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U.S. Securities and Exchange Commission

SEC Adopts Proxy Rule Amendments Encouraging Electronic Shareholder Forums


Washington, 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 among themselves."

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:

  • Any 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.
  • Where the 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.

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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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Modified: 11/28/2007