New SEC Rules Applicable to “Electronic
The SEC’s new rules intended to promote the use of “Electronic
Shareholder Forums,” announced in this afternoon’s
press release copied below, are expected to eliminate some of the
regulatory compliance questions commonly raised by people who are unfamiliar
with our programs, and should also encourage others to experiment more
widely with different variations of forum processes.
Based on what’s reported in the press release, it appears likely
that the new rules will be a more explicit reflection of the same SEC staff
views that have guided the development of our forum practices over the past
eight years. We will of course review the final rules carefully as soon as
they’re published, and consider further refinements of our “Conditions of
Participation” to make the process as effective as possible for its
participants. But the amendments summarized in the press release seem to
simply support our existing Conditions. For example, referring to the most
Verizon Forum’s posted
Conditions of Participation, its paragraphs 3-5 provide for essentially
the same assurances of independence relating to responsibility for
communications by other forum participants and, particularly, for proxy
solicitations, that will now be addressed specifically for electronic
communications in the SEC’s new rules.
Please let me know if you have any questions or comments on how
the new SEC rules may relate to our Forum programs.
GL – 11/28/07
Lutin & Company
575 Madison Avenue, 10th Floor
New York, New York 10022
SEC Adopts Proxy Rule Amendments Encouraging Electronic Shareholder
FOR IMMEDIATE RELEASE
D.C., Nov. 28, 2007
- The Securities and Exchange Commission voted today to adopt
amendments to the federal proxy rules under the Securities Exchange
Act of 1934 to facilitate the use of electronic shareholder forums.
The amendments are expected to open up new avenues for real-time
communications among shareholders, and between shareholders and the
companies they own.
"Today's action is intended to tap the potential of technology to help
shareholders communicate with one another and express their concerns
to companies in ways that could be more effective and less expensive,"
said SEC Chairman Christopher Cox. "The rule amendments are intended
to remove legal concerns, such as the risk that discussion in an
online forum might be viewed as a proxy solicitation, that might deter
shareholders and companies from using this new technology."
"I think the Commission demonstrated again today that it welcomes the
opportunity to remove barriers that may exist for investors and
companies to communicate with each other," said John White, the
Director of the Division of Corporation Finance. "This new proxy rule
exemption should help facilitate another venue for interested
investors to share thoughts and ideas with company management and
Specifically, the amendments will clarify that participation in an
electronic shareholder forum, which could potentially constitute a
solicitation subject to the current proxy rules, will be exempt from
most of the proxy rules if the conditions to the exemption are
satisfied. In summary:
participant in an electronic shareholder forum will be able to rely
on the new exemption so long as his or her communications occur more
than 60 days prior to the date announced by the company for its
annual or special meeting of shareholders, and the communicating
party does not solicit proxy authority while relying on the
exemption. A participant in an electronic shareholder forum will be
eligible to solicit proxy authority after the date that the
exemption is no longer available, provided that the solicitation is
conducted in accordance with Regulation 14A.
company announces a meeting of shareholders less than 60 days before
the meeting date, the solicitation could not occur more than two
days following the company's announcement.
In addition, the amendments provide that a shareholder, company, or
third party acting on behalf of a shareholder or a company, that
establishes, maintains or operates an electronic shareholder forum
will not be liable under the federal securities laws for any statement
or information provided by another person participating in the forum.
The rule amendments will take effect 30 days after they are published
in the Federal Register.
* * *
The full text of the detailed release concerning the rule amendment
will be posted to the SEC Web site as soon as possible.
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