[Federal Register Volume 59, Number 55 (Tuesday, March 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6601]
[[Page Unknown]]
[Federal Register: March 22, 1994]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33768]
Timely Distribution of Proxy and Other Soliciting Material
AGENCY: Securities and Exchange Commission.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: To give shareholders sufficient time to make an informed
voting decision, registrants are reminded of their obligation to
distribute proxy and other soliciting material to banks and brokers on
a timely basis for forwarding to beneficial owners.
FOR FURTHER INFORMATION CONTACT:
Barbara C. Jacobs or Elizabeth M. Murphy, Office of Disclosure Policy,
Division of Corporation Finance at (202) 272-2589, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549.
SUPPLEMENTARY INFORMATION: During the 1993 proxy season, the Division
of Corporation Finance (``Division'') received complaints from
beneficial owners who did not receive their proxy and other soliciting
material in a timely manner. In certain instances, these owners did not
receive the materials in sufficient time to make an informed voting
decision. Accordingly, the Securities and Exchange Commission is
reminding registrants of their obligations to distribute proxy and
other soliciting material to banks and brokers on a timely basis for
forwarding to beneficial owners. Under rule 14a-13(a)(4)\1\ of the
Securities Exchange Act of 1934,\2\ registrants subject to the proxy
rules are required, among other things: (1) to inquire of each bank and
broker of the number of copies of proxy, proxy soliciting material
(and, if directors are to be elected, annual reports to shareholders)
necessary to furnish to beneficial owners;\3\ and
---------------------------------------------------------------------------
\1\17 CFR 240.14a-13(a)(4).
\2\15 U.S.C. 78a et seq.
\3\Rule 14a-13(a)(1) and (2) [17 CFR 240.14a-13(a)(1) and (2)].
The inquiry required by Rule 14a-13(a)(1) must be made at least 20
business days prior to the record date absent certain circumstances.
See rule 14a-13(a)(3) [17 CFR 240.14a-13(a)(3)]. As the inquiry
represents the initial step of the proxy voting process, it must be
made within the specified time period.
---------------------------------------------------------------------------
(2) to supply, in a timely manner, copies of the proxy, other proxy
soliciting material (and the annual report to shareholders, if
required) in such quantities as reasonably requested by the bank or
broker in order to send such material to each beneficial owner of
securities.\4\
---------------------------------------------------------------------------
\4\This notice also applies to the obligation of registrants to
distribute information statements (and, if directors are to be
elected, annual reports to shareholders) to banks and brokers. See
Rule 14c-7(a)(4) of the Exchange Act [17 CFR 240.14c-7(a)(4)].
---------------------------------------------------------------------------
Although the rules do not specify the number of days before the
meeting by which registrants must make their proxy materials available
for distribution to their beneficial owners, in order to comply with
the timeliness requirement, the materials must be mailed sufficiently
in advance of the meeting date to allow five business days for
processing by the banks and brokers\5\ and an additional period to
provide ample time for delivery of the material, consideration of the
material by the beneficial owners, return of their voting instructions,
and transmittal of the vote from the bank or broker to the
tabulator.\6\
---------------------------------------------------------------------------
\5\See Rules 14b-2(b)(2) [17 CFR 240.14b-2(b)(2)] and 14b-
1(b)(2) [17 CFR 240.14b-1(b)(2)], which set forth the obligations of
banks and brokers to forward materials to beneficial owners within
five business days.
\6\For example, Sec. 402.05 of the New York Stock Exchange
Listed Company Manual recommends that proxy materials be sent 30
calendar days before the meeting date, while section 703 of the
American Stock Exchange Company Guide recommends that the material
be received by shareholders as many days as possible (preferably at
least 20 calendar days) in advance of the meeting date. In many
cases, a longer period may be required, particularly where non-
routine issues are being voted upon or third-class bulk rate mail is
used.
In addition, see Improving Communications Between Issuers and
Beneficial Owners of Nominee Held Securities, Report of the Advisory
Committee on Shareholder Communications, U.S. Securities and
Exchange Commission (June 1982) at Chapter II.D.3. which recommends
that registrants distribute proxy materials at least thirty days
prior to the meeting date.
---------------------------------------------------------------------------
A few practices by registrants that seem to have contributed to the
late receipt of proxy materials by beneficial owners are the mailing of
materials by third class bulk mailing, providing fewer sets of
materials than requested by a bank or broker, or refusing to provide
additional sets of materials necessary to cover changes in ownership
through the record date. Registrants choosing to mail materials by
third class bulk mailing must factor in the additional length of time
that it will take their materials to reach beneficial owners and adjust
their distribution schedule accordingly to ensure their timely receipt.
Dated: March 16, 1994.
By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-6601 Filed 3-21-94; 8:45 am]
BILLING CODE 8010-01-M
