SEC Votes to Adopt E-Proxy Rule Amendments and Propose Mandatory Model

December 13, 2006

At its open meeting on December 13, 2006, the Securities and Exchange Commission adopted amendments to its proxy rules to permit Internet delivery of proxy materials following a “notice and access” model. The compliance date for the amendments is July 1, 2007, and companies and other persons may not use the amendments prior to that date. Therefore most companies will not be able to use Internet delivery for the 2007 proxy season.

A company may use the Internet to satisfy its obligation to furnish its proxy materials (generally its proxy statement and annual report) to shareholders if it satisfies certain conditions including the following:

  • It posts those proxy materials on an Internet website; and

  • It provides a notice in plain English at least 40 days before the meeting in question providing certain information about the meeting, specifying the website address where its proxy materials may be accessed and providing a toll free number and email address where shareholders may request paper copies of the materials.

In a change from the proposal, a proxy card may not accompany the original notice of Internet delivery. However, a proxy card may be delivered ten days after delivery of the notice if accompanied by a second copy of the notice. In another change, a shareholder may express a permanent preference for paper delivery.

For shareholders holding through brokers, banks or similar intermediaries, companies could furnish proxy materials as described above, and the notice and paper delivery arrangements would be provided through the intermediaries.

Persons other than issuers soliciting proxies could also avail themselves of Internet delivery of proxy materials to shareholders whom they elect to solicit, subject also to the ability of solicited shareholders to request paper delivery.

The Commission also proposed rules that would make Internet delivery of proxy materials mandatory for companies and other soliciting persons. Comments on the proposal will be due 60 days after publication of the proposal in the Federal Register.

The SEC’s press release describing the proposal can be viewed at the following link:

If you have any questions, please feel free to call any of your regular contacts at the firm or any of our partners and counsel listed under Corporate Governance, Capital Markets or Mergers, Acquisitions and Joint Ventures in the “Our Practice” section of our web site.