Delivery of Proxy and Information Statements to Households
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Federal Register › Vol. 64 › 64 FR 62548
Text
Proposed Rules
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 230 and 240
[Release Nos. 33-7767, 34-42102, IC-24124; File No. S7-26-99]
RIN 3235-AH66
Delivery of Proxy and Information Statements to Households
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rule.
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SUMMARY: The Commission is proposing for public comment amendments to
the proxy rules under the Securities Exchange Act of 1934. The proposed
amendments would permit companies and other persons to satisfy the
proxy and information statement delivery requirements, with respect to
two or more shareholders sharing the same address, by sending or
forwarding a single proxy or information statement to these
shareholders (``householding''). The proposed amendments are intended
to reduce the amount of duplicative information that shareholders
receive, and to lower printing and mailing costs to registrants that
ultimately are borne by the shareholders. In a separate release, the
Commission is adopting similar amendments to Commission rules that
govern the delivery of annual and (in the case of investment companies)
semiannual reports and new Rule 154 under the Securities Act of 1933
that permits issuers and broker-dealers to household prospectuses. This
release proposes changes to Rule 154 and to the annual report
requirements.
DATES: Comments must be received on or before January 18, 2000.
milar amendments to Commission rules that
govern the delivery of annual and (in the case of investment companies)
semiannual reports and new Rule 154 under the Securities Act of 1933
that permits issuers and broker-dealers to household prospectuses. This
release proposes changes to Rule 154 and to the annual report
requirements.
DATES: Comments must be received on or before January 18, 2000.
ADDRESSES: Comments should be submitted in triplicate to Jonathan G.
Katz, Secretary, Securities and Exchange Commission, 450 5th Street,
NW, Washington, DC 20549-0609. Comments also may be submitted
electronically at the following E-mail address: [email protected].
All comment letters should refer to File No. S7-26-99; this file number
should be included on the subject line if E-mail is used. Comment
letters will be available for public inspection and copying in the
Commission's Public Reference Room, 450 5th Street, NW, Washington, DC
20549. Electronically submitted comment letters also will be posted on
the Commission's Internet web site (http://www.sec.gov).
FOR FURTHER INFORMATION CONTACT: Elizabeth M. Murphy, Special Counsel,
at (202) 942-2900, Office of Chief Counsel, Division of Corporation
Finance, Securities and Exchange Commission, 450 5th Street, NW,
Washington, DC 20549.
SUPPLEMENTARY INFORMATION: The Commission today proposes amendments to
Rule 154 \1\ under the Securities Act of 1933 (the ``Securities Act'')
\2\ and Rules 14a-2,\3\ 14a-3,\4\ 14a-7,\5\ 14b-1,\6\ 14b-2,\7\ and
14c-3 \8\ under the Securities Exchange Act of 1934 (the ``Exchange
Act'').\9\
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\1\ 17 CFR 230.154.
\2\ 15 U.S.C. 77.
\3\ 17 CFR 240.14a-2.
\4\ 17 CFR 240.14a-3.
\5\ 17 CFR 240.14a-7.
\6\ 17 CFR 240.14b-1.
\7\ 17 CFR 240.14b-2.
\8\ 17 CFR 240.14c-3.
\9\ 15 U.S.C. 78a.
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I. Introduction
1934 (the ``Exchange
Act'').\9\
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\1\ 17 CFR 230.154.
\2\ 15 U.S.C. 77.
\3\ 17 CFR 240.14a-2.
\4\ 17 CFR 240.14a-3.
\5\ 17 CFR 240.14a-7.
\6\ 17 CFR 240.14b-1.
\7\ 17 CFR 240.14b-2.
\8\ 17 CFR 240.14c-3.
\9\ 15 U.S.C. 78a.
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I. Introduction
The Commission proposes amendments to the proxy rules to reduce the
amount of duplicative information shareholders receive. The proposal
was prompted by amendments the Commission is adopting today in a
Companion Release.\10\ In the Companion Release, the Commission is
adopting new Securities Act Rule 154 to enable issuers and broker-
dealers to satisfy prospectus delivery requirements for two or more
investors sharing the same address by sending a single prospectus.\11\
The Commission also is adopting similar amendments to the proxy rules
under the Exchange Act that govern the delivery of annual reports to
shareholders, and to the rules under the Investment Company Act that
govern the delivery of semiannual reports to investment company
investors.\12\
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\10\ Release No. 33-7766 (Nov. 4, 1999).
\11\ Rule 154 also applies to prospectus supplements.
\12\ Revised Rules 30d-1 [17 CFR 270.30d-1], 30d-2 [17 CFR
270.30d-2], 14a-3 and 14c-3.
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of semiannual reports to investment company
investors.\12\
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\10\ Release No. 33-7766 (Nov. 4, 1999).
\11\ Rule 154 also applies to prospectus supplements.
\12\ Revised Rules 30d-1 [17 CFR 270.30d-1], 30d-2 [17 CFR
270.30d-2], 14a-3 and 14c-3.
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The purpose of the amendments to the proxy rules adopted today is
to conform the provisions regarding the householding of annual reports
by companies to the amendments that permit the householding of
prospectuses and investment company semiannual reports. Companies are
required to send an annual report to security holders in connection
with the delivery of a proxy or information statement when directors
are being elected.\13\ For many years, the proxy rules have included
provisions stating that companies do not have to send an annual report
to a shareholder of record having the same address as another
shareholder of record to whom a report is sent if the shareholder
provides written consent.
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\13\ Rule 14a-3(a) [17 CFR 240.14a-3(a)].
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With respect to prospectuses and annual reports, the Commission
originally proposed to limit householding without written consent to
situations in which shareholders had opened their accounts before the
effective date of the new rules.\14\ Several commenters asserted that
the proposed distinction between shareholders who must give written
consent to householding and those who need not would be costly and
burdensome to administer. They also stated that the distinction could
confuse shareholders.
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ir accounts before the
effective date of the new rules.\14\ Several commenters asserted that
the proposed distinction between shareholders who must give written
consent to householding and those who need not would be costly and
burdensome to administer. They also stated that the distinction could
confuse shareholders.
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\14\ Release No. 33-7475 (``Proposing Release'') (Nov. 13, 1997)
[62 FR 61933]. The Commission proposed to allow householding to
existing shareholders as of the effective date of the new rules
without written consent, due to a concern that many shareholders,
while not objecting to householding, would fail to respond to
requests for consent.
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Under the amendments the Commission is adopting today, the rules no
longer require companies to get written consent from shareholders to
householding of prospectuses, annual reports and semiannual reports if:
(1) The document is delivered to members of the same family with the
same last name sharing a common home address or post office box; (2)
shareholders are given advance notice of householding; and (3)
shareholders do not object to householding.
The Commission did not propose to permit householding of proxy and
information statements when it proposed the householding provisions
adopted today. Several commenters on the proposed amendments suggested
that the Commission consider further revisions to permit the
householding of proxy materials. Many of these commenters noted that
householding would facilitate companies' common practice of mailing the
annual report together with the proxy or information statement
ion statements when it proposed the householding provisions
adopted today. Several commenters on the proposed amendments suggested
that the Commission consider further revisions to permit the
householding of proxy materials. Many of these commenters noted that
householding would facilitate companies' common practice of mailing the
annual report together with the proxy or information statement. A few
commenters further suggested that the Commission extend the proposed
householding provisions expressly to permit broker-dealers and banks
\15\ (``intermediaries'') to household delivery of annual reports and
proxy and information statements to beneficial owners of equity
securities registered pursuant to Section 12 of the Exchange Act.\16\
The proxy rules currently do not include provisions that
permit intermediaries to household documents.
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\15\ Rule 14b-2(a)(1) [17 CFR 240.14b-2(a)(1)] defines the term
``bank'' as a bank, association, or other entity that exercises
fiduciary powers.
\16\ The proxy rules apply only to companies with equity
securities registered under Section 12 of the Exchange Act and to
investment companies registered under the Investment Company Act of
1940 (``Investment Company Act'') [15 U.S.C. 80a] [17 CFR 270.20a-
1].
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In light of the commentary on the Proposing Release, the Commission
proposes in this release to amend the proxy rules further to permit the
householding of proxy and information statements by companies.\17\ The
Commission also proposes, for the first time, to add provisions to the
proxy rules to permit intermediaries to household proxy and information
statements, as well as annual reports, to beneficial shareholders.
However, multiple proxy cards or voting instruction forms--one for each
shareholder residing at a shared address--would have to be delivered
with proxy statements that are householded
Commission also proposes, for the first time, to add provisions to the
proxy rules to permit intermediaries to household proxy and information
statements, as well as annual reports, to beneficial shareholders.
However, multiple proxy cards or voting instruction forms--one for each
shareholder residing at a shared address--would have to be delivered
with proxy statements that are householded. Rule 154, as adopted, does
not permit the householding of combination proxy statement-prospectuses
delivered for business combinations, exchange offers, or
reclassifications of securities registered on Forms N-14, S-4 and F-
4.\18\ Accordingly, the Commission now is proposing to amend Rule 154
to permit the householding of proxy statements combined with
prospectuses, as discussed more fully below.
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\17\ References to ``companies'' throughout this release include
investment companies. Funds are not required to comply with the Rule
14a-3(b) annual report requirement because they file shareholder
reports under Section 30(d) of the Investment Company Act. Item 22
of Exchange Act Schedule 14A [17 CFR 240.14a-101] consolidates fund-
specific proxy disclosure requirements, and requires that, unless
the proxy statement is accompanied by a copy of the fund's most
recent annual report, the proxy statement must state prominently
that the fund will furnish without charge a copy of the annual
report and the most recent semi-annual report succeeding the annual
report, if any, to a shareholder upon request.
\18\ See 17 CFR 239.23, .25, .34.
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II. Discussion--Delivery of Proxy and Information Statements to a
Household
A. Purpose of the Proposed Amendments
e fund will furnish without charge a copy of the annual
report and the most recent semi-annual report succeeding the annual
report, if any, to a shareholder upon request.
\18\ See 17 CFR 239.23, .25, .34.
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II. Discussion--Delivery of Proxy and Information Statements to a
Household
A. Purpose of the Proposed Amendments
The Commission is proposing amendments to Exchange Act Rules 14a-3,
14b-1, 14b-2 and 14c-3 to permit companies and intermediaries to
satisfy their respective proxy and information statement delivery
requirements by sending a single copy of the proxy or information
statement to two or more shareholders \19\ residing at the same
address. Companies, intermediaries and shareholders have complained to
the Commission in the past that the distribution of multiple copies of
the same document to shareholders who share the same address often
inundates shareholders with unwanted mail and causes companies to incur
higher printing and mailing costs. The purpose of the proposed
amendments is to allow companies and intermediaries to household proxy
and information statements to both record and beneficial shareholders
in the same manner that, upon effectiveness of the Companion Release,
will be permissible for prospectuses and annual reports to security
holders.
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ts. The purpose of the proposed
amendments is to allow companies and intermediaries to household proxy
and information statements to both record and beneficial shareholders
in the same manner that, upon effectiveness of the Companion Release,
will be permissible for prospectuses and annual reports to security
holders.
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\19\ Companies are permitted to household annual reports and
proxy or information statements to a single shareholder holding the
same securities in two or more accounts with the same address
without having to comply with the householding provisions that have
been adopted (with respect to annual reports) or that are being
proposed (with respect to proxy and information statements). This
also is true when a shareholder is acting as custodian for
securities: (1) In an account created under a state Uniform Gilfts
to Minors Act (``UGMA'') or Uniform Transfers to Minors Act
(``UTMA'') and the shareholder also holds the same security in his
or her own account, with the same address; or (2) in two or more
accounts created under a state UGMA or UTMA. The Companion Release
states similarly that the delivery of a single prospectus or
shareholder report under these circumstances meets the prospectus
delivery requirements of the Securities Act. See Companion Release,
supra note 10, at n.6.
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B. Proposed Householding of Proxy and Information Statements by
Companies to Record Holders
Release
states similarly that the delivery of a single prospectus or
shareholder report under these circumstances meets the prospectus
delivery requirements of the Securities Act. See Companion Release,
supra note 10, at n.6.
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B. Proposed Householding of Proxy and Information Statements by
Companies to Record Holders
Exchange Act Rule 14a-3 requires companies to furnish their
shareholders with a proxy statement before soliciting proxy voting
authority from the shareholders with respect to a matter submitted to a
shareholder vote.\20\ If the solicitation relates to an annual meeting
(or special meeting in lieu of the annual meeting) where directors are
being elected, a company's proxy statement must be preceded or
accompanied by an annual report to security holders that includes
specified financial information about the company.\21\ Companies are
able to deliver the proxy statement directly only to their shareholders
of record; they must deliver the proxy statement to their beneficial
shareholders indirectly through the intermediaries.\22\
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\20\ Rule 14a-3(a).
\21\ Rule 14a-3(b) [17 CFR 240.14a-3(b)].
\22\ In Release 33-7607 (Nov. 11, 1998) [67 FR 67331)], the
Commission solicited comment on whether it should revise the proxy
rules to permit the optional direct delivery of proxy materials to
non-objecting beneficial owners by companies.
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\20\ Rule 14a-3(a).
\21\ Rule 14a-3(b) [17 CFR 240.14a-3(b)].
\22\ In Release 33-7607 (Nov. 11, 1998) [67 FR 67331)], the
Commission solicited comment on whether it should revise the proxy
rules to permit the optional direct delivery of proxy materials to
non-objecting beneficial owners by companies.
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Pursuant to amendments adopted today in the Companion Release, Rule
14a-3 will permit companies to household the annual report to security
holders under certain conditions. Because the current proxy rules
require the annual report to accompany or precede delivery of the proxy
statement, companies generally mail the annual report with the proxy
statement in the same envelope.\23\ As a result, the ability of
companies to reduce costs by householding the annual report would be
limited by their inability also to household the proxy statement.
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\23\ Some companies have chosen to deliver proxy statements and
annual reports in electronic rather than paper format pursuant to
procedures set out in Release Nos. 33-7233 (Oct. 6, 1995) [60 FR
53548] and 33-7288 (May 9, 1996) [61 FR 24644]. Section II.B.2 of
this release discusses householding of electronic documents.
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The proposed revisions to Rule 14a-3 would permit companies to
household the proxy statement to record shareholders under the same
conditions for householding prospectuses and annual reports.\24\
Specifically, as described in more detail below, the amendments would
require the company to:
\24\ Companies also would be able to household other proxy
soliciting material, such as additional or revised proxy materials
mailed after the proxy statement was sent to shareholders.
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ng prospectuses and annual reports.\24\
Specifically, as described in more detail below, the amendments would
require the company to:
\24\ Companies also would be able to household other proxy
soliciting material, such as additional or revised proxy materials
mailed after the proxy statement was sent to shareholders.
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Get written or implied consent from record shareholders to
householding of the proxy statement;
Include a separate proxy card for each shareholder to whom
the householded proxy statement is sent;
Expressly undertake in the proxy or information statement
to deliver upon written or oral request a separate copy of the annual
report and proxy or information statement to a record shareholder
residing at a shared address to which the company delivers a
householded copy of each document; and
Resume delivery of individual copies of the proxy
statement within 30 days after a shareholder request (i.e., revocation
of any written or implied consent).
The Commission proposes similar amendments to Rule 14c-3, which
requires companies to deliver information statements to shareholders
when they are taking certain corporate actions, but not soliciting
proxy voting authority. Comment is solicited generally as to whether
companies should be permitted to household proxy and information
statements.
1. Consent
a. Implied Consent. Under the proposed changes to the proxy
rules,\25\ companies would be able to deliver a single proxy or
information statement to multiple shareholders who share an address
without having affirmatively to obtain written consent to householding
from the shareholders, if the following conditions are met:
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\25\ Proposed Rule 14a-3(e)(1)(ii).
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proxy or
information statement to multiple shareholders who share an address
without having affirmatively to obtain written consent to householding
from the shareholders, if the following conditions are met:
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\25\ Proposed Rule 14a-3(e)(1)(ii).
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Each shareholder at the shared address has the same last
name as the other shareholders (or the company
reasonably believes that they all are members of the same family); \26\
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\26\ Proposed Rule 14a-3(e)(1)(ii)(A). Some commenters on the
householding proposals adopted in the Companion Release expressed
concern about the ability to discern whether certain shareholders
residing at the same address are members of the same family (e.g., a
husband and wife with different surnames). The Commission believes
that companies relying on the rule may, in many cases, be able to
base their reasonable belief on information already provided by the
shareholder (e.g., in an account agreement).
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At least 90 days before beginning delivery by
householding, the company sends each record shareholder at the shared
address a separate written notice in plain English \27\ of its
intention to household proxy and information statements; \28\
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).
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At least 90 days before beginning delivery by
householding, the company sends each record shareholder at the shared
address a separate written notice in plain English \27\ of its
intention to household proxy and information statements; \28\
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\27\ Proposed Rule 14a-3(e)(1)(ii)(B) includes a note stating
that the notice should be written in plain English. The proposed
rule refers to Securities Act Rule 421(d)(2) [17 CFR 230.421(d)(2)].
Rule 421(d)(2) states that language must ``substantially comply''
with the following principles: (i) Short sentences; (ii) definite,
concrete, everyday words; (iii) active voice; (iv) tabular
presentation or bullet lists for complex material, whenever
possible; (v) no legal jargon or highly technical terms; and (vi) no
multiple negatives.
\28\ The proposed notice could not be sent in the same envelope
with other written material, such as an account statement, dividend
check or shareholder report; under proposed Rule 14a-
3(e)(1)(ii)(B)(l), it would have to be delivered separately from
other communications and could not be incorporated into other
material. In most cases, it is expected that companies would mail a
single notice regarding its intention to household annual reports as
well as proxy and information statements.
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The notice (or envelope containing the notice) includes
the following prominent statement, or similar clear and understandable
statement, in bold-face type: ``Important Notice Regarding Delivery of
Shareholder Documents''; \30\
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\30\ Proposed Rule 14a-3(e)(1)(ii)(B)(7). This statement may be
more effective in alerting shareholders if it appears on the
envelope.
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ndable
statement, in bold-face type: ``Important Notice Regarding Delivery of
Shareholder Documents''; \30\
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\30\ Proposed Rule 14a-3(e)(1)(ii)(B)(7). This statement may be
more effective in alerting shareholders if it appears on the
envelope.
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The written notice provides record shareholders who object
to householding with a reply form or toll-free telephone number to
express their objection;\31\
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\31\ Proposed Rule 14a-3(e)(1)(ii)(B)(3). In addition to
providing a reply form or toll-free telephone number, the notice
also may provide supplemental methods of opting out of householding,
such as sending the reply form to a facsimile telephone number or
responding by e-mail. Reply forms to be returned by mail must be
pre-addressed and returnable by business reply mail or by another
method in which the person relying on the rule pays the postage.
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The written notice states the duration of the consent and
explains how a shareholder can revoke consent to householding; \32\
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\32\ Proposed Rule 14a-3(e)(1)(ii)(B)(4) and (5).
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The company does not receive notice that the shareholders
object to householding within the 90-day notice period; \33\ and
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\32\ Proposed Rule 14a-3(e)(1)(ii)(B)(4) and (5).
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The company does not receive notice that the shareholders
object to householding within the 90-day notice period; \33\ and
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\33\ Proposed Rule 14a-3(e)(1)(ii)(C). If the company receives
notice that one or more shareholders objects to householding within
the 90-day notice period, but there are two or more shareholders in
the household who do not object, the company would be able to
household to the non-objecting shareholders.
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The company delivers householded proxy or information
statements only to a residential street address or post office box.\34\
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\34\ Proposed Rule 14a-3(e)(1)(ii)(D).
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The rules being adopted today in the Companion Release that permit
householding of prospectuses and annual reports by implied consent
state that shareholders must receive written notice of the company's
plan to household these documents at least 60 days before householding
begins. The Commission is proposing to change the 60-day notice
requirement to 90 days with respect to annual reports, and proposes a
90-day period for proxy and information statements. The additional time
may be necessary to avoid interfering with the company's proxy
statement mailing schedule--because many companies mail the proxy
statement 45 days or more before the annual meeting date, a 60-day
period may not provide sufficient time for the mailing of the notice
and receipt of any shareholder objections before the planned mailing
date.\35\
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d interfering with the company's proxy
statement mailing schedule--because many companies mail the proxy
statement 45 days or more before the annual meeting date, a 60-day
period may not provide sufficient time for the mailing of the notice
and receipt of any shareholder objections before the planned mailing
date.\35\
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\35\ A 60-day notice period also could interfere with the time
frames set forth in the shareholder communications rules regarding
the delivery of proxy materials to beneficial owners. Rule 14a-13
[17 CFR 240.14a-13] requires companies to request the number of sets
of materials needed by intermediaries for delivery to beneficial
owners 20 business days before the company's record date. The number
of sets of material needed by the intermediary will be affected by
the number of shareholders receiving householded documents. The
record date frequently is set at a date 60 days before the meeting
date pursuant to state law requirements.
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The Commission requests comment on whether the proposed conditions
for relying on implied consent are necessary or appropriate. Should the
rules require companies to get written consent to householding of proxy
and information statements from members of the same family with the
same last name, even though the Commission today is adopting amendments
that allow householding of prospectuses and annual reports by implied
consent? Should proxy statements be treated differently than
information statements? Conversely, should companies be able to
household proxy and information statements by implied consent to
unrelated shareholders residing at a shared address? Do companies have
the means reasonably to determine whether shareholders who do not share
the same last name (for example, spouses with different surnames) are
related to one another? Is joint account and beneficiary information
useful in this
ely, should companies be able to
household proxy and information statements by implied consent to
unrelated shareholders residing at a shared address? Do companies have
the means reasonably to determine whether shareholders who do not share
the same last name (for example, spouses with different surnames) are
related to one another? Is joint account and beneficiary information
useful in this regard? \36\
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\36\ See Companion Release, supra note 10, at n.17 and
accompanying text.
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The Commission also solicits comment on whether, as proposed,
companies should have to send record shareholders a separate written
notice of their intention to household proxy and information statements
by implied consent. Should companies be able to incorporate the notice
into an unrelated shareholder communication such as an interim report
or dividend check statement \37\ Should the rules require that the
separate notice also be mailed separately, or should the rules permit
delivery with other investor materials, as the Commission's rules will
now permit for prospectuses and investment company semiannual reports
\38\ Is 90 days an appropriate notice period, or should it be shorter
or longer? Furthermore, are the proposed means by which a shareholder
can object to householding appropriate? Should the rules include
alternative methods by which shareholders could object?
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\37\ Id. at n.18.
\38\ Id. at n.28.
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d it be shorter
or longer? Furthermore, are the proposed means by which a shareholder
can object to householding appropriate? Should the rules include
alternative methods by which shareholders could object?
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\37\ Id. at n.18.
\38\ Id. at n.28.
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Commenters should note that, under the proposed rules, companies
would have to specify in the required written notice the types of
documents they intend to household (i.e., proxy and information
statements). New Securities Act Rule 154 and revised Rule 14a-3(e)
adopted today in the Companion Release similarly require the written
notice to specify a company's intention to household prospectuses and
annual reports, respectively. Therefore, companies choosing to
household all of these documents (prospectuses, annual reports and
proxy and information statements) may wish to consider mailing the
householding notice after the Commission has considered the revisions
proposed in this release. Otherwise, companies would need to mail two
separate notices--one regarding an intention to household prospectuses
and/or annual reports upon effectiveness of the amendments in the
Companion Release and a second regarding an intention to household
proxy and information statements. The second notice could not be
delivered until the effective date of the proposed changes described in
this release.
b. Affirmative Written Consent. A company also would be permitted
to household the proxy or information statement to related or unrelated
record shareholders residing at a shared address if each of the
shareholders consents in writing to the company's
delivery of one proxy or information statement to the shared
address.\39\
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irmative Written Consent. A company also would be permitted
to household the proxy or information statement to related or unrelated
record shareholders residing at a shared address if each of the
shareholders consents in writing to the company's
delivery of one proxy or information statement to the shared
address.\39\
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\39\ In order to satisfy the written consent requirement, a
shareholder would need to consent specifically to householding of
proxy and information statements.
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If a company solicits written consent from related or unrelated
record shareholders residing at a shared address, it should specify in
the request for consent the types of documents it intends to household
(e.g., annual reports and/or proxy statements and/or information
statements), the duration of the consent, the procedure to revoke
consent, and the anticipated date that householding will begin. The
company could begin householding immediately upon receipt of the
written consent. If a shareholder, on his or her own initiative,
requests the company to household the proxy or information statement, a
company that is agreeable to the request should send a confirmation to
the shareholder including the information described above.
Comment is solicited as to whether unrelated shareholders residing
at a single address should have to provide written consent to
householding. If so, should they be allowed to consent orally as well
as in writing? If oral consent is permitted, what kind of documentation
should the Commission require companies to retain as evidence of
consent?
c. Duration of Consent. Companies could solicit from record
shareholders a consent to householding of perpetual duration that is
valid until revoked, or a consent of limited duration such as one year
or a specified number of years
t orally as well
as in writing? If oral consent is permitted, what kind of documentation
should the Commission require companies to retain as evidence of
consent?
c. Duration of Consent. Companies could solicit from record
shareholders a consent to householding of perpetual duration that is
valid until revoked, or a consent of limited duration such as one year
or a specified number of years. If companies rely on implied consent to
householding, the required 90-day notice to shareholders should make it
clear whether the company intends to household indefinitely or for a
fixed period.\40\ The Commission requests comment on whether companies
should have to re-solicit implied and/or written consent to
householding periodically, and if so, whether they should have to do so
annually or at a different interval.\41\
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\40\ Proposed Rule 14a-3(e)(1)(ii)(B)(4).
\41\ Even if a company solicits ``perpetual'' consent to
householding, if the company chooses to household its materials to
all of its shareholders, it will have to solicit consent from new
shareholders as they open their accounts or on an annual basis.
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Under the proposed rules, shareholders could revoke their consent
to householding at any time, by instructing the company orally or in
writing.\42\ A company could not continue to household the proxy or
information statement more than 30 days after receiving such
instructions. Comment is solicited as to whether 30 days is an
appropriate revocation period from the perspective of both companies
and shareholders, or should be shorter or longer.
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\42\ Proposed Rule 14a-3(e)(1)(iii).
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ays after receiving such
instructions. Comment is solicited as to whether 30 days is an
appropriate revocation period from the perspective of both companies
and shareholders, or should be shorter or longer.
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\42\ Proposed Rule 14a-3(e)(1)(iii).
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2. Addressing
Under the revised rules, companies would have the flexibility to
address the householded copy of the proxy or information statement
either to shareholders as a group, (e.g., ``ABC Corporation
Shareholders,'' ``Jane Doe and Household'' or ``Household of Jane
Doe''), or to each of the shareholders residing at the shared address
(e.g., ``Jane Doe and Mary Doe''). In order to prevent householding of
the proxy or information statement to shareholders with the same last
name who share a business address but are not related, the proposed
rules would require companies relying on implied consent to deliver the
proxy or information statement to a residential street address, or to a
post office box. The rules would state that a company can assume that a
street address is a residence unless the company has information
indicating that the address is not a residence.
For purposes of the revised rules, the term ``address'' would mean
a street address, post office box number, an electronic mail address,
facsimile telephone number, or similar destination to which paper or
electronic documents are delivered. If a company has reason to believe
that an address is a street address of a multi-unit building, the
address also would have to include the unit number.
Because the potential benefits of householding electronic documents
appear to be minimal,\43\ the Commission is not proposing to allow
electronic delivery of householded proxy and information statements in
connection with implied consent to householding
has reason to believe
that an address is a street address of a multi-unit building, the
address also would have to include the unit number.
Because the potential benefits of householding electronic documents
appear to be minimal,\43\ the Commission is not proposing to allow
electronic delivery of householded proxy and information statements in
connection with implied consent to householding. The proposed rules
would permit electronic delivery of householded proxy and information
statements only if delivery is made to a shared electronic address (for
example, a shared electronic mail account) and all shareholders in the
household give written consent to householding.\45\ Comment is
requested on whether the Commission should permit the electronic
delivery of a householded proxy or information statement if all of the
shareholders in the household have consented to householding but not
all have consented to electronic delivery pursuant to procedures
outlined in Commission releases.\46\
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\43\ None of the commenters on the Proposing Release stated that
householding electronically delivered documents would save money, or
that investors had been requesting this form of delivery. Several
commenters noted the difficulty of permitting electronic delivery of
householded documents. One individual shareholder emphasized the
risks involved in using electronic delivery, especially the ease
with which electronic messages might be deleted by accident and the
difficulty of forwarding messages from a discontinued e-mail account
with an Internet provider. Furthermore, the cost of sending an
electronic document or e-mail generally is very low, and therefore,
sending one e-mail to a household rather than multiple e-mails would
not result in significant cost savings.
\45\ See Rule 14(a)(3)(e)(1)(ii)(D). One of the provisions
pertaining to householding by implied consent requires delivery to a
street address
il account
with an Internet provider. Furthermore, the cost of sending an
electronic document or e-mail generally is very low, and therefore,
sending one e-mail to a household rather than multiple e-mails would
not result in significant cost savings.
\45\ See Rule 14(a)(3)(e)(1)(ii)(D). One of the provisions
pertaining to householding by implied consent requires delivery to a
street address. All of the shareholders in the household would have
to provide written consent to both electronic delivery and
householding.
\46\ See note 23.
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Comment is solicited on the proposed address requirements. Should
companies have the proposed flexibility to address householded proxy
and information statements to a group of shareholders? Should
shareholders have the right to specify how the householded proxy or
information statement is addressed? Should companies be able to address
householded annual reports, proxy statements and information statements
to only one of the shareholders residing at a shared address?
Is the requirement that companies deliver the householded proxy or
information statement only to addresses reasonably believed to be
residences workable? Is the proposed definition of ``address''
appropriate? Would householding to a shared electronic address result
in significant cost savings?
3. Inclusion of Multiple Proxy Cards With Single Proxy Statement
Unlike prospectuses, annual reports and information statements, the
proxy statement is accompanied by a form of proxy (``proxy card'').
Rule 14a-4(f) \47\ states that no person conducting a proxy
solicitation shall deliver a proxy card to a shareholder unless it is
preceded or accompanied by a definitive proxy statement that has been
filed with, or mailed for filing to, the Commission. Therefore,
shareholders generally receive the proxy card in the same envelope that
contains the company's proxy statement and annual report
.
Rule 14a-4(f) \47\ states that no person conducting a proxy
solicitation shall deliver a proxy card to a shareholder unless it is
preceded or accompanied by a definitive proxy statement that has been
filed with, or mailed for filing to, the Commission. Therefore,
shareholders generally receive the proxy card in the same envelope that
contains the company's proxy statement and annual report. Proxy cards
are addressed based on the shareholder account titles appearing on a
company's list of registered holders.
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\47\ 17 CFR 240.14a-4(f).
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Under the proposed rules, companies would need to continue sending
a separate proxy card with the householded proxy statement for each
separate shareholder account with respect to which proxy authority is
being solicited. For example, if a husband and wife each holds the same
company's securities in two individual accounts, a company could
deliver a single proxy statement and annual report to them but would
have to include two separate proxy cards in the envelope, and designate
the proxy cards individually based on the two account titles. Comment
is solicited on whether the Commission should permit householding of
proxy statements in view of the need to include multiple proxy cards.
Are there concerns that householding may interfere with shareholders'
exercise of voting rights through the proxy card's execution?
4. Undertaking to Provide Additional Copies of Householded Documents
The proposed rules \48\ would require companies to undertake in the
proxy or information statement to deliver, upon written or oral
request, a separate copy of the annual report, proxy statement or
information statement to a shareholder residing at a shared address to
which a householded copy of the documents was delivered. The company
would have to deliver the separate copy promptly after a shareholder
request
48\ would require companies to undertake in the
proxy or information statement to deliver, upon written or oral
request, a separate copy of the annual report, proxy statement or
information statement to a shareholder residing at a shared address to
which a householded copy of the documents was delivered. The company
would have to deliver the separate copy promptly after a shareholder
request.
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\48\ Proposed Rule 14a-3(e)(1)(i)(E) and proposed Item 22 of
Schedule 14A.
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The purpose of this proposed requirement is to ensure that a
shareholder who has given implied or written consent to householding,
but then experiences a change in circumstances that makes sharing a
householded document impractical, still has access to the annual
report, proxy statement or information statement. The householding
rules applicable to annual reports adopted today in the Companion
Release do not include this undertaking requirement. The proposed
amendments would modify those rules.
Comment is solicited as to whether the proposed undertaking is
appropriate, and if so, whether the rules should mandate delivery of a
separate copy of the annual report, proxy statement or information
statement within a specific time period rather than promptly. Should
companies have to set forth the proposed undertaking in the proxy or
information statement, or should there be other alternatives? Comment
also is requested on whether Securities Act Rule 154 adopted today in
the Companion Release should be revised to include a similar
undertaking. The proposed rules also would require companies choosing
to household the annual report,\49\ proxy statement and/or information
statement to include the following information in the proxy or
information statement: \50\
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Rule 154 adopted today in
the Companion Release should be revised to include a similar
undertaking. The proposed rules also would require companies choosing
to household the annual report,\49\ proxy statement and/or information
statement to include the following information in the proxy or
information statement: \50\
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\49\ The proposed proxy disclosure requirement is not included
in the provisions permitting householding of the annual report
adopted today in the Companion Release.
\50\ Proposed Item 23 of Schedule 14A and proposed Item 5 of
Schedule 14C.
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State that only one annual report and/or proxy statement
or information statement is being delivered to multiple shareholders
residing at a shared address unless the registrant has received
contrary instructions from one or more of the shareholders;
Undertake to deliver promptly, upon written or oral
request, a separate copy of the annual report and/or proxy statement or
information statement to a shareholder residing at a shared address to
which a single copy of the documents was delivered;
Provide instructions as to how a shareholder can notify
the registrant that the shareholder wishes to receive a separate annual
report and/or proxy statement or information statement in the future;
and
Provide instructions as to how shareholders can request
householding if they are receiving multiple copies of the annual report
and/or proxy or information statement.
Comment is solicited on whether registrants should be required to
provide annual disclosure about householding, as proposed. If so,
should this disclosure have to appear in the proxy or information
statement or could it be provided in other shareholder communications?
5
can request
householding if they are receiving multiple copies of the annual report
and/or proxy or information statement.
Comment is solicited on whether registrants should be required to
provide annual disclosure about householding, as proposed. If so,
should this disclosure have to appear in the proxy or information
statement or could it be provided in other shareholder communications?
5. State Law Requirements Concerning Notice of Meeting
Many state corporate codes contain provisions requiring companies
to provide shareholders of record with written notices of meetings and
adjourned meetings. The provisions generally state that written notice
of a meeting at which shareholders are required or permitted to take
action must be sent to each shareholder of record a specified number of
days before the meeting date. For example, the Delaware General
Corporate Code states that written notice of any meeting shall be given
not less than 10 nor more than 60 days before the date of the meeting
to each shareholder entitled to vote at the meeting.\51\ This notice
typically is transmitted with the proxy statement.
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\51\ 8 Del. C. Section 222 (1998).
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It is unclear whether a householded proxy statement that includes
the meeting notice would satisfy state law requirements that companies
deliver a notice to each record shareholder. Companies choosing to
household the proxy statement therefore would have to consider the
possible need to deliver separately the notice of meeting to each
shareholder in the household to satisfy state law requirements.
Comment is solicited on whether state law meeting notice
requirements present legal and/or practical obstacles to householding
of the proxy statement
each record shareholder. Companies choosing to
household the proxy statement therefore would have to consider the
possible need to deliver separately the notice of meeting to each
shareholder in the household to satisfy state law requirements.
Comment is solicited on whether state law meeting notice
requirements present legal and/or practical obstacles to householding
of the proxy statement. Would a meeting notice incorporated in a
single, householded proxy statement sent to all record holders residing
at a shared address be deemed to be delivered to each such shareholder
in the household in compliance with applicable state law? Would the
householded proxy statement have to be addressed to each shareholder
rather than generically to the group of shareholders residing at a
shared address in order to satisfy state law? Would the attachment of
multiple meeting notices to the householded proxy statement, each
notice addressed to each shareholder sharing the address, fulfill the
states' individual meeting notice requirements, or must a notice be
sent separately to each record shareholder?
6. Business Combination Proxy Statement-Prospectuses
As discussed in the Companion Release, new Securities Act Rule 154
does not permit the householding of prospectuses required to be
delivered in connection with business combination transactions,
exchange offers and reclassifications of securities.\52\ The Proposing
Release requested comment on whether companies should be permitted to
household those types of prospectuses, given that they generally are
accompanied by proxy cards or tender offer material that must be
executed by each shareholder. Some commenters on the Proposing Release
suggested that the Commission consider broadening Rule 154 to permit
householding of those types of prospectuses.
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household those types of prospectuses, given that they generally are
accompanied by proxy cards or tender offer material that must be
executed by each shareholder. Some commenters on the Proposing Release
suggested that the Commission consider broadening Rule 154 to permit
householding of those types of prospectuses.
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\52\ Rule 154 does not apply to the delivery of a prospectus
filed as part of a registration statement on Form N-14, S-4 or F-4,
or to the delivery of any other prospectus in connection with a
business combination transaction, exchange offer or reclassification
of securities. See Rule 154(e) (17 CFR 230.154(e)).
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Upon consideration of these comments, and because the proposals
described in this release would permit the householding of proxy
statements, the Commission is proposing to expand the coverage of Rule
154 to include combined proxy statement-prospectuses delivered in
connection with business combinations, exchange offers or
reclassifications of securities.
Companies householding the combined proxy statement-prospectuses
would continue to have to include
separate proxy cards that need to be executed by each individual
shareholder in the household. Comment is solicited as to whether the
Commission should permit companies to household combined proxy
statement-prospectuses
business combinations, exchange offers or
reclassifications of securities.
Companies householding the combined proxy statement-prospectuses
would continue to have to include
separate proxy cards that need to be executed by each individual
shareholder in the household. Comment is solicited as to whether the
Commission should permit companies to household combined proxy
statement-prospectuses. Do shareholders perceive these prospectuses
about extraordinary transactions as being more significant than proxy
statements relating to routine proposals? If so, are they more likely
to want to receive separate copies of the combined proxy statement-
prospectus? If the revised rules do not permit companies to household
combined proxy statement-prospectuses, do companies have the means to
suppress householding when delivering this type of document to
shareholders?
The revised rule would not affect any other applicable requirement
of state or federal law concerning the delivery of any document that
requires individual execution, such as a shareholder response to a
tender offer. Comment is solicited on whether the Commission should
permit householding of these documents.
C. Householding of Proxy and Information Statements by Intermediaries
to Beneficial Owners
Exchange Act Rule 14b-1 sets forth the obligations of registered
brokers and dealers in connection with the prompt forwarding of certain
registrant communications to beneficial owners. Rule 14b-2 sets forth
similar obligations of banks, associations and other entities that
exercise fiduciary powers
.
C. Householding of Proxy and Information Statements by Intermediaries
to Beneficial Owners
Exchange Act Rule 14b-1 sets forth the obligations of registered
brokers and dealers in connection with the prompt forwarding of certain
registrant communications to beneficial owners. Rule 14b-2 sets forth
similar obligations of banks, associations and other entities that
exercise fiduciary powers. The proposed amendments would revise these
rules to state that broker and bank intermediaries may, on their own
initiative, or at the request of a company, household the annual
report, proxy statement or information statement to beneficial owners
residing at a shared address if the requirements set forth in proposed
Rule 14a-3(e)(1) (with respect to annual reports and proxy statements)
and Rule 14c-3(c) (with respect to information statements) are met.
Pursuant to the proposed change discussed above, intermediaries also
would be able to household combined proxy statement-prospectuses to
beneficial owners.
Under the proposed amendments, the intermediaries rather than the
registrant would follow the procedures described in proposed Rule 14a-
3(e)(1) and obtain implied or written consent to householding from
beneficial owners.\53\ Intermediaries using voting instruction forms to
elicit information from beneficial owners as to how their shares should
be voted would have to include a separate form for each beneficial
owner residing at a shared address.\54\ This would be similar to the
requirement that registrants must include a separate proxy card for
each individual record holder residing at a shared address.
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ion from beneficial owners as to how their shares should
be voted would have to include a separate form for each beneficial
owner residing at a shared address.\54\ This would be similar to the
requirement that registrants must include a separate proxy card for
each individual record holder residing at a shared address.
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\53\ A signature on a new bank or broker-dealer account
agreement would not satisfy the written consent requirement if the
agreement merely refers to or incorporates by reference another
document, such as the proxy or information statement, and does not
describe the householding procedures.
\54\ Intermediaries generally use voting instruction forms
rather than the proxy card to facilitate automated processing of the
beneficial owners' voting instructions regarding non-routine
matters. The voting instruction forms contain the same information
as the proxy card with respect to the items presented for
shareholder vote. Once the intermediary tabulates the results from
the voting instruction forms, it executes the proxy card in its own
name and returns it to the company or the company's designated
agent.
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Under the current proxy rules,\55\ intermediaries are not required
to promptly forward information to beneficial shareholders if a company
does not provide assurance of reasonable reimbursement of the
intermediaries' reasonable expenses, both direct and indirect, incurred
in performing those obligations. The proxy rules do not include a
schedule of ``reasonable fees,'' but the NYSE rules and rules of other
self-regulatory organizations do include a fee schedule. NYSE Rule 451
sets forth the maximum fees that NYSE member firms (brokers) may charge
NYSE listed companies for forwarding proxy materials to beneficial
owners.
---------------------------------------------------------------------------
e proxy rules do not include a
schedule of ``reasonable fees,'' but the NYSE rules and rules of other
self-regulatory organizations do include a fee schedule. NYSE Rule 451
sets forth the maximum fees that NYSE member firms (brokers) may charge
NYSE listed companies for forwarding proxy materials to beneficial
owners.
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\55\ Rules 14b-1(c)(2) and 14b-2(c)(2) [17 CFR 240.14b-1(c)(2)
and 240.14b-2(c)(2)].
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In December 1996, the NYSE proposed a new reimbursement fee
structure for the forwarding of proxy materials and other shareholder
communications.\56\ Public comment was solicited on the proposals. The
Commission approved the fees on a pilot basis (``pilot fees'').\57\ The
pilot fees have been revised several times and currently are set to
expire on January 3, 2000.\58\
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\56\ Release 34-38058 (Dec. 18, 1996) [61 FR 68082].
\57\ Release 34-38406 (Mar. 14, 1997)[62 FR 13922].
\58\ Release 34-42086 (Nov. 1, 1999).
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In addition to per piece processing fees for the forwarding of
proxy materials and other shareholder communications, the pilot fees
include a ``paper and postage elimination fee'' \59\ which may be
charged by intermediaries for the elimination of a paper mailing to a
beneficial owner as a result of householding or electronic delivery.
Nearly all large broker and many bank intermediaries currently
outsource the proxy material distribution function for beneficial
shareholders to ADP Investor Communications Services (``ADP''). ADP, as
agent for intermediaries, is able to charge companies for the proxy
distribution services in accordance with the pilot fees, including the
paper and postage elimination fee.
---------------------------------------------------------------------------
rrently
outsource the proxy material distribution function for beneficial
shareholders to ADP Investor Communications Services (``ADP''). ADP, as
agent for intermediaries, is able to charge companies for the proxy
distribution services in accordance with the pilot fees, including the
paper and postage elimination fee.
---------------------------------------------------------------------------
\59\ The intermediary is entitled to collect $.50 for each set
of proxy materials eliminated.
---------------------------------------------------------------------------
Under the proposed rules, intermediaries or their agents could
offer shareholders the option of consenting--on an implied or written
consent basis--to householding of proxy and information statements
relating only to a particular company, or consenting to householding of
any proxy or information statement the intermediary is required to
forward to the shareholder. The proposed rules, however, would not
require that shareholders be given this option of limiting their
consent to a particular company. Comment is solicited on whether
shareholders should have the option to limit their consent to a
particular company.
The revised rules would state that intermediaries must exclude
annual reports, proxy statements, and information statements that will
be eliminated pursuant to householding procedures in responding to
company requests concerning the number of the intermediaries' customers
that are beneficial owners of the companies' securities.\60\
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\60\ Proposed Rules 14b-1(c)(3) and 14b-2(c)(4).
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liminated pursuant to householding procedures in responding to
company requests concerning the number of the intermediaries' customers
that are beneficial owners of the companies' securities.\60\
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\60\ Proposed Rules 14b-1(c)(3) and 14b-2(c)(4).
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Comment is requested on whether intermediaries should be allowed to
household annual reports, proxy statements, and information statements
to beneficial owners. If so, should they or their agents be allowed to
household regardless of whether the company chooses to household to its
record holders? Should companies be required to reimburse
intermediaries or their agents for their reasonable expenses incurred
in obtaining implied or written consents to householding even if the
company has not directed or approved the intermediary's decision to
household? Should the intermediaries be required to obtain express
authorization from companies before they begin householding?
Conversely, should the rules require intermediaries to household to
beneficial owners at the direction of companies? If so, should the
companies be required to compensate the intermediaries for their
reasonable expenses incurred in connection with the solicitation of
implied or written consents? Is it reasonable for intermediaries (or
their agent) to collect the $.50 paper and postage elimination
ersely, should the rules require intermediaries to household to
beneficial owners at the direction of companies? If so, should the
companies be required to compensate the intermediaries for their
reasonable expenses incurred in connection with the solicitation of
implied or written consents? Is it reasonable for intermediaries (or
their agent) to collect the $.50 paper and postage elimination
fee currently included in the pilot fees for each paper copy of a set
of proxy materials suppressed as a result of householding at the
intermediary level? Should the $.50 postage elimination fee be a one-
time charge (assessed only the first time a paper copy is suppressed)
or a recurrent fee? Is there any reason why the rules permitting
householding by intermediaries to beneficial shareholders should differ
from the rules permitting householding by companies to record
shareholders?
Commenters also are asked to consider whether the rules should
permit householding to record shareholders and beneficial shareholders
sharing the same address. How would information about record
shareholders (possessed by companies or their agents) and information
about beneficial shareholders (possessed by intermediaries or their
agents) be shared to facilitate householding?
The proposed rules also would amend Rule 14a-2(a)(1),\61\ which
excepts solicitations by intermediaries from Rules 14a-3 through 14a-15
if they satisfy certain conditions.\62\ The amendments would revise the
rule to indicate that the exception permits intermediaries' delivery of
materials to each person separately or to a person's household.
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\61\ 17 CFR 240.14a-2(a)(1).
\62\ Proposed Rule 14a-2(a)(1)(ii).
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D. Householding of Proxy Statements by Shareholders
ndicate that the exception permits intermediaries' delivery of
materials to each person separately or to a person's household.
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\61\ 17 CFR 240.14a-2(a)(1).
\62\ Proposed Rule 14a-2(a)(1)(ii).
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D. Householding of Proxy Statements by Shareholders
Under the proposed rules,\63\ shareholders who deliver a proxy
statement to other shareholders also would be able to household the
proxy statement to record holders if the company previously has
obtained shareholder consent to householding in accordance with the
procedures in proposed Rule 14a-3(e)(1).
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\63\ See the Note to proposed Rule 14a-3(e)(1).
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Rule 14a-7 sets forth the obligations of companies either to
provide a shareholder list to a requesting shareholder or to mail the
shareholder's proxy materials. The rule provides that the company has
the option to provide the list or mail the shareholder's materials,
except when the company is soliciting proxies in connection with going
private or roll-up transactions. In those cases, the shareholder has
the option to request the list or have the company mail its materials.
In addition to requiring that the company supply householding
information that it previously has obtained when providing the
shareholder list, the proposed amendments would require companies to
share the benefit of written or implied consents to householding that
they have obtained when mailing materials on a shareholder's
behalf.\64\ Comment is solicited on whether shareholders should be able
to household the proxy statement under the specified conditions.
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, the proposed amendments would require companies to
share the benefit of written or implied consents to householding that
they have obtained when mailing materials on a shareholder's
behalf.\64\ Comment is solicited on whether shareholders should be able
to household the proxy statement under the specified conditions.
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\64\ Proposed Rules 14a-7(a)(2)(i) and (ii).
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The Commission is aware that intermediaries generally deliver proxy
materials on behalf of soliciting parties other than the registrant
under the conditions set forth in Exchange Act Rules 14b-1 and 14b-2
(for example, the soliciting party agrees to reimburse the intermediary
for reasonable expenses incurred by the intermediary to forward the
proxy statement to beneficial owners even though these rules are silent
with respect to any such obligations). Should Rules 14b-1 and 14b-2 be
revised explicitly to require intermediaries to deliver proxy or other
soliciting materials on behalf of soliciting persons (or their agents)
other than the registrant? Are such revisions necessary or appropriate
even if the householding proposals are not adopted?
III. Delivery of Proxy Materials to Registered Investment Advisers
and Investment Managers
Many of the Self-Regulatory Organizations (``SROs'') have adopted
rules to allow beneficial owners to:
Designate a registered investment adviser to vote proxies
and receive proxy material on behalf of the beneficial owner; and
Allow SRO member organizations who serve as investment
managers of ERISA plans to vote proxies.\65\
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the Self-Regulatory Organizations (``SROs'') have adopted
rules to allow beneficial owners to:
Designate a registered investment adviser to vote proxies
and receive proxy material on behalf of the beneficial owner; and
Allow SRO member organizations who serve as investment
managers of ERISA plans to vote proxies.\65\
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\65\ See Release No. 34-34596 (Aug. 25, 1994) [59 FR 45050],
Order Approving Proposed Rule Changes by the New York Stock
Exchange; Release No. 34-34294 (July 1, 1994) [59 FR 35152], Order
Approving Proposed Rule Changes by the American Stock Exchange; and
Release No. 34-35681 (May 5, 1995) [60 FR 25749], Order Approving
Proposed Rule Changes by the NASD. The SRO rules require the
beneficial owner to notify the member organization in writing of the
name of the investment adviser and specify that the investment
adviser has been designated to receive the proxy and related
materials and vote the proxy. In an Information Memo to its member
organizations, the NYSE stated that the member organizations may
wish to provide consolidated proxies and related materials to
investment advisers designated by beneficial owners to exercise
voting discretion.
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The proposed householding rules do not include any specific
provisions regarding householding of proxy materials to registered
investment advisers and investment managers of ERISA plans who have
been designated to vote proxies and receive proxy materials on behalf
of multiple shareholder accounts. The general provisions of the rules,
however, would permit companies to solicit written consent to
householding from these investment advisers and investment managers
regarding householding of proxy materials to registered
investment advisers and investment managers of ERISA plans who have
been designated to vote proxies and receive proxy materials on behalf
of multiple shareholder accounts. The general provisions of the rules,
however, would permit companies to solicit written consent to
householding from these investment advisers and investment managers.
The proposed rules also would allow companies to accommodate requests
in writing from the investment advisers and investment managers that
companies and/or intermediaries send them only one copy of a company's
annual report and proxy statement or information statement, rather than
a separate copy on behalf of each shareholder for whom they are
authorized to make proxy voting decisions.
Comment is requested on whether companies and intermediaries should
be able to household proxy materials to such investment advisers and
investment managers without having to rely on the proposed householding
rules since it is unlikely that a single person or entity making the
proxy voting decision would need more than one copy of the proxy
materials. Commenters who believe that the proposed householding rules
should apply are asked to consider if it would be appropriate to permit
householding to investment advisers and investment managers by implied
consent. Additional comment is sought on whether companies and
intermediaries should be allowed to household proxy material without
consent or by implied consent to trustees, executors, administrators,
guardians or persons who act in similar capacities and who have been
vested with proxy voting authority. Finally, are there other situations
not addressed by the proposed rules where it may be appropriate to
allow householding without any advance consent or by implied consent?
IV. General Request for Comment
terial without
consent or by implied consent to trustees, executors, administrators,
guardians or persons who act in similar capacities and who have been
vested with proxy voting authority. Finally, are there other situations
not addressed by the proposed rules where it may be appropriate to
allow householding without any advance consent or by implied consent?
IV. General Request for Comment
Any interested persons wishing to submit written comments on the
proposed rule amendments that are the subject of this Release, to
suggest additional provisions or changes to the rules, or to submit
comments on other matters that might affect proposals contained in this
Release, are requested to do so. The Commission also requests comment
on whether the proposals, if adopted, would have an adverse effect on
competition that is neither necessary nor appropriate in furthering the
purposes of the Exchange Act.
The Commission requests comment on whether the proposals, if
adopted, would promote efficiency, competition and capital formation.
Comments will be considered by the Commission in compliance with its
responsibilities under Section 2(b) of the Securities
Act,\67\ and Sections 3(f) and 23(a) of the Exchange Act.\68\ The
Commission encourages commenters to provide empirical data or other
facts to support their views.
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\67\ 15 U.S.C. 77b(b).
\68\ 15 U.S.C. 78c(f), 78w(a).
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V. Cost/Benefit Analysis
Act,\67\ and Sections 3(f) and 23(a) of the Exchange Act.\68\ The
Commission encourages commenters to provide empirical data or other
facts to support their views.
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\67\ 15 U.S.C. 77b(b).
\68\ 15 U.S.C. 78c(f), 78w(a).
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V. Cost/Benefit Analysis
The Commission is sensitive to the costs and benefits imposed by
its rules on affected persons and entities. The proposed rules would
permit companies and intermediaries to send fewer copies of proxy and
information statements to shareholders than they currently must send,
and therefore, as discussed below, should result in substantial cost
savings to companies. The proposed rules would be voluntary on the part
of companies and intermediaries; therefore, to the extent that the
proposed rules would require the printing and delivery of notices
concerning householding, use of software to track householding
consents, or would result in other costs of changing procedures, and
the costs outweigh the benefits of householding, companies and
intermediaries may decide not to rely on the rules.
Many of the commenters on the proposals adopted in the Companion
Release urged the Commission to consider proposing revised rules that
would permit companies and intermediaries to household proxy and
information statements. Corporate commenters stated that since they
generally mail the proxy statement and annual report together in the
same envelope, they are unable to achieve any cost savings under the
current rules that permit them to household only the annual report.
Several of the commenters stated that the elimination of duplicate
proxy materials would result in significant cost savings. One
commenter, a newsletter publisher and shareholder service consultant,
estimated that companies could eliminate 10-30% of their annual report
and proxy statement mailings by householding
to companies would far exceed the
costs of obtaining the consents and mailing the notices. Intermediaries
would be entitled to reimbursement from companies for the reasonable
expenses they incur in obtaining consents to householding from the
companies' beneficial shareholders. The proposed rules would require
that the notice be a separate written statement and be accompanied by a
reply form. The costs associated with sending the notice should be
limited to the costs of printing a single page and the postage costs of
delivering the notice to shareholders. The cost should be non-recurring
because the notice generally will only have to be sent once to each
shareholder in a household. Costs of the proposed annual disclosure
about householding should be low because the disclosure will be
included in the proxy or information statement.
The Commission requests comment on the costs and benefits of the
proposed rules, including the cost savings estimate described above and
estimates of the costs of obtaining consents and mailing the notice.
For purposes of the Small Business Regulatory Enforcement Fairness Act
of 1996,\69\ the Commission also requests information regarding the
potential impact of the proposed rules on the economy on an annual
basis. Commenters are requested to include empirical data to support
their views.
---------------------------------------------------------------------------
\69\ Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------
VI. Paperwork Reduction Act
ing the
potential impact of the proposed rules on the economy on an annual
basis. Commenters are requested to include empirical data to support
their views.
---------------------------------------------------------------------------
\69\ Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------
VI. Paperwork Reduction Act
Certain provisions of the proposed rule amendments contain
``collection of information'' requirements within the meaning of the
Paperwork Reduction Act of 1995,\70\ and the Commission has submitted
them to the Office of Management and Budget (``OMB'') for review in
accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. The titles for the
collections of information are: ``Regulation 14A, Commission Rules 14a-
1 through 14a-15 and Schedule 14A''; and ``Regulation 14C, Commission
Rules 14c-1 through 14c-7 and Schedule 14C.'' Regulations 14A and C
contain currently approved collections of information under OMB control
numbers 3235-0059 and 3235-0057, respectively. An agency may not
sponsor or conduct, and a person is not required to respond to, an
information collection unless a currently valid OMB control number is
displayed.
---------------------------------------------------------------------------
\70\ 44 U.S.C. 3501-3520.
---------------------------------------------------------------------------
Regulations 14A and 14C set forth proxy and information disclosure
requirements. Companies that have a class of securities registered
under Section 12 of the Exchange Act are subject to these requirements.
When the Commission proposed rules to permit householding of the annual
report,\71\ it submitted a request for approval of revisions to
Regulations 14A and 14C to OMB. OMB has approved the revisions and they
are adopted as described in the Companion Release, with some
modification.
---------------------------------------------------------------------------
t are subject to these requirements.
When the Commission proposed rules to permit householding of the annual
report,\71\ it submitted a request for approval of revisions to
Regulations 14A and 14C to OMB. OMB has approved the revisions and they
are adopted as described in the Companion Release, with some
modification.
---------------------------------------------------------------------------
\71\ Release 33-7475 (Nov. 13, 1997) [62 FR 61933].
---------------------------------------------------------------------------
In its submission, the Commission estimated that the time required
to prepare and arrange delivery of the notice (required to be mailed by
companies choosing to solicit implied consent to householding of the
annual report from shareholders) would be approximately 20 hours per
respondent per year. Since the annual report and proxy or information
statement generally are mailed to shareholders together in the same
package, it is likely that companies and intermediaries would have to
mail only one notice to obtain consent to householding of both the
annual report and the proxy or information statement. Therefore, the
Commission is not changing the 20 hour estimated increase in connection
with the notice delivery requirement.
Aside from the notice requirement, the Commission also is proposing
a new proxy and information statement disclosure requirement.\72\ The
proposed new disclosure would require companies choosing to household
proxy materials to advise shareholders how they can revoke consent to
householding and how to request separate copies of a householded
document. The disclosure also would tell shareholders how to request
householding. It is estimated that the time to respond to this
disclosure would
be approximately one hour per respondent per year.
---------------------------------------------------------------------------
to advise shareholders how they can revoke consent to
householding and how to request separate copies of a householded
document. The disclosure also would tell shareholders how to request
householding. It is estimated that the time to respond to this
disclosure would
be approximately one hour per respondent per year.
---------------------------------------------------------------------------
\72\ Proposed Item 23 of Schedule 14A and proposed Item 5 of
Schedule 14C.
---------------------------------------------------------------------------
The Commission estimates that 9,892 respondents are subject to
Regulation 14A and that approximately 989 of these would prepare the
proposed Schedule 14A householding disclosure. The Commission estimates
that the burden associated with Regulation 14A as revised per
respondent would be approximately 55 hours for those subject to the
proposed disclosure, and 54 hours per respondent for those not subject
to the disclosure requirement, for a total annual burden of 535,157
hours. Of this total, it is estimated that 25%, or 133,789 hours of the
disclosure burden, would be prepared by in-house counsel and 75%, or
401,368 hours, would be prepared by outside counsel. The estimated cost
to the respondent of the disclosure prepared by outside counsel would
be $70,239,400 at an estimated hourly rate of $175.
An estimated 253 respondents are subject to Regulation 14C and it
is estimated that 25 of these would prepare the proposed Schedule 14C
householding disclosure. The Commission estimates that the burden
associated with Regulation 14C as revised per respondent would be
approximately 55 hours for those subject to the proposed disclosure,
and 54 hours per respondent for those not subject to the disclosure
requirement, for a total annual burden of 13,687 hours. Of this total,
it is estimated that 25%, or 3,422 hours of the disclosure burden,
would be prepared by in-house counsel and 75%, or 10,265 hours, would
be prepared by outside counsel
espondent would be
approximately 55 hours for those subject to the proposed disclosure,
and 54 hours per respondent for those not subject to the disclosure
requirement, for a total annual burden of 13,687 hours. Of this total,
it is estimated that 25%, or 3,422 hours of the disclosure burden,
would be prepared by in-house counsel and 75%, or 10,265 hours, would
be prepared by outside counsel. The estimated cost to the respondent of
the disclosure prepared by outside counsel would be $1,796,375 at an
estimated hourly rate of $175.
------------------------------------------------------------------------
Burden hours
after Cost after
Information collection title proposed revisions
revisions
------------------------------------------------------------------------
Reg. 14A.................................... 133,789 $70,239,400
Reg. 14C.................................... 3,422 1,796,375
------------------------------------------------------------------------
Companies and intermediaries are the primary respondents. Responses
to the collection of information are voluntary and will not be kept
confidential. Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission
solicits comment to: (i) Evaluate whether the proposed collections of
information are necessary for the proper performance of the functions
of the agency, including whether the information will have practical
utility; (ii) evaluate the accuracy of the agency's estimate of the
burden of the proposed collections of information; (iii) enhance the
quality, utility, and clarity of the information to be collected; and
(i) Evaluate whether the proposed collections of
information are necessary for the proper performance of the functions
of the agency, including whether the information will have practical
utility; (ii) evaluate the accuracy of the agency's estimate of the
burden of the proposed collections of information; (iii) enhance the
quality, utility, and clarity of the information to be collected; and
(iv) minimize the burden of the collections of information on
respondents, including through the use of automated collection
techniques or other forms of information technology.
Persons wishing to submit comments on the collection of information
requirements should direct them to the following persons: (i) Desk
Officer for the Securities and Exchange Commission, Office of
Information and Regulatory Affairs, Office of Management and Budget,
Room 3208, New Executive Office Building, Washington, DC 20503; and
(ii) Jonathan G. Katz, Secretary, Securities and Exchange Commission,
450 5th Street, NW, Washington, DC 20549-0609, with reference to File
No. S7-26-99. OMB is required to make a decision concerning the
collections of information between 30 and 60 days after publication;
therefore, a comment to OMB is best assured of having its full effect
if OMB receives it within 30 days of publication.
VII. Initial Regulatory Flexibility Analysis
This Initial Regulatory Flexibility Analysis has been prepared in
accordance with 5 U.S.C. 603. It relates to proposed amendments to
Securities Act Rule 154 and Exchange Act Rules 14a-2, 14a-3, 14a-7,
14b-1, 14b-2, 14c-3 and 14c-7. The proposed amendments to the Exchange
Act rules would permit companies, banks, brokers and other persons to
satisfy the proxy and information statement delivery requirements, with
respect to two or more shareholders sharing the same address, by
sending a single proxy or information statement to the shareholders
(``householding'')
ct Rules 14a-2, 14a-3, 14a-7,
14b-1, 14b-2, 14c-3 and 14c-7. The proposed amendments to the Exchange
Act rules would permit companies, banks, brokers and other persons to
satisfy the proxy and information statement delivery requirements, with
respect to two or more shareholders sharing the same address, by
sending a single proxy or information statement to the shareholders
(``householding''). The proposed changes to Rule 154 would permit
issuers and other persons to household proxy-prospectuses required to
be delivered in connection with business combination transactions,
exchange offers and reclassifications of securities.
A. Reasons for the Proposed Action
The purpose of the proposed amendments is to allow companies,
banks, brokers and other persons to send a single proxy or information
statement or combined proxy-prospectus to multiple shareholders
residing at a shared address. Pursuant to amendments adopted today in
the Companion Release, issuers are able to household prospectuses,
annual reports and semiannual reports to security holders. Because the
proxy rules require the annual report to accompany or precede delivery
of the proxy or information statement, companies generally mail the
annual report in the same package with the proxy or information
statement. The proposed amendments would permit companies to household
proxy and information statements under the same conditions for
householding prospectuses and annual reports. If the amendments are
adopted, companies will be able to household the entire annual meeting
package to consenting shareholders. The proposed amendments are
intended to reduce the amount of duplicative information that
shareholders receive and lower printing and mailing costs to companies
that ultimately are borne by the shareholders.
B. Objectives
useholding prospectuses and annual reports. If the amendments are
adopted, companies will be able to household the entire annual meeting
package to consenting shareholders. The proposed amendments are
intended to reduce the amount of duplicative information that
shareholders receive and lower printing and mailing costs to companies
that ultimately are borne by the shareholders.
B. Objectives
The proposed amendments are designed to save costs for companies,
brokers, banks and other persons, while maintaining protections for
investors. The proposed rules would permit companies and others to
household proxy and information statements and combined proxy-
prospectuses by obtaining implied or written consent from shareholders.
Companies and others may household by implied consent to shareholders
residing at a shared address who are members of the same family if the
shareholders are given advance written notice and the opportunity to
object. Otherwise, the company must obtain written consent to
householding from the shareholders. A commenter on the Proposing
Release estimated that companies and others could reduce their proxy
and information statement mailings by 10-30% if the proposed amendments
are adopted. Reliance on the proposed householding rules would be
optional; the Commission believes companies and others generally will
rely on the proposed rules only to the extent that cost savings can be
achieved.
C. Legal Basis
The Commission is proposing to amend Rule 154 pursuant to the
authority set forth in Section 19(a) of the Securities Act.\73\ It is
proposing to amend the proxy rules under the authority set forth in
Sections 12, 14 and 23(a) of the Exchange Act.\74\
---------------------------------------------------------------------------
\73\ 15 U.S.C. 77s(a).
\74\ 15 U.S.C. 78l, 78n and 78w(a).
---------------------------------------------------------------------------
D. Small Entities Subject to the Rules
Securities Act.\73\ It is
proposing to amend the proxy rules under the authority set forth in
Sections 12, 14 and 23(a) of the Exchange Act.\74\
---------------------------------------------------------------------------
\73\ 15 U.S.C. 77s(a).
\74\ 15 U.S.C. 78l, 78n and 78w(a).
---------------------------------------------------------------------------
D. Small Entities Subject to the Rules
Rule 0-10 under the Exchange Act defines the term ``small
business'' as a company whose total assets on the last day of its most
recent fiscal year were
$5 million or less.\75\ Only small businesses that have securities
registered under Section 12 of the Exchange Act are subject to the
proxy rules. There are approximately 815 reporting companies that have
assets of $5 million or less. As stated above, the proposed
householding rules would be optional.
---------------------------------------------------------------------------
\75\ 17 CFR 240.0-10.
---------------------------------------------------------------------------
E. Reporting, Recordkeeping, and Other Compliance Issues
The primary goal of the proposed revisions is to remove unnecessary
regulatory requirements. The proposed rules, however, would require
companies and other parties choosing to solicit implied consent to
householding from shareholders to mail a separate written notice of the
companies' intention to household proxy and information statements. The
proposed rules also would require companies and other parties to
undertake in the proxy or information statement to provide, upon
written or oral request, a separate copy of the annual report, proxy
statement or information statement to a shareholder residing at an
address to which they delivered a householded copy
f the
companies' intention to household proxy and information statements. The
proposed rules also would require companies and other parties to
undertake in the proxy or information statement to provide, upon
written or oral request, a separate copy of the annual report, proxy
statement or information statement to a shareholder residing at an
address to which they delivered a householded copy. Additionally,
companies choosing to household the annual report and proxy or
information statement would have to provide instructions in the proxy
or information statement as to how: (1) A shareholder can revoke
consent to householding; and (2) shareholders sharing an address can
request householding. It is likely that the notice generally would not
exceed one page, and the proxy or information statement disclosure
would be only a paragraph or two in length.
F. Duplicative, Overlapping or Conflicting Federal Rules
The Commission believes that there are no federal rules that
duplicate, overlap, or conflict with, the proposed rules.
G. Significant Alternatives
The Regulatory Flexibility Act directs the Commission to consider
significant alternatives that would accomplish the stated objective,
while minimizing any significant adverse impact on small issuers. In
connection with the proposed rules, the Commission considered the
following alternatives: (a) The establishment of differing compliance
or reporting requirements or timetables that take into account the
resources available to small entities; (b) the clarification,
consolidation or simplification of compliance and reporting
requirements under the rule for small entities; (c) the use of
performance rather than design standards; and (d) an exemption from the
coverage of the rule, or any part thereof, for small entities.
The proposed rules are intended to remove regulatory requirements
for all companies, including those that are small entities
rification,
consolidation or simplification of compliance and reporting
requirements under the rule for small entities; (c) the use of
performance rather than design standards; and (d) an exemption from the
coverage of the rule, or any part thereof, for small entities.
The proposed rules are intended to remove regulatory requirements
for all companies, including those that are small entities. The costs
of the proposed notice and undertaking requirements are not expected to
be significant and should be more than offset by the cost savings
realized as a result of householding proxy and information statements.
The Commission considered exempting small entities that are reporting
companies from the notice and undertaking requirements, but believes
that investors in companies of all sizes should be notified that a
company intends to household the proxy and information statement and
have the opportunity to object. Since the proposed rules would be
optional and should benefit small entities, it was unnecessary to
consider exempting them from coverage of the proposed rules.
H. Solicitation of Comments
The Commission encourages the submission of comments with respect
to any aspect of this Initial Regulatory Flexibility Analysis. Comment
specifically is requested on the number of small entities that would be
affected by the proposed rules. Comment also is requested on the impact
of the proposed rules on broker and banks that are small entities.
Commenters are asked to describe the nature of any impact and provide
empirical data supporting the extent of their impact. These comments
will be considered in preparation of the Final Regulatory Flexibility
Analysis, if the rules are adopted, and will be placed in the same
public comment file as comments on the proposed rules themselves.
VIII. Statutory Authority
s that are small entities.
Commenters are asked to describe the nature of any impact and provide
empirical data supporting the extent of their impact. These comments
will be considered in preparation of the Final Regulatory Flexibility
Analysis, if the rules are adopted, and will be placed in the same
public comment file as comments on the proposed rules themselves.
VIII. Statutory Authority
The Commission is proposing to amend Rule 154 pursuant to the
authority set forth in Section 19(a) of the Securities Act. The
Commission is proposing to amend Rules 14a-3, 14c-3, 14b-1 and 14b-2
under the authority set forth in sections 12, 14 and 23(a) of the
Exchange Act.
List of Subjects
17 CFR Part 230
Investment companies, Reporting and recordkeeping requirements,
Securities.
17 CFR Part 240
Reporting and recordkeeping requirements, Securities.
Text of Proposed Rules
For the reasons set out in the preamble, Title 17, Chapter II of
the Code of Federal Regulations is proposed to be amended as follows:
PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933
1. The authority citation for Part 230 continues to read, in part,
as follows:
Authority: 15 U.S.C. 77b, 77f, 77g, 77h, 77j, 77r, 77s, 77sss,
78c, 78d, 78l, 78m, 78n, 78o, 78w, 78ll(d), 79t, 80a-8, 80a-24, 80a-
28, 80a-29, 80a-30, and 80a-37, unless otherwise noted.
* * * * *
Sec. 230.154 [Amended]
2. Section 230.154 is amended by removing paragraph (e).
PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934
3. The authority citation for Part 240 continues to read, in part,
as follows:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77eee,
77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 78j-1, 78k,
78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78ll(d),
78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4 and
80b-11, unless otherwise noted.
* * * * *
4. Section 240.14a-2 is amended by revising paragraph (a)(1)(ii) to
read as follows:
ollows:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77eee,
77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 78j-1, 78k,
78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78ll(d),
78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4 and
80b-11, unless otherwise noted.
* * * * *
4. Section 240.14a-2 is amended by revising paragraph (a)(1)(ii) to
read as follows:
Sec. 240.14a-2 Solicitations to which Sec. 240.14a-3 to Sec. (240.14a-
15 apply.
* * * * *
(a) * * *
(1) * * *
(ii) Furnishes promptly to the person solicited (or person's
household in accordance with Sec. 240.14a-3(e)(1)) a copy of all
soliciting material with respect to the same subject matter or meeting
received from all persons who shall furnish such copies thereof for
such purpose and who shall, if requested, defray the reasonable
expenses to be incurred in forwarding such material, and
* * * * *
5. Section 240.14a-3 is amended by revising paragraph (e)(1) to
read as follows:
Sec. 240.14a-3 Information to be furnished to security holders.
* * * * *
(e)(1)(i) A registrant will be considered to have delivered an
annual report and/or proxy statement, as applicable, to all security
holders of record who share an address if:
(A) The registrant delivers one annual report and/or proxy
statement to the shared address;
(B) The registrant addresses the annual report and/or proxy
statement to the security holders as a group (for example, ``ABC Fund
[or Corporation] Shareholders,'' ``Jane Doe and Household,'' ``The
Smith Family'') or to each of the security holders individually (for
example, ``John Doe and Richard Jones'');
(C) The security holders consent in writing to delivery of one
annual report and/or proxy statement;
(D) With respect to delivery of the proxy statement, the registrant
includes a separate proxy card for each security holder residing at the
shared address; and
(E) The registrant includes an undertaking in the proxy statement
to deliver promptly upon written or oral request a
hard Jones'');
(C) The security holders consent in writing to delivery of one
annual report and/or proxy statement;
(D) With respect to delivery of the proxy statement, the registrant
includes a separate proxy card for each security holder residing at the
shared address; and
(E) The registrant includes an undertaking in the proxy statement
to deliver promptly upon written or oral request a separate copy of the
annual report and/or proxy statement to a security holder residing at a
shared address to which a single copy of the documents was delivered.
(ii) Implied consent. The registrant need not obtain written
consent from a security holder if all of the following conditions are
met:
(A) The security holder has the same last name as the other
security holders, or the registrant reasonably believes that the
security holders are members of the same family;
(B) The registrant has sent the security holder a notice at least
90 days before the registrant begins to rely on this section concerning
delivery of annual reports and/or proxy statements to that security
holder. The notice must:
(1) Be a separate written statement that is delivered separately
from any other communications;
(2) State that only one annual report and/or proxy statement will
be delivered to the shared address unless the registrant receives
contrary instructions;
(3) Include a toll-free telephone number, or be accompanied by a
reply form that is pre-addressed with postage provided, that the
security holder can use to notify the registrant that the security
holder wishes to receive a separate annual report and/or proxy
statement;
(4) State the duration of the consent;
(5) Explain how a security holder can revoke consent;
(6) State that the registrant will begin sending individual copies
to a security holder within 30 days after the security holder revokes
consent; and
that the
security holder can use to notify the registrant that the security
holder wishes to receive a separate annual report and/or proxy
statement;
(4) State the duration of the consent;
(5) Explain how a security holder can revoke consent;
(6) State that the registrant will begin sending individual copies
to a security holder within 30 days after the security holder revokes
consent; and
(7) Contain the following prominent statement, or similar clear and
understandable statement, in bold-face type: ``Important Notice
Regarding Delivery of Shareholder Documents.'' Alternatively, this
statement may appear on the envelope containing the notice;
Note to paragraph (e)(1)(ii)(B). The notice should be written in
plain English. See Sec. 230.421(d)(2) of this chapter for a
discussion of plain English principles.
(C) The registrant has not received the reply form or other
notification indicating that the security holder wishes to continue to
receive an individual copy of the annual report and/or proxy statement,
within 90 days after the registrant sent the notice; and
(D) The registrant delivers the report to a post office box or to a
residential street address. The registrant can assume that a street
address is a residence unless it has information that indicates it is a
business.
(iii) Revocation of consent. If a security holder, orally or in
writing, revokes consent to delivery of one annual report and/or proxy
statement, to a shared address, the registrant must begin sending
individual copies to that security holder within 30 days after the
registrant receives revocation of the security holder's consent.
ce unless it has information that indicates it is a
business.
(iii) Revocation of consent. If a security holder, orally or in
writing, revokes consent to delivery of one annual report and/or proxy
statement, to a shared address, the registrant must begin sending
individual copies to that security holder within 30 days after the
registrant receives revocation of the security holder's consent.
(iv) Definition of address. For purposes of this section, address
means a street address, a post office box number, an electronic mail
address, a facsimile telephone number, or other similar destination to
which paper or electronic documents are delivered, unless otherwise
provided in this section. If the registrant has reason to believe that
the address is a street address of a multi-unit building, the address
must include the unit number.
Note to paragraph (e)(1). A person other than the registrant
making a proxy solicitation may deliver a single proxy statement to
security holders of record who have separate accounts and share an
address if: (a) The registrant has followed the procedures in this
section; and (b) the registrant makes available the shared address
information to the person in accordance with Sec. 240.14a-7(a)(2)(i)
and (ii).
* * * * *
6. Section 240.14a-7 is amended by revising paragraphs (a)(2)(i)
and (ii) and designating the existing note to Sec. 240.14a-7 as Note 1,
revising the heading to the notes, and adding Note 2 to read as
follows:
Sec. 240.14a-7 Obligations of registrants to provide a list of, or mail
soliciting materials to, security holders.
* * * * *
(a) * * *
(2) * * *
.14a-7(a)(2)(i)
and (ii).
* * * * *
6. Section 240.14a-7 is amended by revising paragraphs (a)(2)(i)
and (ii) and designating the existing note to Sec. 240.14a-7 as Note 1,
revising the heading to the notes, and adding Note 2 to read as
follows:
Sec. 240.14a-7 Obligations of registrants to provide a list of, or mail
soliciting materials to, security holders.
* * * * *
(a) * * *
(2) * * *
(i) Mail copies of any proxy statement, form of proxy or other
soliciting material furnished by the security holder to the record
holders, including banks, brokers, and similar entities, designated by
the security holder. A sufficient number of copies must be mailed to
the banks, brokers, and similar entities for distribution to all
beneficial owners designated by the security holder. If the registrant,
banks, brokers or similar entities have received implied or written
consent to deliver a single proxy statement to security holders
residing at a shared address in accordance with the procedures in
Sec. 240.14a-3(e)(1), Sec. 240.14b-1(b)(2), or Sec. 240.14b-2(b)(3), a
single copy of the proxy statement furnished by the security holder
shall be mailed to that address. The registrant shall mail the security
holder material with reasonable promptness after tender of the material
to be mailed, envelopes or other containers therefor, postage or
payment for postage and other reasonable expenses of effecting such
mailing. The registrant shall not be responsible for the content of the
material; or
furnished by the security holder
shall be mailed to that address. The registrant shall mail the security
holder material with reasonable promptness after tender of the material
to be mailed, envelopes or other containers therefor, postage or
payment for postage and other reasonable expenses of effecting such
mailing. The registrant shall not be responsible for the content of the
material; or
(ii) Deliver the following information to the requesting security
holder within five business days of receipt of the request: a
reasonably current list of the names, addresses and security positions
of the record holders, including banks, brokers and similar entities
holding securities in the same class or classes as holders which have
been or are to be solicited on management's behalf, or any more limited
group of such holders designated by the security holder if available or
retrievable under the registrant's or its transfer agent's security
holder data systems; the most recent list of names, addresses and
security positions of beneficial owners as specified in Sec. 240.14a-
13(b), in the possession, or which subsequently comes in the
possession, of the registrant; and the names of security holders
residing at a shared address that have consented to delivery of a
single copy of proxy materials to a shared address, if the registrant
has received implied or written consent in accordance with
Sec. 240.14a-3(e)(1). All security holder list information shall be in
the form requested by the security holder to the extent that such form
is available to the registrant without undue burden or expense. The
registrant shall furnish the security holder with updated record holder
information on a daily basis or, if not available on a daily basis, at
the shortest reasonable intervals, provided, however, the registrant
need not provide beneficial or record holder information more current
than the record date for the meeting or action.
* * * * *
to the registrant without undue burden or expense. The
registrant shall furnish the security holder with updated record holder
information on a daily basis or, if not available on a daily basis, at
the shortest reasonable intervals, provided, however, the registrant
need not provide beneficial or record holder information more current
than the record date for the meeting or action.
* * * * *
Notes to Sec. 240.14a-7.
1. * * *
2. When providing the information required by Sec. 240.14a-
7(a)(1)(ii), if the registrant has received implied or written
consent to householding in accordance with Sec. 240.14a-3(e)(1), it
shall exclude from the number of record holders those to whom it
does not have to deliver a separate proxy statement.
7. Section 240.14a-101 is amended by adding Item 23 to read as
follows:
Sec. 240.14a-101 Schedule 14A Information required in proxy statement.
* * * * *
Item 23. Delivery of documents to security holders residing at a
shared address. If one annual report and/or proxy statement is being
delivered (``householded'') to two or more security holders who
share an address in accordance with Sec. 240.14a-3(e)(1), furnish
the following information:
(a) State that only one annual report and/or proxy statement is
being delivered to multiple security holders residing at a shared
address unless the registrant has received contrary instructions
from one or more of the security holders;
(b) Undertake to deliver promptly upon written or oral request a
separate copy of the annual report and/or proxy statement to a
security holder residing at a shared address to which a single copy
of the documents was delivered;
(c) Provide instructions as to how a security holder can notify
the registrant that the security holder wishes to receive a separate
annual report and/or proxy statement in the future; and
er promptly upon written or oral request a
separate copy of the annual report and/or proxy statement to a
security holder residing at a shared address to which a single copy
of the documents was delivered;
(c) Provide instructions as to how a security holder can notify
the registrant that the security holder wishes to receive a separate
annual report and/or proxy statement in the future; and
(d) Provide instructions how security holders sharing an address
can request householding if they are receiving multiple copies of
the annual report and/or proxy statement.
8. Section 240.14b-1 is amended by adding a note following
paragraph (b)(2) and by adding paragraph (c)(3) to read as follows:
Sec. 240.14b-1 Obligation of registered brokers and dealers in
connection with the prompt forwarding of certain communications to
beneficial owners.
* * * * *
(b)(2) * * *
Note to paragraph (b)(2): The broker or dealer may, on its own
initiative, or at the request of a registrant, deliver one annual
report, proxy statement, or information statement to more than one
beneficial owner residing at a shared address if the requirements
set forth in Sec. 240.14a-3(e)(1)(with respect to annual reports and
proxy statements), and Sec. 240.14c-3(c)(with respect to annual
reports and information statements) applicable to registrants are
satisfied instead by the broker or dealer.
* * * * *
(c) * * *
(3) In its response pursuant to paragraph (b)(1) of this section, a
broker or dealer shall not include information about proxy statements,
information statements or annual reports that will not be delivered to
security holders residing at a shared address because of the broker or
dealer's reliance on the householding procedures referred to in the
Note to paragraph (b)(2) of this section.
9. Section 240.14b-2 is amended by adding a note to paragraph
ction, a
broker or dealer shall not include information about proxy statements,
information statements or annual reports that will not be delivered to
security holders residing at a shared address because of the broker or
dealer's reliance on the householding procedures referred to in the
Note to paragraph (b)(2) of this section.
9. Section 240.14b-2 is amended by adding a note to paragraph
(b)(3) and by adding paragraph (c)(4) to read as follows:
Sec. 240.14b-2 Obligation of banks, associations and other entities
that exercise fiduciary powers in connection with the prompt forwarding
of certain communications to beneficial owners.
* * * * *
(b)(3) * * *
Note to paragraph (b)(3): The bank may, on its own initiative,
or at the request of a registrant, deliver one annual report, proxy
statement, or information statement to more than one beneficial
owner residing at a shared address if the requirements set forth in
Sec. 240.14a-3(e)(1) (with respect to annual reports and proxy
statements), and Sec. 240.14c-3(c) (with respect to annual reports
and information statements) applicable to registrants are satisfied
instead by the bank.
* * * * *
(c) * * *
(4) A bank shall not include information in its response pursuant
to paragraphs (b)(1)(ii)(A) of this section proxy statements,
information statements or annual reports that will not be delivered to
security holders residing at a shared address because of the bank's
reliance on the householding procedures referred to in the Note to
paragraph (b)(3) of this section.
10. Section 240.14c-3 is amended by adding paragraph (c) to read as
follows:
Sec. 240.14c-3 Annual report to be furnished security holders.
* * * * *
s,
information statements or annual reports that will not be delivered to
security holders residing at a shared address because of the bank's
reliance on the householding procedures referred to in the Note to
paragraph (b)(3) of this section.
10. Section 240.14c-3 is amended by adding paragraph (c) to read as
follows:
Sec. 240.14c-3 Annual report to be furnished security holders.
* * * * *
(c) A registrant will be considered to have delivered an annual
report or information statement to security holders of record who share
an address if the requirements set forth in Sec. 240.14a-3(e)(1) are
satisfied.
11. Section 240.14c-101 is amended by adding Item 5 to read as
follows:
Sec. 240.14c-101 Schedule 14C Information required in information
statement
Item 5. Delivery of documents to security holders residing at a
shared address. If one annual report and/or information statement is
being delivered (``householded'') to two or more security holders
who share an address in accordance with Sec. 240.14a-3(e)(1),
furnish the following information:
(a) State that only one annual report and/or proxy statement is
being delivered to multiple security holders residing at a shared
address unless the registrant has received contrary instructions
from one or more of the security holders;
(b) Undertake to deliver promptly upon written or oral request a
separate copy of the annual report and/or information statement to a
security holder residing at a shared address to which a single copy
of the documents was delivered;
(c) Provide instructions as to how a security holder can notify
the registrant that the security holder wishes to receive a separate
annual report and/or information statement in the future; and
upon written or oral request a
separate copy of the annual report and/or information statement to a
security holder residing at a shared address to which a single copy
of the documents was delivered;
(c) Provide instructions as to how a security holder can notify
the registrant that the security holder wishes to receive a separate
annual report and/or information statement in the future; and
(d) Provide instructions how security holders sharing an address
can request householding if they are receiving multiple copies of
the annual report and/or information statement.
Dated: November 4, 1999.
By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-29532 Filed 11-15-99; 8:45 am]
BILLING CODE 8010-01-P
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.