part 240 is revised to read as follows: statement or Notice of Internet
small entity to choose the compliance
Availability of Proxy Materials, as
means that will be most cost effective Authority: 15 U.S.C. 77c, 77d, 77g, 77j,
described in § 240.14a–16, to all
for its particular situation. It is likely 77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn,
77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j, security holders of record who share an
that only the issuers that believe they
will realize cost savings or other 78j–1, 78k, 78k–1, 78l, 78m, 78n, 78o, 78p, address if:
benefits as a result of following the 78q, 78s, 78u–5, 78w, 78x, 78ll, 78mm, 80a– (A) The registrant delivers one annual
notice and access model will choose to 20, 80a–23, 80a–29, 80a–37, 80b–3, 80b–4, report to security holders, proxy
80b–11, and 7201 et seq.; and 18 U.S.C. 1350, statement or Notice of Internet
do so. unless otherwise noted.
Broker-dealer and bank intermediaries Availability of Proxy Materials, as
that are small entities must comply with * * * * * applicable, to the shared address;
the requirements of the voluntary model ■ 2. Amend § 240.14a–2 by: (B) The registrant addresses the
upon request from an issuer or other ■ a. Removing the period and adding a annual report to security holders, proxy
soliciting person. However, an semicolon at the end of paragraph statement or Notice of Internet
intermediary is not required to forward (b)(3)(ii); and Availability of Proxy Materials, as
proxy materials to beneficial owners ■ b. Revising paragraph (b)(3)(iv). applicable, to the security holders as a
unless the issuer or other soliciting The revision reads as follows: group (for example, ‘‘ABC Fund [or
person provides assurance of Corporation] Security Holders,’’ ‘‘Jane
§ 240.14a–2 Solicitations to which Doe and Household,’’ ‘‘The Smith
reimbursement of the intermediary’s § 240.14a–3 to § 240.14a–15 apply.
reasonable expenses incurred in Family’’), to each of the security holders
connection with forwarding those * * * * * individually (for example, ‘‘John Doe
materials. Therefore, any costs imposed (b) * * * and Richard Jones’’) or to the security
on intermediaries by the rules will be (3) * * * holders in a form to which each of the
borne by the issuer or other soliciting (iv) The proxy voting advice is not security holders has consented in
person, and ultimately shareholders. furnished on behalf of any person writing;
Exempting broker-dealers and banks soliciting proxies or on behalf of a Note to paragraph (e)(1)(i)(B): Unless
that are small entities would lead to participant in an election subject to the the registrant addresses the annual
inconsistent means by which beneficial provisions of § 240.14a–12(c); and report to security holders, proxy
owners receive their proxy materials, * * * * * statement or Notice of Internet
which we believe would not be ■ 3. Amend § 240.14a–3 by: Availability of Proxy Materials to the
appropriate. ■ a. Revising paragraphs (a), (e)(1)(i), the security holders as a group or to each of
We considered alternatives, such as introductory text of paragraphs the security holders individually, it
permitting an intermediary to merely (e)(1)(ii)(A) and (e)(1)(ii)(B)(2), must obtain, from each security holder
forward an issuer’s Notice rather than paragraphs (e)(1)(ii)(B)(2)(ii), to be included in the household group,
preparing its own Notice and permitting (e)(1)(ii)(B)(2)(iii), (e)(1)(ii)(B)(3), a separate affirmative written consent to
beneficial owners to request copies (e)(1)(iii), and (e)(2); and the specific form of address the
directly from the issuer. However, we ■ b. Revising the term ‘‘annual report’’ registrant will use.
believe that those alternatives create a to read ‘‘annual report to security (C) The security holders consent, in
high likelihood of confusion with holders’’ in paragraph (b)(13). accordance with paragraph (e)(1)(ii) of
respect to whether a beneficial owner The revisions read as follows: this section, to delivery of one annual
would be entitled to execute a proxy report to security holders or proxy
card rather than provide voting § 240.14a–3 Information to be furnished to statement, as applicable;
instructions to his or her intermediary. security holders. (D) With respect to delivery of the
To prevent such confusion, we have (a) No solicitation subject to this proxy statement or Notice of Internet
decided that such alternatives would regulation shall be made unless each Availability of Proxy Materials, the
not be appropriate. person solicited is concurrently registrant delivers, together with or
furnished or has previously been subsequent to delivery of the proxy
IX. Statutory Basis and Text of furnished with: statement, a separate proxy card for
Amendments (1) A publicly-filed preliminary or each security holder at the shared
We are adopting the amendments definitive written proxy statement address; and
pursuant to Sections 3(b), 10, 13, 14, 15, containing the information specified in (E) The registrant includes an
23(a), and 36 of the Securities Exchange Schedule 14A (§ 240.14a–101); undertaking in the proxy statement to
Act of 1934, as amended, and Sections (2) A publicly-filed preliminary or deliver promptly upon written or oral
20(a), 30, and 38 of the Investment definitive proxy statement, in the form request a separate copy of the annual
Company Act of 1940, as amended. and manner described in § 240.14a–16, report to security holders, proxy
statement or Notice of Internet requires otherwise, a registrant is not distribution to all beneficial owners
Availability of Proxy Materials, as required to send an annual report to designated by the security holder. The
applicable, to a security holder at a security holders, proxy statement or security holder may designate only
shared address to which a single copy Notice of Internet Availability of Proxy record holders and/or beneficial owners
of the document was delivered. Materials to a security holder if: who have not requested paper and/
(ii) Consent. (A) Affirmative written (i) An annual report to security or e-mail copies of the proxy statement.
consent. Each security holder must holders and a proxy statement, or a If the registrant has received affirmative
affirmatively consent, in writing, to Notice of Internet Availability of Proxy written or implied consent to deliver a
delivery of one annual report to security Materials, for two consecutive annual single proxy statement to security
holders or proxy statement, as meetings; or holders at a shared address in
applicable. A security holder’s (ii) All, and at least two, payments (if accordance with the procedures in
affirmative written consent will be sent by first class mail) of dividends or § 240.14a–3(e)(1), a single copy of the
considered valid only if the security interest on securities, or dividend proxy statement or Notice of Internet
holder has been informed of: reinvestment confirmations, during a Availability of Proxy Materials
* * * * * twelve month period, have been mailed furnished by the security holder shall be
(B) * * * to such security holder’s address and sent to that address, provided that if
(2) The registrant has sent the security have been returned as undeliverable. If multiple copies of the Notice of Internet
holder a notice at least 60 days before any such security holder delivers or Availability of Proxy Materials are
the registrant begins to rely on this causes to be delivered to the registrant furnished by the security holder for that
section concerning delivery of annual written notice setting forth his then address, the registrant shall deliver
reports to security holders, proxy current address for security holder those copies in a single envelope to that
statements or Notices of Internet communications purposes, the address. The registrant shall send the
Availability of Proxy Materials to that registrant’s obligation to deliver an security holder material with reasonable
security holder. The notice must: annual report to security holders, a promptness after tender of the material
* * * * * proxy statement or a Notice of Internet to be sent, envelopes or other containers
(ii) State that only one annual report Availability of Proxy Materials under therefore, postage or payment for
to security holders, proxy statement or this section is reinstated. postage and other reasonable expenses
Notice of Internet Availability of Proxy * * * * * of effecting such distribution. The
Materials, as applicable, will be registrant shall not be responsible for
delivered to the shared address unless § 240.14a–4 [Amended] the content of the material; or
the registrant receives contrary ■ 4. Amend § 240.14a–4 by: (ii) Deliver the following information
instructions; ■ a. Removing the authority citation to the requesting security holder within
(iii) Include a toll-free telephone following the section; five business days of receipt of the
number, or be accompanied by a reply ■ b. Revising the word ‘‘mailed’’ to read request:
form that is pre-addressed with postage ‘‘sent’’ in the first sentence of paragraph (A) A reasonably current list of the
provided, that the security holder can (c)(1); and names, addresses and security positions
use to notify the registrant that the ■ c. Revising the word ‘‘mails’’ to read of the record holders, including banks,
security holder wishes to receive a ‘‘sends’’ in the last sentence of brokers and similar entities holding
separate annual report to security paragraph (c)(1). securities in the same class or classes as
holders, proxy statement or Notice of holders which have been or are to be
■ 5. Amend § 240.14a–7 by:
Internet Availability of Proxy Materials; solicited on management’s behalf, or
■ a. Revising paragraphs (a)(2)(i) and
any more limited group of such holders
* * * * * (a)(2)(ii);
■ b. Adding paragraph (a)(2)(iii); and
designated by the security holder if
(3) The registrant has not received the available or retrievable under the
reply form or other notification ■ c. In the ‘‘Notes to § 240.14a–7’’,
revising the numerical designation ‘‘1.’’ registrant’s or its transfer agent’s
indicating that the security holder security holder data systems;
wishes to continue to receive an to read ‘‘Note 1 to § 240.14a–7’’, revising
the numerical designation ‘‘2.’’ to read (B) The most recent list of names,
individual copy of the annual report to addresses and security positions of
security holders, proxy statement or ‘‘Note 2 to § 240.14a–7’’ and adding
‘‘Note 3 to § 240.14a–7’’. beneficial owners as specified in
Notice of Internet Availability of Proxy § 240.14a–13(b), in the possession, or
Materials, as applicable, within 60 days The revisions and additions read as
follows: which subsequently comes into the
after the registrant sent the notice possession, of the registrant;
required by paragraph (e)(1)(ii)(B)(2) of § 240.14a–7 Obligations of registrants to (C) The names of security holders at
this section; and provide a list of, or mail soliciting material a shared address that have consented to
* * * * * to, security holders. delivery of a single copy of proxy
(iii) Revocation of consent. If a * * * * * materials to a shared address, if the
security holder, orally or in writing, (a) * * * registrant has received written or
revokes consent to delivery of one (2) * * * implied consent in accordance with
annual report to security holders, proxy (i) Send copies of any proxy § 240.14a–3(e)(1); and
statement or Notice of Internet statement, form of proxy, or other (D) If the registrant has relied on
Availability of Proxy Materials to a soliciting material, including a Notice of § 240.14a–16, the names of security
shared address, the registrant must Internet Availability of Proxy Materials holders who have requested paper
begin sending individual copies to that (as described in § 240.14a–16), copies of the proxy materials for all
security holder within 30 days after the furnished by the security holder to the meetings and the names of security
registrant receives revocation of the record holders, including banks, holders who, as of the date that the
security holder’s consent. brokers, and similar entities, designated registrant receives the request, have
* * * * * by the security holder. A sufficient requested paper copies of the proxy
(2) Notwithstanding paragraphs (a) number of copies must be sent to the materials only for the meeting to which
and (b) of this section, unless state law banks, brokers, and similar entities for the solicitation relates.
(iii) All security holder list (d) of this section in sufficient time for intended to be acted on and the
information shall be in the form the record holder or respondent bank to soliciting person’s recommendations
requested by the security holder to the prepare, print and send a Notice of regarding those matters, but no
extent that such form is available to the Internet Availability of Proxy Materials supporting statements;
registrant without undue burden or to beneficial owners at least 40 calendar (4) A list of the materials being made
expense. The registrant shall furnish the days before the meeting date. available at the specified Web site;
security holder with updated record (b)(1) All materials identified in the (5) A toll-free telephone number, an
holder information on a daily basis or, Notice of Internet Availability of Proxy e-mail address, and an Internet Web site
if not available on a daily basis, at the Materials must be publicly accessible, where the security holder can request a
shortest reasonable intervals; provided, free of charge, at the Web site address copy of the proxy statement, annual
however, the registrant need not provide specified in the notice on or before the report to security holders, and form of
beneficial or record holder information time that the notice is sent to the proxy, relating to all of the registrant’s
more current than the record date for security holder and such materials must future security holder meetings and for
the meeting or action. remain available on that Web site the particular meeting to which the
* * * * * through the conclusion of the meeting of proxy materials being furnished relate;
Notes to § 240.14a–7. security holders. (6) Any control/identification
* * * * * (2) All additional soliciting materials numbers that the security holder needs
Note 3 to § 240.14a–7. If the registrant sent to security holders or made public to access his or her form of proxy;
is sending the requesting security after the Notice of Internet Availability (7) Instructions on how to access the
holder’s materials under § 240.14a–7 of Proxy Materials has been sent must form of proxy, provided that such
and receives a request from the security be made publicly accessible at the instructions do not enable a security
holder to furnish the materials in the specified Web site address no later than holder to execute a proxy without
form and manner described in the day on which such materials are having access to the proxy statement
§ 240.14a–16, the registrant must first sent to security holders or made and, if required by § 240.14a–3(b), the
accommodate that request. public. annual report to security holders; and
(3) The Web site address relied upon (8) Information on how to obtain
■ 6. Amend § 240.14a–8 by revising the
for compliance under this section may directions to be able to attend the
word ‘‘mail’’ to read ‘‘send’’ in the last not be the address of the Commission’s
sentence of paragraph (e)(2) and in meeting and vote in person.
electronic filing system. (e)(1) The Notice of Internet
paragraph (e)(3) and the word ‘‘mails’’ (4) The registrant must provide
to read ‘‘sends’’ in the introductory text Availability of Proxy Materials may not
security holders with a means to be incorporated into, or combined with,
of paragraph (m)(3). execute a proxy as of the time the Notice
■ 7. Amend § 240.14a–12 by revising another document, except that it may be
of Internet Availability of Proxy incorporated into, or combined with, a
the term ‘‘annual report’’ to read Materials is first sent to security
‘‘annual report to security holders’’ in notice of security holder meeting
holders. required under state law, unless state
the heading of paragraph (c)(1) and the (c) The materials must be presented
first sentence of paragraph (c)(1). law prohibits such incorporation or
on the Web site in a format, or formats,
■ 8. Amend § 240.14a–13 by revising
combination.
convenient for both reading online and
the word ‘‘mailing’’ to read ‘‘sending’’ in (2) The Notice of Internet Availability
printing on paper.
paragraph (a)(5) and the word ‘‘mail’’ to (d) The Notice of Internet Availability of Proxy Materials may contain only the
read ‘‘send’’ in Note 2 following of Proxy Materials must contain the information required by paragraph (d) of
paragraph (a) and in paragraph (c), each following: this section and any additional
time it appears. (1) A prominent legend in bold-face information required to be included in
type that states: a notice of security holders meeting
■ 9. Add § 240.14a–16 to read as
under state law; provided that:
follows: ‘‘Important Notice Regarding the Availability
(i) The registrant must revise the
of Proxy Materials for the Shareholder
§ 240.14a–16 Internet availability of proxy Meeting To Be Held on [insert meeting date]. information on the Notice of Internet
materials.
1. This communication presents only an
Availability of Proxy Materials,
(a)(1) A registrant may furnish a proxy overview of the more complete proxy including any title to the document, to
statement pursuant to § 240.14a–3(a), or materials that are available to you on the reflect the fact that:
an annual report to security holders Internet. We encourage you to access and (A) The registrant is conducting a
pursuant to § 240.14a–3(b), to a security review all of the important information consent solicitation rather than a proxy
holder by sending the security holder a contained in the proxy materials before solicitation; or
Notice of Internet Availability of Proxy voting. (B) The registrant is not soliciting
2. The [proxy statement] [information proxy or consent authority, but is
Materials, as described in this section, statement] [annual report to security holders]
40 calendar days or more prior to the [is/are] available at [Insert Web site address].
furnishing an information statement
security holder meeting date, or if no 3. If you want to receive a paper or e-mail pursuant to § 240.14c–2; and
meeting is to be held, 40 calendar days copy of these documents, you must request (ii) The registrant may include a
or more prior to the date the votes, one. There is no charge to you for requesting statement on the Notice to educate
consents or authorizations may be used a copy. Please make your request for a copy security holders that no personal
to effect the corporate action, and as instructed below on or before [Insert a information other than the identification
complying with all other requirements date] to facilitate timely delivery.’’; or control number is necessary to
of this section. (2) The date, time, and location of the execute a proxy.
(2) If the registrant chooses to provide meeting, or if corporate action is to be (f)(1) Except as provided in paragraph
the proxy statement or annual report to taken by written consent, the earliest (h) of this section, the Notice of Internet
security holders to beneficial owners date on which the corporate action may Availability of Proxy Materials must be
pursuant to this section, it must provide be effected; sent separately from other types of
the record holder or respondent bank (3) A clear and impartial security holder communications and
with all information listed in paragraph identification of each separate matter may not accompany any other
document or materials, including the (i) The registrant must file a form of (1) A soliciting person other than the
form of proxy. the Notice of Internet Availability of registrant is required to provide copies
(2) Notwithstanding paragraph (f)(1) Proxy Materials with the Commission of its proxy materials only to security
of this section, the registrant may pursuant to § 240.14a–6(b) no later than holders to whom it has sent a Notice of
accompany the Notice of Internet the date that the registrant first sends Internet Availability of Proxy Materials;
Availability of Proxy Materials with: the notice to security holders. and
(i) A pre-addressed, postage-paid (j) Obligation to provide copies. (2) A soliciting person other than the
reply card for requesting a copy of the (1) The registrant must send, at no registrant must send its Notice of
proxy materials; and cost to the record holder or respondent Internet Availability of Proxy Materials
(ii) A copy of any notice of security bank and by U.S. first class mail or other by the later of:
holder meeting required under state law reasonably prompt means, a paper copy (i) 40 Calendar days prior to the
if that notice is not combined with the of the proxy statement, information security holder meeting date or, if no
Notice of Internet Availability of Proxy statement, annual report to security meeting is to be held, 40 calendar days
Materials. holders, and form of proxy (to the extent prior to the date the votes, consents, or
(g) Plain English. each of those documents is applicable) authorizations may be used to effect the
(1) To enhance the readability of the to any record holder or respondent bank corporate action; or
Notice of Internet Availability of Proxy requesting such a copy within three (ii) 10 calendar days after the date that
Materials, the registrant must use plain business days after receiving a request the registrant first send its proxy
English principles in the organization, for a paper copy. statement or Notice of Internet
language, and design of the notice. (2) The registrant must send, at no Availability of Proxy Materials to
(2) The registrant must draft the cost to the record holder or respondent security holders.
language in the Notice of Internet bank and via e-mail, an electronic copy (3) Content of the soliciting person’s
Availability of Proxy Materials so that, of the proxy statement, information Notice of Internet Availability of Proxy
at a minimum, it substantially complies statement, annual report to security Materials.
with each of the following plain English holders, and form of proxy (to the extent (i) If, at the time a soliciting person
writing principles: each of those documents is applicable) other than the registrant sends its Notice
(i) Short sentences; to any record holder or respondent bank of Internet Availability of Proxy
(ii) Definite, concrete, everyday requesting such a copy within three Materials, the soliciting person is not
words; business days after receiving a request aware of all matters on the registrant’s
(iii) Active voice; for an electronic copy via e-mail. agenda for the meeting of security
(iv) Tabular presentation or bullet (3) The registrant is required to holders, the soliciting person’s Notice
lists for complex material, whenever provide copies of the proxy materials on Internet Availability of Proxy
possible; pursuant to paragraphs (j)(1) and (j)(2) of Materials must provide a clear and
(v) No legal jargon or highly technical this section for one year after the impartial identification of each separate
business terms; and conclusion of the meeting or corporate matter on the agenda to the extent
(vi) No multiple negatives. action to which the proxy materials known by the soliciting person at that
(3) In designing the Notice of Internet relate. time. The soliciting person’s notice also
Availability of Proxy Materials, the (4) The registrant must maintain must include a clear statement
registrant may include pictures, logos, records of security holder requests to indicating that there may be additional
or similar design elements so long as the receive materials in paper or via e-mail agenda items of which the soliciting
design is not misleading and the for future solicitations and must person is not aware and that the security
required information is clear. continue to provide copies of the holder cannot direct a vote for those
(h) The registrant may, at its materials to a security holder who has items on the soliciting person’s proxy
discretion, choose to furnish some made such a request until the security card provided at that time.
proxy materials pursuant to § 240.14a– holder revokes such request. (ii) If a soliciting person other than
3(a)(1) and other proxy materials (k) Security holder information. the registrant sends a form of proxy not
pursuant to this section, provided that (1) A registrant or its agent shall containing all matters intended to be
the registrant may not send a form of maintain the Internet Web site on which acted upon, the Notice of Internet
proxy to security holders until 10 it posts its proxy materials in a manner Availability of Proxy Materials must
calendar days or more after the date it that does not infringe on the anonymity clearly state whether execution of the
sent the Notice of Internet Availability of a person accessing such Web site. form of proxy will invalidate a security
of Proxy Materials to security holders, (2) The registrant and its agents shall holder’s prior vote on matters not
unless the form of proxy is accompanied not use any e-mail address obtained presented on the form of proxy.
or has been preceded by a copy of the from a security holder solely for the (m) This section shall not apply to a
proxy statement and any annual report purpose of requesting a copy of proxy proxy solicitation in connection with a
to security holders that is required by materials pursuant to paragraph (j) of business combination transaction, as
§ 240.14a–3(b) through the same this section for any purpose other than defined in § 230.165 of this chapter.
delivery medium. If the registrant sends to send a copy of those materials to that (n) This section provides a non-
a form of proxy after the expiration of security holder. The registrant shall not exclusive alternative by which an issuer
such 10-day period and the form of disclose such information to any person or other person may furnish a proxy
proxy is not accompanied or preceded other than an employee or agent to the statement pursuant to § 240.14a–3(a) or
by a copy, via the same medium, of the extent necessary to send a copy of the an annual report to security holders
proxy statement and any annual report proxy materials pursuant to paragraph pursuant to § 240.14a–3(b) to a security
to security holders that is required by (j) of this section. holder. This section does not affect the
§ 240.14a–3(b), then the registrant shall (l) A person other than the registrant availability of any other means by
accompany the form of proxy with a may solicit proxies pursuant to the which an issuer or other person may
Notice of Internet Availability of Proxy conditions imposed on registrants by furnish a proxy statement pursuant to
Materials. this section, provided that: § 240.14a–3(a), or an annual report to
security holders pursuant to § 240.14a– ■ a. Revising paragraphs (b)(2) informs the broker or dealer that it
3(b), to a security holder. including the Note and (c)(2)(i); intends to rely on § 240.14a–16 to
■ 10. Amend § 240.14a–101 by: ■ b. Revising the term ‘‘annual reports’’ furnish proxy materials to beneficial
■ a. Revising the term ‘‘annual report’’ to read ‘‘annual reports to security owners and provides all of the relevant
to read ‘‘annual report on Form 10–K or holders’’ in paragraphs (c)(2)(ii) and information listed in § 240.14a–16(d) to
Form 10–KSB’’ in Instruction 1 to (c)(3); the broker or dealer, the broker or dealer
paragraph (d)(2)(ii)(L) of Item 7; ■ c. Revising the term ‘‘annual report’’ shall:
■ b. Revising the word ‘‘mail’’ to read to read ‘‘annual report to security (1) Prepare and send a Notice of
‘‘send’’ in Instruction 2 to paragraph holders’’ in paragraph (c)(2)(ii); Internet Availability of Proxy Materials
(d)(2)(ii)(L) of Item 7; and ■ d. Revising the word ‘‘mail’’ to read containing the information required in
■ c. Revising Item 23. ‘‘send’’ in paragraph (c)(2)(ii); and paragraph (e) of this section to
The revision reads as follows. ■ e. Adding paragraphs (d) and (e). beneficial owners no later than:
The revisions and additions read as (i) With respect to a registrant, 40
§ 240.14a–101 Schedule 14A. Information follows:
required in proxy statement. calendar days prior to the security
* * * * * § 240.14b–1 Obligation of registered holder meeting date or, if no meeting is
Item 23. Delivery of documents to brokers and dealers in connection with the to be held, 40 calendar days prior to the
security holders sharing an address. If prompt forwarding of certain date the votes, consents, or
one annual report to security holders, communications to beneficial owners. authorizations may be used to effect the
proxy statement, or Notice of Internet (b) * * * corporate action; and
Availability of Proxy Materials is being (2) The broker or dealer shall, upon (ii) With respect to a soliciting person
delivered to two or more security receipt of the proxy, other proxy other than the registrant, the later of:
holders who share an address in soliciting material, information (A) 40 calendar days prior to the
accordance with § 240.14a–3(e)(1), statement, and/or annual report to security holder meeting date or, if no
furnish the following information: security holders from the registrant or meeting is to be held, 40 calendar days
(a) State that only one annual report other soliciting person, forward such prior to the date the votes, consents, or
to security holders, proxy statement, or materials to its customers who are authorizations may be used to effect the
Notice of Internet Availability of Proxy beneficial owners of the registrant’s corporate action; or
Materials, as applicable, is being securities no later than five business (B) 10 calendar days after the date that
delivered to multiple security holders days after receipt of the proxy material, the registrant first sends its proxy
sharing an address unless the registrant information statement or annual report statement or Notice of Internet
has received contrary instructions from to security holders. Availability of Proxy Materials to
one or more of the security holders; Note to Paragraph (b)(2): At the security holders.
(b) Undertake to deliver promptly request of a registrant, or on its own (2) Establish a Web site at which
upon written or oral request a separate initiative so long as the registrant does beneficial owners are able to access the
copy of the annual report to security not object, a broker or dealer may, but broker or dealer’s request for voting
holders, proxy statement, or Notice of is not required to, deliver one annual instructions and, at the broker or
Internet Availability of Proxy Materials, report to security holders, proxy dealer’s option, establish a Web site at
as applicable, to a security holder at a statement, information statement, or which beneficial owners are able to
shared address to which a single copy Notice of Internet Availability of Proxy access the proxy statement and other
of the documents was delivered and Materials to more than one beneficial soliciting materials, provided that such
provide instructions as to how a owner sharing an address if the Web sites are maintained in a manner
security holder can notify the registrant requirements set forth in § 240.14a– consistent with paragraphs (b), (c), and
that the security holder wishes to 3(e)(1) (with respect to annual reports to (k) of § 240.14a–16;
receive a separate copy of an annual security holders, proxy statements, and (3) Upon receipt of a request from the
report to security holders, proxy Notices of Internet Availability of Proxy registrant or other soliciting person,
statement, or Notice of Internet Materials) and § 240.14c–3(c) (with send to security holders specified by the
Availability of Proxy Materials, as respect to annual reports to security registrant or other soliciting person a
applicable; holders, information statements, and copy of the request for voting
(c) Provide the phone number and Notices of Internet Availability of Proxy instructions accompanied by a copy of
mailing address to which a security Materials) applicable to registrants, with the intermediary’s Notice of Internet
holder can direct a notification to the the exception of § 240.14a–3(e)(1)(i)(E), Availability of Proxy Materials 10
registrant that the security holder are satisfied instead by the broker or calendar days or more after the broker
wishes to receive a separate annual dealer. or dealer sends its Notice of Internet
report to security holders, proxy (c) * * * Availability of Proxy Materials pursuant
statement, or Notice of Internet (2) * * * to paragraph (d)(1); and
Availability of Proxy Materials, as (i) Its obligations under paragraphs (4) Upon receipt of a request for a
applicable, in the future; and (b)(2), (b)(3) and (d) of this section if the copy of the materials from a beneficial
(d) Provide instructions how security registrant or other soliciting person, as owner:
holders sharing an address can request applicable, does not provide assurance (i) Request a copy of the soliciting
delivery of a single copy of annual of reimbursement of the broker’s or materials from the registrant or other
reports to security holders, proxy dealer’s reasonable expenses, both soliciting person, in the form requested
statements, or Notices of Internet direct and indirect, incurred in by the beneficial owner, within three
Availability of Proxy Materials if they connection with performing the business days after receiving the
are receiving multiple copies of annual obligations imposed by paragraphs
beneficial owner’s request;

reports to security holders, proxy (b)(2), (b)(3) and (d) of this section; or (ii) Forward a copy of the soliciting
statements, or Notices of Internet * * * * * materials to the beneficial owner, in the
Availability of Proxy Materials. (d) Compliance with § 240.14a–16. If form requested by the beneficial owner,
■ 11. Amend § 240.14b–1 by: a registrant or other soliciting person within three business days after
receiving the materials from the the other proxy soliciting material and/ statement or Notice of Internet
registrant or other soliciting person; and or the annual report to security holders, Availability of Proxy Materials to
(iii) Maintain records of security either: security holders.
holder requests to receive a paper or e- * * * * * (2) Establish a Web site at which
mail copy of the proxy materials in Note to Paragraph (b)(3): At the beneficial owners are able to access the
connection with future proxy request of a registrant, or on its own bank’s request for voting instructions
solicitations and provide copies of the initiative so long as the registrant does and, at the bank’s option, establish a
proxy materials to a security holder who not object, a bank may, but is not Web site at which beneficial owners are
has made such a request for all required to, deliver one annual report to able to access the proxy statement and
securities held in the account of that security holders, proxy statement, other soliciting materials, provided that
security holder until the security holder information statement, or Notice of such Web sites are maintained in a
revokes such request. Internet Availability of Proxy Materials manner consistent with paragraphs (b),
(e) Content of Notice of Internet to more than one beneficial owner (c), and (k) of § 240.14a–16;
Availability of Proxy Materials. The sharing an address if the requirements (3) Upon receipt of a request from the
broker or dealer’s Notice of Internet set forth in § 240.14a–3(e)(1) (with registrant or other soliciting person,
Availability of Proxy Materials shall: respect to annual reports to security send to security holders specified by the
(1) Include all information, as it holders, proxy statements, and Notices registrant or other soliciting person a
relates to beneficial owners, required in of Internet Availability of Proxy copy of the request for voting
a registrant’s Notice of Internet Materials) and § 240.14c–3(c) (with instructions accompanied by a copy of
Availability of Proxy Materials under respect to annual reports to security the intermediary’s Notice of Internet
§ 240.14a–16(d), provided that the holders, information statements, and Availability of Proxy Materials 10 days
broker or dealer shall provide its own, Notices of Internet Availability of Proxy or more after the bank sends its Notice
or its agent’s, toll-free telephone Materials) applicable to registrants, with of Internet Availability of Proxy
number, an e-mail address, and an the exception of § 240.14a–3(e)(1)(i)(E), Materials pursuant to paragraph (d)(1);
Internet Web site to service requests for are satisfied instead by the bank. and
copies from beneficial owners; * * * * * (4) Upon receipt of a request for a
(2) Include a brief description, if (c) * * * copy of the materials from a beneficial
applicable, of the rules that permit the (2) * * * owner:
broker or dealer to vote the securities if (i) Its obligations under paragraphs (i) Request a copy of the soliciting
the beneficial owner does not return his (b)(2), (b)(3), (b)(4) and (d) of this materials from the registrant or other
or her voting instructions; and section if the registrant or other soliciting person, in the form requested
(3) Otherwise be prepared and sent in soliciting person, as applicable, does not by the beneficial owner, within three
a manner consistent with paragraphs (e), provide assurance of reimbursement of business days after receiving the
(f), and (g) of § 240.14a–16. its reasonable expenses, both direct and beneficial owner’s request;
■ 12. Amend § 240.14b–2 by: indirect, incurred in connection with (ii) Forward a copy of the soliciting
■ a. Revising the introductory text of performing the obligations imposed by materials to the beneficial owner, in the
paragraph (b)(3), the Note to paragraph paragraphs (b)(2), (b)(3), (b)(4) and (d) of form requested by the beneficial owner,
(b)(3), and paragraph (c)(2)(i); this section; or within three business days after
■ b. Revising the term ‘‘annual reports’’ * * * * * receiving the materials from the
to read ‘‘annual reports to security (d) Compliance with § 240.14a–16. If registrant or other soliciting person; and
holders’’ in paragraph (c)(2)(ii) and a registrant or other soliciting person (iii) Maintain records of security
(c)(4); informs the bank that it intends to rely holder requests to receive a paper or e-
■ c. Revising the term ‘‘annual report’’ on § 240.14a–16 to furnish proxy mail copy of the proxy materials in
to read ‘‘annual report to security materials to beneficial owners and connection with future proxy
holders’’ in paragraph (c)(2)(ii); provides all of the relevant information solicitations and provide copies of the
■ d. Revising the word ‘‘mail’’ to read listed in § 240.14a–16(d) to the bank, the proxy materials to a security holder who
‘‘send’’ in paragraph (c)(2)(ii); and bank shall: has made such a request for all
■ e. Adding paragraphs (d) and (e). (1) Prepare and send a Notice of securities held in the account of that
The additions and revisions read as Internet Availability of Proxy Materials security holder until the security holder
follows: containing the information required in revokes such request.
paragraph (e) of this section to (e) Content of Notice of Internet
§ 240.14b–2 Obligation of banks, beneficial owners no later than:
associations and other entities that Availability of Proxy Materials. The
(i) With respect to a registrant, 40 bank’s Notice of Internet Availability of
exercise fiduciary powers in connection calendar days prior to the security
with the prompt forwarding of certain Proxy Materials shall:
holder meeting date or, if no meeting is
communications to beneficial owners. (1) Include all information, as it
to be held, 40 calendar days prior to the
* * * * * relates to beneficial owners, required in
date the votes, consents, or
(b) * * * a registrant’s Notice of Internet
authorizations may be used to effect the
(3) Upon receipt of the proxy, other Availability of Proxy Materials under
corporate action; and
proxy soliciting material, information (ii) With respect to a soliciting person § 240.14a–16(d), provided that the bank
statement, and/or annual report to other than the registrant, the later of: shall provide its own, or its agent’s, toll-
security holders from the registrant or (A) 40 calendar days prior to the free telephone number, e-mail address,
other soliciting person, the bank shall security holder meeting date or, if no and Internet Web site to service requests
forward such materials to each meeting is to be held, 40 calendar days for copies from beneficial owners; and
(2) Otherwise be prepared and sent in
beneficial owner on whose behalf it prior to the date the votes, consents, or
holds securities, no later than five authorizations may be used to effect the a manner consistent with paragraphs (e),
business days after the date it receives corporate action; or (f), and (g) of § 240.14a–16.
such material and, where a proxy is (B) 10 calendar days after the date that ■ 13. Amend § 240.14c–2 by:
solicited, the bank shall forward, with the registrant first sends its proxy ■ a. Revising paragraph (a); and
■ b. Adding paragraph (d). paragraph (d) does not affect the paragraph (a)(3) of this section, pay its
The revision and addition read as availability of any other means by reasonable expenses for completing the
follows: which a registrant may transmit an sending of such material to beneficial
information statement pursuant to owners.
§ 240.14c–2 Distribution of information
statement.
paragraph (a) of this section to a security * * * * *
holder.
(a)(1) In connection with every annual ■ 17. Amend § 240.14c–101 by:
or other meeting of the holders of the ■ 14. Amend § 240.14c–3 by:
■ a. Revising the word ‘‘mailing’’ to read
class of securities registered pursuant to ■ a. Removing the authority citation
‘‘sending’’ in Item 4, Instruction 1; and
section 12 of the Act or of a class of following this section;
■ b. Revising Item 5.
securities issued by an investment ■ b. Revising paragraphs (a)(1) and (c);
and The revision reads as follows.
company registered under the
Investment Company Act of 1940 that ■ c. Adding paragraph (d). § 240.14c–101 Schedule 14C. Information
has made a public offering of securities, The revisions and addition read as required in information statement.
including the taking of corporate action follows: * * * * *
by the written authorization or consent § 240.14c–3 Annual report to be furnished Item 5. Delivery of documents to
of security holders, the registrant shall security holders. security holders sharing an address. If
transmit to every security holder of the (a) * * * one annual report to security holders,
class that is entitled to vote or give an (1) The annual report to security information statement, or Notice of
authorization or consent in regard to holders shall contain the information Internet Availability of Proxy Materials
any matter to be acted upon and from specified in paragraphs (b)(1) through is being delivered to two or more
whom proxy authorization or consent is (b)(11) of § 240.14a–3. security holders who share an address,
not solicited on behalf of the registrant furnish the following information in
pursuant to section 14(a) of the Act: * * * * *
(c) A registrant will be considered to accordance with § 240.14a–3(e)(1):
(i) A written information statement (a) State that only one annual report
containing the information specified in have delivered a Notice of Internet
Availability of Proxy Materials, annual to security holders, information
Schedule 14C (§ 240.14c–101); statement, or Notice of Internet
(ii) A publicly-filed information report to security holders or information
statement to security holders of record Availability of Proxy Materials, as
statement, in the form and manner
who share an address if the applicable, is being delivered to
described in § 240.14c–3(d), containing
requirements set forth in § 240.14a– multiple security holders sharing an
the information specified in Schedule
3(e)(1) are satisfied with respect to the address unless the registrant has
14C (§ 240.14c–101); or
Notice of Internet Availability of Proxy received contrary instructions from one
(iii) A written information statement
Materials, annual report to security or more of the security holders;
included in a registration statement
filed under the Securities Act of 1933 on holders or information statement, as (b) Undertake to deliver promptly
Form S–4 or F–4 (§ 239.25 or § 239.34 of applicable. upon written or oral request a separate
this chapter) or Form N–14 (§ 239.23 of (d) A registrant may furnish an annual copy of the annual report to security
this chapter) and containing the report to security holders pursuant to holders, information statement, or
information specified in such Form. paragraph (a) of this section by Notice of Internet Availability of Proxy
(2) Notwithstanding paragraph (a)(1) satisfying the requirements set forth in Materials, as applicable, to a security
of this section: § 240.14a–16. This paragraph (d) holder at a shared address to which a
(i) In the case of a class of securities provides a non-exclusive alternative by single copy of the documents was
in unregistered or bearer form, such which a registrant may furnish an delivered and provide instructions as to
statements need to be transmitted only annual report pursuant to paragraph (a) how a security holder can notify the
to those security holders whose names of this section to a security holder. This registrant that the security holder
are known to the registrant; and paragraph (d) does not affect the wishes to receive a separate copy of an
(ii) No such statements need to be availability of any other means by annual report to security holders,
transmitted to a security holder if a which a registrant may furnish an information statement, or Notice of
registrant would be excused from annual report pursuant to paragraph (a) Internet Availability of Proxy Materials,
delivery of an annual report to security of this section to a security holder. as applicable;
holders or a proxy statement under ■ 15. Amend § 240.14c–5 by revising (c) Provide the phone number and
§ 240.14a–3(e)(2) if such section were the word ‘‘mailed’’ to read ‘‘sent’’ in the mailing address to which a security
applicable. second sentence of the introductory text holder can direct a notification to the
* * * * * of paragraph (a). registrant that the security holder
(d) A registrant may transmit an ■ 16. Amend § 240.14c–7 by revising
wishes to receive a separate annual
information statement to security paragraph (a)(5) before the Note and the report to security holders, information
holders pursuant to paragraph (a) of this word ‘‘mail’’ to read ‘‘send’’ in Note 2 statement, or Notice of Internet
section by satisfying the requirements following paragraph (a). Availability of Proxy Materials, as
set forth in § 240.14a–16; provided, The revision reads as follows: applicable, in the future; and
however, that the registrant may revise (d) Provide instructions how security
the information required in the Notice § 240.14c–7 Providing copies of material holders sharing an address can request
of Internet Availability of Proxy for certain beneficial owners. delivery of a single copy of annual
Materials to reflect the fact that the (a) * * * reports to security holders, information
registrant is not soliciting proxies for the (5) Upon the request of any record statements, or Notices of Internet
meeting. This paragraph (d) provides a holder or respondent bank that is Availability of Proxy Materials if they
non-exclusive alternative by which a supplied with Notices of Internet are receiving multiple copies of annual
registrant may transmit an information Availability of Proxy Materials, reports to security holders, information
statement pursuant to paragraph (a) of information statements and/or annual statements, or Notices of Internet
this section to a security holder. This reports to security holders pursuant to Availability of Proxy Materials.
PART 249—FORMS, SECURITIES any other participant (as defined in (§ 240.14a–101)) terminating any
EXCHANGE ACT OF 1934 Instruction 3 to Item 4 of Schedule 14A solicitation subject to § 240.14a–12(c),
(§ 240.14a–101)) terminating any including the cost or anticipated cost to
■ 18. The general authority citation for solicitation subject to § 240.14a-12(c), the registrant.
part 249 is revised to read as follows: including the cost or anticipated cost to * * * * *
Authority: 15 U.S.C. 78a et seq., 7202, the registrant.
7233, 7241, 7262, 7264, and 7265; and 18 * * * * * PART 274—FORMS PRESCRIBED
U.S.C. 1350, unless otherwise noted. ■ 21. Amend Item 4 to Part I of Form UNDER THE INVESTMENT COMPANY
* * * * * 10–K (referenced in § 249.310) by ACT OF 1940
■ 19. Amend Item 4 to ‘‘Part II—Other revising paragraph (d) to read as
Information’’ of Form 10–Q (referenced follows: ■ 23. The authority citation for part 274
in § 249.308a) by revising paragraph (d) continues to read, in part, as follows:
Note: The text of Form 10–K does not, and
to read as follows: this amendment will not, appear in the Code Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s,
Note: The text of Form 10–Q does not, and of Federal Regulations. 78c(b), 78l, 78m, 78n, 78o(d), 80a–8, 80a–24,
this amendment will not, appear in the Code 80a–26, and 80a–29, unless otherwise noted.
Form 10–K
of Federal Regulations. * * * * *
* * * * *
Form 10–Q Part I ■ 24. Amend Sub-Item 77C to
* * * * * * * * * * ‘‘Instructions to Specific Items’’ of Form
Part II—Other Information Item 4. Submission of Matters to a Vote N–SAR (referenced in §§ 249.330 and
* * * * * of Security Holders. 274.101) by revising paragraph (d) to
Item 4. Submission of Matters to a Vote * * * * * read as follows:
of Security Holders. (d) A description of the terms of any Note: The text of Form N–SAR does not,
* * * * * settlement between the registrant and and this amendment will not, appear in the
(d) A description of the terms of any any other participant (as defined in Code of Federal Regulations.
settlement between the registrant and Instruction 3 to Item 4 of Schedule 14A
any other participant (as defined in (§ 240.14a–101)) terminating any Form N–SAR
Instruction 3 to Item 4 of Schedule 14A solicitation subject to § 240.14a–12(c), * * * * *
(§ 240.14a–101)) terminating any including the cost or anticipated cost to Instructions to Specific Items
solicitation subject to § 240.14a–12(c), the registrant. * * * * *
including the cost or anticipated cost to * * * * *
the registrant. SUB–ITEM 77C: Submission of matters
■ 22. Amend Item 4 to Part I of Form to a vote of security holders
* * * * * 10–KSB (referenced in § 249.310b) by
* * * * *
■ 20. Amend Item 4 to ‘‘Part II—Other revising paragraph (d) to read as
Information’’ of Form 10–QSB follows: (d) Describe the terms of any
(referenced in § 249.308b) by revising settlement between the registrant and
Note: The text of Form 10–KSB does not,
paragraph (d) to read as follows: and this amendment will not, appear in the
any other participant (as defined in
Code of Federal Regulations. Instruction 3 to Item 4 of Schedule 14A
Note: The text of Form 10–QSB does not,
and this amendment will not, appear in the
(§ 240.14a–101)) terminating any
Form 10–KSB solicitation subject to § 240.14a–12(c),
Code of Federal Regulations.
* * * * * including the cost or anticipated cost to
Form 10–QSB Part I the registrant.
* * * * * * * * * * * * * * *
Part II—Other Information Item 4. Submission of Matters to a Vote
of Security Holders. Dated: January 22, 2007.
* * * * *
Item 4. Submission of Matters to a Vote By the Commission.
* * * * *
of Security Holders. (d) A description of the terms of any Nancy M. Morris,
* * * * * settlement between the registrant and Secretary.
(d) A description of the terms of any any other participant (as defined in [FR Doc. 07–327 Filed 1–26–07; 8:45 am]
settlement between the registrant and Instruction 3 to Item 4 of Schedule 14A BILLING CODE 8011–01–P

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Monday,

January 29, 2007

comment form (http://www.sec.gov/

rules/final.shtml); or 18 17 CFR 249.308a. On December 8, 2005, we proposed

31 See, for example, letters from BRT, Committee

92 See Rule 14a–3(b)(10) [17 CFR 240.14a–

person could choose to send the Notice possibility of an electronic-only solicitation in

128 15U.S.C. 78n(c). only option that we discussed in the proposing

FR 61408]. estimates associated with the Notice, the collection

will be substantially reduced. Third, about/stats.html stating that ADP handled

time. 178 15 U.S.C. 80a–2(c). (Dec. 8, 2005) [70 FR 74597].

Financial and Operational Combined Uniform

beneficial owner’s request;

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