Speech by SEC Staff:
Division Statement Before the Commission Open Meeting Regarding Electronic Shareholder Forums
Senior Special Counsel to the Director
Division of Corporation Finance
U.S. Securities and Exchange Commission
November 28, 2007
Good morning. Today we are recommending that the Commission adopt amendments to the proxy rules under the Securities Exchange Act of 1934 to facilitate the use of electronic shareholder forums. These amendments would clarify that participation in an electronic shareholder forum by a shareholder, company, or third party acting on behalf of a shareholder or company, that could potentially constitute a solicitation subject to the proxy rules, is exempt from most of the proxy rules if the shareholder, company, or third party acting on behalf of a shareholder or company satisfies all of the conditions to the exemption.
More specifically, under the new exemption, a solicitation in an electronic shareholder forum, by or on behalf of a person who does not seek proxy authority and does not furnish or otherwise request, or act on behalf of a person who furnishes or requests, a form of revocation, abstention, consent, or authorization, would be exempt from most of the proxy rules so long as it occurs more than 60 days prior to the date announced by the company for its annual or special meeting of shareholders. Or, if the company announces the meeting less than 60 days before the meeting date, the solicitation does not occur more than two days following the company's announcement.
The new rules would make clear that a person who participates in an electronic shareholder forum and makes solicitations in reliance on the exemption we are recommending that the Commission adopt would continue to be eligible to solicit proxies outside of the new exemption, provided that any such solicitation complied with Regulation 14A.
In addition, the recommended amendments provide that a shareholder, company, or third party acting on behalf of a shareholder or company that establishes, maintains or operates an electronic shareholder forum would not be liable under the federal securities laws for any statement or information provided by another person participating in the forum. These recommended amendments are intended to remove legal ambiguity that might deter shareholders and companies from exploring this mode of communication.
The rule amendments would take effect 30 days after publication in the Federal Register.
Thank you. We would be happy to answer any questions that you have on the release.