Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, November 28, 2007

SEC Adopts Shareholder Forum Amendments

The SEC voted to adopt amendments to the proxy rules to facilitate the use of electronic shareholder forums. The amendments are expected to open up new avenues for real-time communications among shareholders, and between shareholders and the companies they own.  The rule amendments are intended to remove the risk that discussion in an online forum might be viewed as a proxy solicitation.

In summary:

Any participant in an electronic shareholder forum will be able to rely on the new exemption so long as his or her communications occur more than 60 days prior to the date announced by the company for its annual or special meeting of shareholders, and the communicating party does not solicit proxy authority while relying on the exemption. A participant in an electronic shareholder forum will be eligible to solicit proxy authority after the date that the exemption is no longer available, provided that the solicitation is conducted in accordance with Regulation 14A.
Where the company announces a meeting of shareholders less than 60 days before the meeting date, the solicitation could not occur more than two days following the company's announcement.
In addition, the amendments provide that a shareholder, company, or third party acting on behalf of a shareholder or a company, that establishes, maintains or operates an electronic shareholder forum will not be liable under the federal securities laws for any statement or information provided by another person participating in the forum.

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