The SEC updated Compliance and Disclosure Interpretations ("C&DIs") guidance related to proxy rules and Schedules 14A/C.

The C&DIs clarified, among other substantive changes caused by the revised interpretations, that:

  • when an action "is to be taken with respect to the election of directors" and the "persons solicited have cumulative voting rights," a soliciting party can cumulate votes among director nominees by indicating this "in bold-faced type on the proxy card" so long as state law permits;
  • a registrant that has received notice of a non-Rule 14a-8 matter is not exempt from the requirement to file proxy materials in a preliminary form if it "cannot properly exercise discretionary authority . . . in accordance with Rule 14a-4(c)(2)";
  • a registrant is not required to "file a preliminary proxy statement in connection with a proposed corporate name change to be submitted for security holder approval at the annual meeting";
  • if "raising proceeds through the sale of common stock is not an integral part of an acquisition transaction," then "the proposal to authorize additional common stock" would not involve "the acquisition for purposes of Note A of Schedule 14A";
  • a filing of a Schedule 13D may constitute widespread solicitation and negate one's ability to rely on Rule 14a-2(b)(2), depending on the circumstances;

  • notice of a non-Rule 14a-8 matter to be presented to a vote is considered untimely based on the registrant's advance notice provision or, if absent, the 45-day standard of Rule 14a-4(c)(1). If untimely, a registrant can exclude the matter from its proxy statement while preserving discretionary authority as long as it includes a statement regarding how it intends to exercise its discretion;

  • to determine when notice of a matter is received in a timely manner (under Rule 14a-4(c)(1)) and whether the registrant has discretionary authority under Rule 14a-4(c)(1), a registrant that has advance notice bylaws "must rely on the deadline for submission of non-Rule 14a-8 matters prescribed in its advance notice provision" rather than the 45-day deadline specified in Rule 14a-4(c)(1); and
  • when a proxy statement is filed in connection with a merger for the sole purpose of changing the registrant's domicile from one state to another, the financial statements under Item 13 of Schedule 14A are not necessary.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.