Securities Law> Additional Offerings, Disclosure & the Securities Exchange Act of 1934> Proxies

Shareholder Proxy Solicitation Rules

As the number of shareholders in a corporation has grown and as the shareholders have become geographically dispersed, the practice of soliciting their proxies for shareholder votes has developed. Such proxies make it easier to obtain a quorum at annual meetings of corporations required by state law and at meetings called to take special action. Section 14(a) of the Securities Exchange Act of 1934 was adopted in order to provide the Securities and Exchange Commission with authority to regulate the timing and content of solicitations of shareholder proxies.

  • Securities that are listed on stock exchanges such as the New York and American Stock Exchanges,
  • Over-the-counter securities that are held by 500 or more persons and are part of the equity of a company that has assets of more than $10 million,
  • Securities of registered public utility holding companies and their subsidiaries, and
  • Registered investment company securities.

Proxy solicitations relating to unlisted securities of companies with listed securities are not covered by Commission proxy regulation unless the unlisted securities also are registered with the Commission. Commission proxy regulations also do not cover unlisted and unregistered securities.

The Commission through its regulation of a proxy solicitation does not intend to provide Commission approval of any recommendation for shareholder action in the proxy materials. Rather, the objective of Commission proxy solicitation regulations is to ensure that shareholders are provided with sufficient information necessary to make an informed decision.

Holders of any type of corporate security that is registered are entitled to a required proxy information when their consent to some action affecting their security is solicited. Thus, holders of corporate bonds in addition to holders of corporate stock may be entitled to receipt of a proxy that meets Commission requirements.

Shareholders of a company may solicit proxies of other shareholders of the company. Due to the substantial cost that may be involved in such solicitations, the Commission has adopted Rule 14a-8. That rule provides that the company must include in its proxy statement solicitations by shareholders of the company to fellow shareholders if those solicitations meet various requirements regarding that timeliness of the solicitation, the subject of the solicitation, and the amount of securities held by the shareholder making the solicitation.