4148 Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations 

1 17 CFR 240.14a–2. 

2 17 CFR 240.14a–3. 

3 17 CFR 240.14a–4. 

4 17 CFR 240.14a–7. 

5 17 CFR 240.14a–8. 

6 17 CFR 240.14a–12. 

7 17 CFR 240.14a–13. 

8 17 CFR 240.14b–1. 

9 17 CFR 240.14b–2. 

10 17 CFR 240.14c–2. 

11 17 CFR 240.14c–3. 

12 17 CFR 240.14c–5. 

13 17 CFR 240.14c–7. 

14 17 CFR 240.14a–101. 

15 17 CFR 240.14c–101. 

16 17 CFR 249.310. 

17 17 CFR 249.310a. 

18 17 CFR 249.308a. 

19 17 CFR 249.308b. 

20 15 U.S.C. 78a et seq. 

21 17 CFR 249.330 and 274.101. 

22 15 U.S.C. 80a–1 et seq. 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR Parts 240, 249 and 274 

[Release Nos. 34–55146; IC–27671; File No. 

S7–10–05] 

RIN 3235–AJ47 

Internet Availability of Proxy Materials 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Final rule; request for comment 

on Paperwork Reduction Act burden 

estimates. 

SUMMARY: We are adopting amendments 

to the proxy rules under the Securities 

Exchange Act of 1934 that provide an 

alternative method for issuers and other 

persons to furnish proxy materials to 

shareholders by posting them on an 

Internet Web site and providing 

shareholders with notice of the 

availability of the proxy materials. 

Issuers must make copies of the proxy 

materials available to shareholders on 

request, at no charge to shareholders. 

The amendments put into place 

processes that will provide shareholders 

with notice of, and access to, proxy 

materials while taking advantage of 

technological developments and the 

growth of the Internet and electronic 

communications. Issuers that rely on the 

amendments may be able to 

significantly lower the costs of their 

proxy solicitations that ultimately are 

borne by shareholders. The amendments 

also might reduce the costs of engaging 

in a proxy contest for soliciting persons 

other than the issuer. The amendments 

do not apply to business combination 

transactions. The amendments also do 

not affect the availability of any existing 

method of furnishing proxy materials. 

DATES: Effective Date: March 30, 2007. 

Compliance Date: Persons may not 

send a Notice of Internet Availability of 

Proxy Materials to shareholders prior to 

July 1, 2007. 

Comment Due Date: Comments on the 

Paperwork Reduction Act burden 

estimate should be received on or before 

March 30, 2007. 

ADDRESSES: Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/final.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number S7–10–05 on the subject line; 

or 

• Use the Federal eRulemaking Portal 

(http://www.regulations.gov). Follow the 

instructions for submitting comments. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number S7–10–05. To help us process 

and review your comments more 

efficiently, please use only one method. 

The Commission will post all comments 

on its Internet Web site (http:// 

www.sec.gov/rules/final.shtml). 

Comments also are available for public 

inspection and copying in the 

Commission’s Public Reference Room, 

100 F Street, NE., Washington, DC 

20549. All comments received will be 

posted without change; we do not edit 

personal identifying information from 

submissions. You should submit only 

information that you wish to make 

publicly available. 

FOR FURTHER INFORMATION CONTACT: 

Raymond A. Be, Special Counsel, Office 

of Rulemaking, Division of Corporation 

Finance, at (202) 551–3430, Securities 

and Exchange Commission, 100 F 

Street, NE., Washington, DC 20549– 

3628. 

SUPPLEMENTARY INFORMATION: We are 

amending Rules 14a–2,1 14a–3,2 14a–4,3

14a–7,4 14a–8,5 14a–12,6 14a–13,7 14b– 

1,8 14b–2,9 14c–2,10 14c–3,11 14c–5,12

14c–7,13 Schedule 14A,14 Schedule 

14C,15 Form 10–K,16 Form 10–KSB,17

Form 10–Q,18 and Form 10–QSB,19

under the Securities Exchange Act of 

1934 20 and Form N–SAR21 under the 

Exchange Act and the Investment 

Company Act of 1940.22 We also are 

adding new Rule 14a–16 under the 

Exchange Act. 

Table of Contents 

I. Introduction 

II. Description of the Amendments 

A. The Notice and Access Model for 

Issuers 

1. Notice of Internet Availability of Proxy 

Materials 

a. Householding 

b. Security and Privacy on the Internet 

i. Theft of Identification or Control 

Numbers 

ii. Phishing 

iii. Misuse of Information by Issuers and 

Other Soliciting Persons 

2. Proxy Card 

3. Internet Web Site Posting of Proxy 

Materials 

4. Period of Reliance 

5. State Law Notices 

6. Additional Soliciting Materials 

7. Requests for Copies of Proxy Materials 

B. The Role of Intermediaries 

1. Background 

2. Discussion of the Amendments 

3. Request for Copies by Beneficial Owners 

C. Soliciting Persons Other Than the Issuer 

1. Mechanics of Proxy Solicitations by 

Persons Other Than the Issuer 

2. Timeframe for Sending Notice of 

Internet Availability of Proxy Materials 

3. Content of the Notice of Internet 

Availability of Proxy Materials of a 

Soliciting Person Other Than the Issuer 

4. Shareholder Lists and the Furnishing of 

Proxy Materials by the Issuer 

5. The Role of Intermediaries With Respect 

to Solicitations by Persons Other Than 

the Issuer 

D. Business Combination Transactions 

E. Compliance Date and Monitoring 

IV. Conforming and Correcting Revisions to 

the Proxy Rules 

V. Paperwork Reduction Act 

A. Background 

B. Summary of Amendments 

C. Comments on PRA Estimates 

VI. Cost-Benefit Analysis 

A. Background 

B. Summary of Amendments 

C. Benefits 

D. Costs 

VII. Consideration of Burden on Competition 

and Promotion of Efficiency, 

Competition and Capital Formation 

VIII. Final Regulatory Flexibility Analysis 

A. Need for the Amendments 

B. Significant Issues Raised by Public 

Comment 

C. Small Entities Subject to the 

Amendments 

D. Reporting, Recordkeeping and Other 

Compliance Requirements 

E. Agency Action To Minimize Effect on 

Small Entities 

IX. Statutory Basis and Text of Amendments 

I. Introduction 

On December 8, 2005, we proposed 

amendments to update the proxy rules 

to take greater advantage of 

communications technology by 

supplementing the existing regulatory 


rwilkins on PROD1PC63 with RULES
Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations 4149 

23Release No. 34–52926 (Dec. 8, 2005) [70 FR 

74597]. For purposes of this release only, the term 

‘‘proxy materials’’ includes proxy statements on 

Schedule 14A, proxy cards, information statements 

on Schedule 14C, annual reports to security holders 

required by Rules 14a–3 and 14c–3 of the Exchange 

Act, notices of shareholder meetings, additional 

soliciting materials, and any amendments to such 

materials. For purposes of this release, the term 

does not include materials filed under Rule 14a–12. 

24See, for example, letters suggesting that current 

rates of Internet access are sufficient from American 

Bar Association (ABA), America’s Community 

Bankers (ACB), Association of Ameritech SBC 

Retirees (SBC Retirees), Business Roundtable (BRT), 

Computershare Ltd. (Computershare), Proxinvest, 

Gary Tannahill, Hermes, Investment Company 

Institute (ICI), Securities Transfer Association 

(STA), and Sullivan & Cromwell. But also see, for 

example, letters from Association of BellTel 

Retirees (BellTel Retirees), Todd Collier, Joel 

Brown, James Davis, Donna Garal, Clark Green, 

Heather Harper, Frank Inman, William Lafollette, 

James Phipps, Beth Spletter, Megan Stroinski, and 

the United States Postal Service (USPS) suggesting 

that those rates are not sufficient. 

25Some commenters believed that the proposed 

model might result in a decline in voting by 

shareholders. See, for example, letters from 

Automatic Data Processing, Inc. (ADP), James 

Angel, Timothy Buchman, State Board of 

Administration of Florida (Florida State Board), 

Fund of Stockowners Rights (Stockowners Rights), 

IR Web Report, and Securities Industry Association 

(SIA). However, other commenters believed the 

rules may increase shareholder voting by 

facilitating the voting process. See, for example, 

letters from AFL–CIO, Robert Atkinson, 

Institutional Shareholder Services (ISS), Proxinvest, 

and Society of Corporate Secretaries and 

Governance Professionals (SCSGP). 

26See, for example, letters from James Angel, 

Todd Collier, James Davis, William LaFollette, 

Matthew McGuire, and USPS. 

27See, for example, letters from ADP and 

Computershare. 

28See letter from ABA. 

29See letters from American Business Council 

(ABC), AFL–CIO, James Angel, CALSTRS, Florida 

State Board, Ohio Public Employees Retirement 

System (OPERS), San Diego City Employees’

Retirement System (San Diego Retirement), SIA, 

William Sjostrom, Stocklein Law Group, Swingvote, 

and Paul Uhlenhop. 

30See letters from ACB, AFL–CIO, Amalgamated 

Bank of LongView Funds (Amalgamated Bank), 

BellTel Retirees, Council of Institutional Investors 

(CII), Florida State Board, Carl Hagberg, 

International Brotherhood of Teamsters (Teamsters), 

National Retiree Legislative Network (NRLN), San 

Diego Retirement, and Swingvote. 

31See, for example, letters from BRT, Committee 

of Concerned Shareholders (Concerned 

Shareholders), Computershare, Carl Hagberg, 

Mellon, and STA. 

32See letters from BRT, Computershare, and 

SCSGP. 

33 It appeared that many commenters opposing 

adoption mistakenly believed that they would lose 

the ability to receive paper copies. Others objected 

to having to request paper copies under the notice 

and access model. See, for example, letters from 

Arthur Comings, Dave Few, George Liddell, Robert 

Link, and Chloris Wolski. 34According to data available on the Web site of 

ADP. See www.ics.adp.com/release11/public_site/ 

about/stats.html. 

35See letter from ADP. At the proposing stage, we 

estimated that 75% of people in the United States 

had Internet access, but we did not have an estimate 

for the percentage of investors with Internet access. 

36See, for example, letters from ABA, ACB, BRT, 

Computershare, Hermes, ICI, Proxinvest, SBC 

Retirees, STA, Sullivan & Cromwell, and Gary 

Tannahill. 

37See, for example, letters from American 

Association of Retired Persons (AARP), BellTel 

Retirees, Timothy Buchman, Todd Collier, NRLN, 

Printing Industries of America (PIA), Stockowners 

Rights, and Telephone Pioneers of America. 

38See, for example, letters from BellTel Retirees, 

Joel Brown, Todd Collier, James Davis, Donna 

Garal, Clark Green, Heather Harper, Frank Inman, 

William Lafollette, James Phipps, Beth Spletter, 

Megan Stroinski, and USPS. 

framework with an alternative ‘‘notice 

and access’’ proxy model that could 

reduce significantly the printing and 

mailing costs associated with furnishing 

proxy materials to shareholders.23

Under the notice and access model that 

we proposed, an issuer would be able to 

satisfy its obligations under the 

Commission’s proxy rules by posting its 

proxy materials on a publicly-accessible 

Internet Web site (other than the 

Commission’s EDGAR Web site) and 

providing shareholders with a notice 

informing them that the materials are 

available and explaining how to access 

those materials. Under the proposal, an 

issuer relying on the model would be 

required to provide a requesting 

shareholder with a copy of the proxy 

materials in paper or by e-mail, at no 

charge to the shareholder. We proposed 

that soliciting persons other than the 

issuer also would be able to rely on the 

notice and access model. 

We received approximately 140 

comment letters on the proposed notice 

and access model from a variety of 

interested parties, including issuers and 

their agents, shareholders, 

intermediaries and their agents, 

financial printers, manufacturers of 

mailing products, and academics. There 

was significant disagreement among the 

commenters regarding these key issues 

raised by the proposed model: 

• The sufficiency of current Internet 

access among the U.S. population such 

that the proposed model would be 

desirable; 24

• The effect that the proposed notice 

and access model might have on levels 

of proxy voting by shareholders; 25

• The level of security and privacy on 

the Internet; 26

• The extent of potential savings to 

issuers and those conducting proxy 

contests that choose to rely on the 

proposed model; 27 and 

• Whether the proposed model may 

make the proxy delivery system, 

particularly as it relates to beneficial 

owners holding in street name through 

their brokers or other intermediaries, too 

complex.28

Several commenters suggested 

revisions related to the proposed notice 

and access model, including the 

following: 

• The proposed rules should allow a 

shareholder to make an election to 

receive paper copies of the proxy 

materials with respect to any future 

solicitations that would remain in place 

until subsequently revoked by the 

shareholder; 29

• An issuer should have to make the 

proxy card available to shareholders 

through the same medium it uses to 

make the proxy statement available to 

them; 30

• The Commission should review and 

simplify the proxy delivery system as a 

whole rather than addressing the issue 

of electronic delivery of proxy materials 

in isolation; 31 and 

• The New York Stock Exchange 

(‘‘NYSE’’) should review its current 

schedule of maximum fees that its 

member firms may charge issuers to 

forward issuers’ proxy materials to 

beneficial owners.32

Although there was a mixed reaction 

to the proposal,33 we believe that 

current levels of access to the Internet 

merit adoption of the notice and access 

model as an alternative to the existing 

proxy distribution system. In this 

regard, we note that more than 10.7 

million beneficial shareholders already 

have given their affirmative consent to 

electronic delivery of proxy materials 

and approximately 87.8% of shares 

voted were voted electronically or 

telephonically during the 2006 proxy 

season.34 Moreover, research submitted 

to us during the comment period 

indicates that approximately 80% of 

investors in the United States have 

access to the Internet in their homes, a 

greater percentage than we estimated at 

the proposing stage.35 Several 

commenters expressed the view that the 

current level of Internet usage is 

sufficiently high to warrant adoption of 

the proposed notice and access model.36

Although some commenters did not 

think that Internet access is sufficiently 

widespread, particularly among 

seniors,37 to warrant implementation of 

the proposed model at this time,38 the 

requirement that any shareholder 

lacking Internet access, or preferring 

delivery of a copy of the proxy 

materials, can make a permanent 

request to receive a copy of the proxy 

materials (and all future proxy 

materials) at no charge should 

substantially mitigate the concern about 

Internet access. 

Therefore, we are adopting the 

proposal substantially as proposed. The 

final rules are intended to allow issuers 

and other soliciting persons to establish 

procedures that will promote use of the 

Internet as a reliable and cost-efficient 

means of making proxy materials 


rwilkins on PROD1PC63 with RULES
4150 Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations 

39 In a companion release, the Commission is 

proposing to require issuers and other soliciting 

persons to follow a substantially similar model. See 

Release No. 34–55147. 40An issuer or other soliciting person also must 

continue to comply with Exchange Act Rules 14a–

6 [17 CFR 240.14a–6] and 14c–5 [17 CFR 240.14c–

5], which require the issuer or other soliciting 

person to file its proxy statement (or information 

statement) and additional soliciting material with 

the Commission. An issuer also must continue to 

comply with Exchange Act Rules 14a–3(c) [17 CFR 

240.14a–3(c)] and 14c–3(b) [17 CFR 240.14c–3(b)], 

which require an issuer to submit copies of its 

annual report to security holders to the 

Commission. The rules that we are adopting in this 

release do not affect any current Commission filing 

requirement, except that an issuer or other 

soliciting person following the notice and access 

model would be required to file the Notice as 

additional soliciting material under Exchange Act 

Rule 14a–6(b) [17 CFR 240.14a–6(b)]. 41As discussed in more detail in Section II.A.2 

of this release, an issuer or any other soliciting 

person must provide a means for executing proxies 

available at the time the Notice is sent. It may not 

wait until it sends a paper or e-mail copy of the 

proxy card 10 calendar days or more after sending 

the Notice to provide shareholders with a means to 

execute a proxy. 

42An issuer may send a proxy card to 

shareholders before the conclusion of the 10-day 

period if the proxy card is accompanied or 

preceded by a copy, via the same medium, of the 

proxy statement and annual report to security 

holders if required by Rule 14a–3(b). 

43Release No. 33–7233 (Oct. 6, 1995) [60 FR 

53458] (the ‘‘1995 Interpretive Release’’) provided 

guidance on electronic delivery of prospectuses, 

annual reports to security holders and proxy 

solicitation materials under the Securities Act of 

1933 [15 U.S.C. 77a et seq.], the Securities Exchange 

Act of 1934, and the Investment Company Act of 

1940. Release No. 33–7288 (May 9, 1996) [61 FR 

24644] (the ‘‘1996 Interpretive Release’’) provided 

guidance on electronic delivery of required 

information by broker-dealers and transfer agents 

under the Securities Act, the Exchange Act, and the 

Investment Company Act. Release No. 33–7856 

(Apr. 28, 2000) [65 FR 25843] (the ‘‘2000 

Interpretive Release’’) provided guidance on the use 

of electronic media to deliver documents under the 

federal securities laws, an issuer’s liability for Web 

site content, and basic legal principles that issuers 

and market intermediaries should consider in 

conducting online offerings. 

44An issuer or other soliciting person may, in the 

course of a solicitation, send several proxy cards to 

a shareholder. Under the notice and access model, 

the Notice must accompany each proxy card sent 

to a shareholder unless the issuer or other soliciting 

person sends a proxy statement with, or before, the 

proxy card and by the same medium as the proxy 

card is sent. 

45The requirement in Exchange Act Rules 14a–

3(b) and 14c–3(a) to furnish annual reports to 

security holders does not apply to registered 

investment companies [17 CFR 240.14a–3(b) and 

available to shareholders. Among those 

shareholders who access the proxy 

materials electronically, the rules also 

may increase the use of the Internet for 

voting proxies. An issuer’s or other 

soliciting person’s election to follow the 

notice and access model will be 

voluntary.39

Under the final rules, as discussed in 

more detail below, an issuer may satisfy 

its obligation under the Commission’s 

proxy rules to furnish proxy materials to 

shareholders in connection with a proxy 

solicitation by posting its proxy 

materials on a publicly-accessible 

Internet Web site (other than the 

Commission’s EDGAR Web site) and 

sending a Notice of Internet Availability 

of Proxy Materials (‘‘Notice’’) to 

shareholders at least 40 calendar days 

before the shareholder meeting date 

indicating that the proxy materials are 

available and explaining how to access 

those materials.40 Shareholders must 

have a means to execute a proxy as of 

the time on which the Notice is sent.41

The Notice also must explain how a 

shareholder can request a copy of the 

proxy materials and how a shareholder 

can indicate a preference to receive a 

paper or e-mail copy of any proxy 

materials distributed under the notice 

and access model in the future. An 

issuer may not send a proxy card along 

with the Notice; however, 10 calendar 

days or more after sending the Notice, 

the issuer may send a proxy card to 

shareholders.42 If an issuer chooses to 

send a proxy card without a copy of the 

proxy statement under this provision, a 

copy of the Notice must accompany the 

proxy card so that recipients will be 

notified again about the Web site on 

which the proxy statement is accessible. 

Finally, the notice and access model 

may not be used in conjunction with a 

proxy solicitation related to a business 

combination transaction. 

Shareholders and other persons 

conducting their own proxy 

solicitations may rely on the notice and 

access model under requirements 

substantially similar to the requirements 

that would apply to issuers. As a result, 

these rules may have the effect of 

reducing the cost of engaging in a proxy 

contest. However, unlike the 

requirements for an issuer, a soliciting 

person other than the issuer may 

selectively choose the shareholders from 

whom it desires to solicit proxies 

without the need to send an information 

statement to all other shareholders. 

The new rules do not affect the 

availability of other means of providing 

proxy materials to shareholders, such as 

obtaining affirmative consents for 

electronic delivery pursuant to existing 

Commission guidance.43 Thus, an issuer 

may rely on affirmative consents to 

furnish proxy materials to some 

shareholders, and rely on the notice and 

access model to furnish the materials to 

others. 

We are making several significant 

revisions to the proposed notice and 

access model in response to 

commenters’ concerns. First, the final 

rules do not permit a proxy card to 

accompany the Notice as we originally 

proposed, although the rules do permit 

an issuer or other soliciting person to 

send a proxy card 10 calendar days or 

more after it sends the Notice, provided 

that a copy of the Notice accompanies 

the proxy card.44 Second, we are 

adopting a requirement that issuers and 

other soliciting persons send the Notice 

to shareholders at least 40 calendar days 

before the shareholder meeting date, 

rather than 30 calendar days before the 

meeting, as proposed. We are making 

this change so that issuers and other 

soliciting persons will still have at least 

a 30-day period in which they can send 

a proxy card to shareholders if they 

choose to do so. 

Third, in addition to the proposed 

requirement that a shareholder be able 

to request a paper or e-mail copy of the 

proxy materials for a particular meeting, 

the final rules require an issuer to allow 

shareholders to elect to receive paper or 

e-mail copies of proxy materials that the 

issuer will distribute in the future in 

reliance on the notice and access model. 

Similarly, intermediaries must allow 

beneficial owners to elect to receive 

paper or e-mail copies of any proxy 

materials that will be distributed in the 

future in reliance on the notice and 

access model with respect to all 

securities held in the beneficial owner’s 

account. Fourth, under the new rules, 

an intermediary must prepare its own 

Notice for distribution to beneficial 

owners. 

Fifth, the intermediary’s Notice sent 

to a beneficial owner will direct the 

owner to request paper or e-mail copies 

from his or her intermediary, rather than 

from the issuer. Finally, the final rules 

do not permit soliciting persons other 

than the issuer to engage in a 

conditional solicitation as proposed 

and, therefore, the rules require such 

persons to send a copy of the proxy 

materials upon request from a 

shareholder to whom they have sent a 

Notice. 

II. Description of the Amendments 

A. The Notice and Access Model for 

Issuers 

The notice and access model that we 

are adopting provides an alternative 

means for an issuer to furnish proxy 

materials to its shareholders. These 

proxy materials include: 

• Notices of shareholder meetings; 

• Schedule 14A proxy statements and 

consent solicitation statements; 

• Forms of proxy (i.e., proxy cards); 

• Schedule 14C information 

statements; 

• Annual reports to security 

holders; 45


rwilkins on PROD1PC63 with RULES
Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations 4151 

240.14c–3(a)]. The rules that we are adopting do not 

apply to the requirement in Section 30(e) of the 

Investment Company Act of 1940 [15 U.S.C. 80a–

29(e)] and the rules thereunder that every registered 

investment company transmit reports to 

shareholders at least semi-annually. 

46Our rules permit, but do not require, delivery 

of additional soliciting materials. See Rule 14a–6(b). 

47See, for example, letters from ABC, ACB, 

Association of Corporate Counsel (ACC), 

Proxinvest, SCSGP, STA, and Sullivan & Cromwell. 

48For purposes of determining this 40-day period 

under the new rules, the first day of this period 

would be the day on which the issuer sends the 

Notice. The 40th day would be the day prior to the 

meeting date or date of the corporate action. 

49The Notice could be sent electronically to 

shareholders who have previously provided 

affirmative consent, or other evidence to show 

delivery, pursuant to our earlier guidance on 

electronic delivery. See the 1995 Interpretive 

Release and the 2000 Interpretive Release. 

50The rules also permit a reply card for 

requesting a paper or e-mail copy of the proxy 

materials to accompany the Notice. 

51Of course, an issuer still would be obligated to 

send a copy of the proxy statement and annual 

report if a shareholder requests a copy. An issuer 

also may send a proxy card before the end of the 

10-day period if it is accompanied by the proxy 

statement and annual report. 

52Appropriate changes must be made to the 

Notice if the issuer is providing an information 

statement pursuant to Regulation 14C or seeking to 

effect a corporate action by written consent. 

• Additional soliciting materials; 46

and 

• Any amendments to such materials 

that are required to be furnished to 

shareholders. 

In the proposing release, we sought 

comment on whether reliance on the 

notice and access model should be 

limited to particular types of issuers, 

shareholders, or transactions. The only 

restriction that we proposed was that 

the rules should not apply to business 

combination transactions. Commenters 

in favor of the notice and access model 

generally supported broad availability of 

the notice and access model.47

Therefore, the new rules permit any 

issuer to use the notice and access 

model to disseminate its proxy materials 

to all types of shareholders, whether 

registered or beneficial owners, and 

with respect to any solicitation except 

those related to business combination 

transactions. 

1. Notice of Internet Availability of 

Proxy Materials 

To notify shareholders of the 

availability of the proxy materials on an 

Internet Web site, an issuer relying on 

the notice and access model must send 

a Notice to shareholders 40 calendar 

days 48 or more in advance of the 

shareholder meeting date or, if no 

meeting is to be held, 40 calendar days 

or more in advance of the date that 

consents or authorizations may be used 

to effect the corporate actions.49 We 

believe that it is important for the 

Notice to be furnished in a way that 

brings it to each shareholder’s attention. 

Therefore, no other materials may 

accompany the Notice except for the 

notice of a shareholder meeting required 

under state corporation law.50 An issuer 

also may combine the Notice with the 

state law notice unless state law 

prohibits such combination. 

We have extended the proposed 30- 

day deadline for delivery of the Notice 

to a 40-day deadline to provide issuers 

with time to encourage shareholders 

who have not executed a proxy to 

participate in the voting process and to 

provide shareholders with sufficient 

time to receive the Notice, request 

copies of the materials, if desired, and 

review the proxy materials prior to 

executing a proxy. Under the new rules, 

an issuer may send a proxy card 10 

calendar days or more after sending the 

Notice. If an issuer chooses to send a 

proxy card under this provision, a proxy 

statement and annual report need not 

accompany the proxy card.51 However, 

if a copy of the proxy statement and 

annual report do not accompany or 

precede the proxy card, a copy of the 

Notice must accompany the proxy card 

so that shareholders can access the 

specified Web site without referring to 

the earlier Notice. This 10-day waiting 

period is designed to provide 

shareholders with sufficient time to 

access the proxy materials, or request a 

copy of the proxy materials, before the 

issuer sends a proxy card without an 

accompanying proxy statement and 

annual report. 

If an issuer chooses to follow the 

notice and access model, the Notice of 

Internet Availability of Proxy Materials 

must include the following information 

in clear and understandable terms:52

• A prominent legend in bold-face 

type that states: 

‘‘Important Notice Regarding the Availability 

of Proxy Materials for the Shareholder 

Meeting To Be Held on [insert meeting date]. 

• This communication presents only an 

overview of the more complete proxy 

materials that are available to you on the 

Internet. We encourage you to access and 

review all of the important information 

contained in the proxy materials before 

voting. 

• The [proxy statement] [information 

statement] [annual report to security holders] 

[is/are] available at [Insert Web site address]. 

• If you want to receive a paper or e-mail 

copy of these documents, you must request 

one. There is no charge to you for requesting 

a copy. Please make your request for a copy 

as instructed below on or before [Insert a 

date] to facilitate timely delivery.’’

• The date, time, and location of the 

meeting or, if corporate action is to be 

taken by written consent, the earliest 

date on which the corporate action may 

be effected; 

• A clear and impartial identification 

of each separate matter intended to be 

acted on and the issuer’s 

recommendations regarding those 

matters, but no supporting statements; 

• A list of the materials being made 

available at the specified Web site; 

• (1) A toll-free telephone number; (2) 

an e-mail address; and (3) an Internet 

Web site address where the shareholder 

can request a copy of the proxy 

materials, for all meetings and for the 

particular meeting to which the Notice 

relates; 

• Any control/identification numbers 

that the shareholder needs to access his 

or her proxy card; 

• Instructions on how to access the 

proxy card, provided that such 

instructions do not enable a shareholder 

to execute a proxy without having 

access to the proxy statement and 

annual report; and 

• Information on how to obtain 

directions to be able to attend the 

meeting and vote in person. 

In response to commenters, we have 

added certain items to this list of 

permissible Notice information. First, 

we are clarifying that the Notice must 

contain instructions on how to access 

the proxy card. Such information 

should include any control or 

identification numbers necessary for the 

shareholder to execute a proxy, but may 

not include a means to execute a proxy, 

such as a telephone number, which 

would enable the shareholder to execute 

a proxy without having access to the 

proxy statement and annual report. 

A shareholder’s execution of a proxy 

via an Internet voting platform indicates 

that the shareholder has access to the 

Internet and, as such, is able to access 

the proxy materials electronically under 

the new rules. Similarly, if a 

shareholder executes a proxy via a 

telephone number placed on the 

Internet Web site which provides 

electronic access to the proxy materials, 

that indicates the shareholder has access 

to the Internet. However, if a telephone 

number for executing a proxy is placed 

on the Notice, there can be no assurance 

that a shareholder executing a proxy by 

means of that telephone number has 

access to the Internet Web site. 

Accordingly, placing such a telephone 

number on the Notice is not permitted. 

A telephone number for executing a 

proxy may, however, be provided on a 

proxy card sent to shareholders 10 

calendar days or more after the Notice 

was sent because, by that time, a 

shareholder is likely to have had 


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4152 Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations 

53See letters from ABA, Mellon Investor Services 

(Mellon), and SCSGP. 

54 17 CFR 230.421(d). 

55See letters from Florida State Board and 

Proxinvest. 

56See letters from Carl Hagberg, Hermes, and 

James Reed. For example, one commenter suggested 

that each proposal be accompanied by the ‘‘pros 

and cons’’ associated with that proposal. See letter 

from James Reed. Another commenter 

recommended that the president’s letter, 

Management’s Discussion and Analysis and 

selected financial information be included. See 

letter from Carl Hagberg. 

57 17 CFR 240.14a–6(b). 

58See Rule 14a–16(i) [17 CFR 240.14a–16(i)]. 

59 17 CFR 240.14a–3(e). 

60 If the Notice is sent via e-mail, the 

householding rules do not permit the sending of 

only one copy of the Notice to all shareholders in 

the household. Instead the Notice must be 

separately e-mailed to each shareholder. See Rule 

14a–3(e)(1)(ii)(B)(4) [17 CFR 240.14a–

3(e)(1)(ii)(B)(4)]. 

61 Issuers also are required to share a listing of the 

shareholders that have consented to householding 

with soliciting shareholders, or afford the benefit of 

such consents to a soliciting shareholder if the 

issuer is mailing proxy materials on the 

shareholder’s behalf. See Rule 14a–7(a)(2) [17 CFR 

240.14a–7(a)(2)]. 

62See letters from BRT, Computershare, 

Proxinvest, and SCSGP. 

63See, for example, letters from James Angel, 

Todd Collier, James Davis, William LaFollette, 

Matthew McGuire, and USPS. 

64Record holders could not be subject to such 

manipulation because they do not hold their 

securities in a trading account with the company in 

the same sense as beneficial owners hold their 

securities in a brokerage account. 

65See letter from William LaFollette. 

sufficient time to access the materials on 

the Internet or request copies. 

Also, in response to comments, we 

have revised the rules to require an 

issuer or other soliciting person to 

include instructions in the Notice about: 

(1) How a shareholder can request 

delivery of copies of proxy materials in 

paper or by e-mail in the future; 53 and 

(2) how to attend the shareholder 

meeting and vote in person. The new 

rules also require the Notice to include 

an Internet Web site on which a 

shareholder can request a copy of the 

proxy materials, in addition to a toll-free 

telephone number and an e-mail 

address for that purpose. 

The Notice may include only the 

information specified above, unless it is 

being combined with the state law 

meeting notice, in which case any 

information required by state law also 

may be included in the Notice. While 

not required, to reduce the chance of 

parties creating false Notices to extract 

confidential information from 

shareholders, the Notice also may 

contain a statement advising 

shareholders that they are not required 

to provide any personal information, 

other than the identification or control 

number provided in the Notice (if such 

a number is used), to execute a proxy. 

To ensure that the Notice is clear and 

understandable, it must meet 

substantially the same plain English 

principles as apply to key sections of 

Securities Act prospectuses pursuant to 

Securities Act Rule 421(d).54 Both 

commenters remarking on the plain 

English aspect of the proposal 

supported such a requirement.55

Several commenters recommended 

that issuers should be able to include 

more information in the Notice than we 

proposed. They suggested that the rules 

should allow the Notice to incorporate 

information from the proxy statement 

and annual report that those 

commenters believe is the most 

important information contained in 

those documents. They believed that 

presenting this information on the 

Notice would enable shareholders to 

make an informed decision based on the 

Notice alone.56 We believe that the 

proxy statement and annual report to 

security holders represent the 

information necessary to make an 

informed voting decision. The Notice is 

intended merely to make shareholders 

aware that these proxy materials are 

available on an Internet Web site; it is 

not intended to serve as a stand-alone 

basis for making a voting decision. 

Because the disclosures in the proxy 

statement and annual report represent 

the information necessary for a voting 

decision, we do not believe it is 

appropriate to permit issuers and other 

soliciting persons to present only 

selected information from the proxy 

statement or annual report to security 

holders in the Notice. 

The form of the Notice will constitute 

other soliciting material that the issuer 

or other soliciting person must file with 

the Commission pursuant to Rule 14a–

6(b) 57 no later than the date on which 

it is first sent or given to shareholders.58

a. Householding 

Consistent with the proposal, the final 

rules permit an issuer to ‘‘household’’

the Notice pursuant to Rule 14a–3(e).59

Accordingly, an issuer could send a 

single copy of the Notice to one or more 

shareholders residing at the same 

address if the issuer satisfies all of the 

Rule 14aπ3(e) conditions.60 An issuer is 

not required to re-solicit specific 

consent regarding the householding of 

the Notice from shareholders if it has 

obtained their consent to householding 

of proxy materials in the past. However, 

an issuer following the notice and 

access model must allow each 

householded account to execute 

separate proxies. Therefore, the issuer 

must provide separate identification or 

control numbers, if it uses such 

numbers, to each account at the shared 

address, as required by the current 

householding rule.61 Alternately, an 

issuer also may send separate Notices 

for each householded account in a 

single envelope. Commenters generally 

supported this aspect of the proposal.62

b. Security and Privacy on the Internet 

Several commenters were concerned 

about security and confidentiality of 

shareholder information that may be 

transmitted over the Internet.63 We 

believe that the final rules ameliorate 

many of these concerns. We address 

those concerns below. 

i. Theft of Identification or Control 

Numbers 

Some commenters were concerned 

that computer hackers may use any 

identifying information sent to 

shareholders to access their accounts.64

The Notice may contain identification 

or control numbers for executing 

proxies or providing voting instructions, 

if an issuer or intermediary uses such 

numbers. We understand that these 

numbers, which are in common use 

today, usually provide the user only 

with access to execute proxies or 

provide voting instructions; they do not 

enable the user to buy or sell securities 

in a shareholder’s account or transfer 

funds from that account. Thus, more 

sensitive activities, such as trading 

securities or transferring funds, could 

not be performed by someone who has 

stolen this identifying information. 

Finally, we note that 85% of shares 

voted already are voted electronically 

using such identification or control 

numbers. 

ii. ‘‘Phishing’’

One commenter expressed concern 

that, if Notices are sent electronically, 

shareholders may be tricked into 

disclosing personal information to 

persons fraudulently purporting to be 

issuers or intermediaries by fake 

‘‘phishing’’ e-mails purporting to be 

official Notices, but designed to extract 

personal information from a 

shareholder.65 We do not believe that 

the rules would provide significant 

opportunity for abuse through phishing 

for the following reasons. 

First, an issuer may send a Notice by 

e-mail only if the shareholder has 

affirmatively consented to such 

delivery. Second, the Notice is not 

permitted to request any confidential 

information from the shareholder. 

Rather, the only confidential 

information that a shareholder must 

provide to access the proxy card would 

be a confidential identification or 


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66See Rule 14a–16(f)(3) [17 CFR 240.14a–

16(f)(3)]. 

67See letter from Thomas Richardson. 

68See letter from Bowne & Co. 

69See Rule 14a–16(k)(1) [17 CFR 240.14a–

16(k)(1)]. 

70Of course, the issuer would be permitted to 

track the identity, by means of the shareholder 

entering an issuer-provided control/identification 

number, of persons voting on an electronic platform 

in order to validate the election results. 

71See Rule 14a–16(k)(2) [17 CFR 240.14a–

16(k)(2)]. Rule 14a–16(k) is not designed to create 

new duties in private rights of action under the 

federal securities laws. 

72See Rule 14a–16(b)(1) [17 CFR 240.14a–

16(b)(1)]. 

73See Rule 14a–16(b)(4) [17 CFR 240.14a–

16(b)(4)]. 

74See, for example, letters from ACB, AFL–CIO, 

Amalgamated Bank, BellTel Retirees, CII, Florida 

State Board, Carl Hagberg, NRLN, San Diego 

Retirement, Swingvote, and Teamsters. 

75See, for example, letters from AFL–CIO, Florida 

State Board, and Teamsters. 

76See, for example, letters from ABA, ACC, BRT, 

Computershare, ISS, New York State Bar 

Association (NY State Bar), and Proxinvest. 

77See Rule 14a–16(h) [17 CFR 240.14a–16(h)]. 

78Additional soliciting materials used after the 

Notice is sent must be posted on the specified Web 

site no later than the day on which those materials 

are first sent or given to shareholders. 

79This Web site could be a central site with 

prominent links to each of the proxy-related 

Continued 

control number used by many issuers 

and intermediaries to track votes. As 

noted above, this number does not 

provide access to a shareholder’s 

brokerage or bank account or permit the 

transfer of funds from a shareholder’s 

account. Therefore, the shareholder’s 

account number and other personal 

financial information would not be in 

jeopardy of being stolen. The rules do 

permit an issuer or other soliciting 

person to include on the Notice a 

protective warning to shareholders, 

advising them that no personal 

information other than the identification 

or control number is necessary to 

execute a proxy.66

iii. Misuse of Information by Issuers and 

Other Soliciting Persons 

Other commenters were concerned 

that issuers themselves, or other 

soliciting persons, may use shareholder 

information inappropriately. For 

example, they were concerned that an 

issuer may use shareholders’ e-mail 

addresses for purposes other than proxy 

communications, such as advertising, or 

sell the e-mail addresses to third 

parties.67 As a protective measure, one 

commenter suggested that the Internet 

Web site on which the proxy statement 

is posted should not require installation 

of cookies on the shareholder’s 

computer as a prerequisite for access to 

the Web site.68

We agree that shareholder information 

gathered under the amended rules 

should be used only for the purposes of 

furnishing proxy materials to 

shareholders. Thus, we have revised the 

final rules to clarify that an issuer or its 

agent must maintain the Internet Web 

site on which the proxy materials are 

posted in a manner that does not 

infringe on the anonymity of a 

shareholder accessing that Web site.69

For example, it may not track the 

identity of persons accessing that Web 

site to view the proxy statement.70 In 

addition, the Web site cannot require 

the installation of any ‘‘cookies’’ or 

other software that might collect 

information about the accessing person. 

Further, the issuer and its agents may 

not use any e-mail address obtained 

from a shareholder for the purpose of 

requesting a copy of proxy materials for 

any purpose other than to send a copy 

of those materials to that shareholder. 

Finally, an issuer may not transfer a 

shareholder’s e-mail address to other 

persons without the shareholder’s 

express consent, except in connection 

with the distribution of proxy materials, 

such as an agent handling the proxy 

distribution on the issuer’s behalf.71

2. Proxy Card 

Under the notice and access model 

that we are adopting, an issuer is not 

permitted to furnish the proxy card 

together with the initial Notice for a 

particular solicitation. An issuer 

following the notice and access model 

must post the proxy card on the Web 

site with the proxy statement and any 

annual report no later than the time at 

which the Notice is sent to shareholders 

so that the documents are electronically 

available at the time shareholders 

receive the Notice.72 In addition, on that 

Web site, the issuer must concurrently 

provide shareholders with at least one 

method of executing a proxy vote.73 We 

believe that a shareholder who accesses 

proxy materials on the Internet Web site 

should be able to execute a proxy as 

soon as the shareholder is able to 

electronically access the proxy 

statement. An issuer may provide a 

means to execute a proxy through a 

variety of methods, including by 

providing an electronic voting platform 

linked to the Web site where the proxy 

materials are posted or a telephone 

number for executing a proxy. Merely 

providing a shareholder with a means to 

request a paper proxy card would not be 

sufficient because a shareholder would 

not be able to execute a proxy at the 

time it accesses the proxy materials. 

We received a significant number of 

comments on the aspect of our proposal 

that would have permitted the proxy 

card to accompany the Notice. 

Numerous commenters were concerned 

that physically separating the card from 

the proxy statement, as originally 

proposed, may lead to the type of 

uninformed voting that the proxy rules 

are intended to prevent.74 Some 

commenters were concerned that issuers 

may attempt to structure their 

solicitations in a manner that 

discourages access to the proxy 

statement, particularly with respect to 

shareholder proposals.75 Others, 

however, believed that separating the 

card from the proxy statement would 

not lead to such problems.76

We note these concerns and have 

revised the rules to require the proxy 

card to be accessible on the Internet 

along with the proxy statement and any 

annual report when the Notice is sent. 

The issuer may not send a proxy card 

with its initial Notice. However, we 

recognize that an issuer may wish to 

undertake subsequent soliciting 

activities to encourage shareholders 

who have not executed a proxy to do so. 

Currently, issuers often send 

replacement proxy cards accompanied 

by additional soliciting materials to 

shareholders who have not yet voted. To 

facilitate this re-solicitation process, the 

rules permit an issuer that is following 

the notice and access model to send a 

proxy card 10 calendar days or more 

after sending the Notice. This 10-day 

waiting period still provides a 30 day 

period during which an issuer can 

encourage shareholders to execute a 

proxy. Any such subsequent solicitation 

efforts may, but need not, include a 

copy of the proxy statement and any 

annual report to security holders. 

However, if the subsequent 

communication includes a proxy card, it 

also must include either a copy of the 

proxy statement and any annual report 

or a copy of the Notice.77

3. Internet Web Site Posting of Proxy 

Materials 

All proxy materials to be furnished 

through the notice and access model, 

other than additional soliciting 

materials, must be posted on a specified 

Internet Web site by the time the issuer 

sends the Notice to shareholders.78

These materials must remain on that 

Web site and be accessible to 

shareholders through the conclusion of 

the related shareholder meeting, at no 

charge to the shareholder. As discussed 

above, the Notice must identify clearly 

the Internet Web site address at which 

the proxy materials are available. The 

Internet Web site address must be 

specific enough to lead shareholders 

directly to the proxy materials,79 rather 


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4154 Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations 

disclosure documents listed in the Notice, as well 

as proxy materials posted on the Web site after the 

Notice is sent. 

80An issuer must continue to comply with Rules 

14a–6 and 14c–5, which require the soliciting 

person to file its proxy statement (or information 

statement) and additional soliciting material with 

the Commission. An issuer also must continue to 

comply with Rules 14a–3(c) and 14c–3(b), which 

require an issuer to submit copies of its annual 

report to security holders to the Commission. The 

issuer must comply with these requirements by the 

time it posts the materials on the Web site. 

81See letters from James Angel, SCSGP, and 

Swingvote. 

82See Rule 14a–16(c) [17 CFR 240.14a–16(c)]. 

83See the 1995 Interpretive Release No. 33–7233, 

at n. 24 and the accompanying text; Release No. 33–

8128 (Sep. 16, 2002) [67 FR 58480]; Release No. 33–

8230 (May 7, 2003) [68 FR 25788]; and Release No. 

33–8518 (Dec. 22, 2004) [70 FR 1505]. 

84To the extent the Commission adopts the 

universal Internet availability model in companion 

Release 34–55147, this option will no longer be 

available to issuers. 

85See, for example, letters from ABC, AFL-CIO, 

James Angel, CALSTRS, Florida State Board, 

OPERS, San Diego Retirement, SIA, William 

Sjostrom, Stocklein Law Group, Swingvote, and 

Paul Uhlenhop. 

86A shareholder that elects to receive paper or email copies may, in the future, revoke that election. 

However, an issuer may continue to request that 

shareholder to accept electronic delivery or the 

notice and access model or seek that shareholder’s 

affirmative consent to electronic delivery. Nothing 

in the proxy rules prohibits an issuer from 

structuring incentives to encourage shareholders to 

accept electronic delivery or the notice and access 

model. 

87See Rule 14a–16(e) [17 CFR 240.14a–16(e)]. 

Issuers typically include the meeting notices 

required by state law at the beginning of their proxy 

statements. As discussed previously, the new rules 

would permit any information necessary to meet a 

state law requirement to accompany or be combined 

with the Notice. 

88Exchange Act Rule 14a–6(b) requires an issuer 

or other soliciting person choosing to deliver 

additional soliciting materials to file them with the 

Commission, in the same form that they are sent to 

shareholders, no later than the date that they are 

first sent or given to shareholders. 

89 17 CFR 240.14a–16(j). 

than to the home page or other section 

of the Web site on which the proxy 

materials are posted, so that 

shareholders do not have to browse the 

Web site to find the materials. The 

Internet Web site that an issuer uses to 

electronically furnish its proxy 

materials to shareholders must be a 

publicly accessible Internet Web site 

other than the Commission’s EDGAR 

Web site.80 Commenters agreed that 

simply providing a link to the proxy 

materials on EDGAR was insufficient.81

Commenters were divided with 

respect to the type of document format 

that issuers or other soliciting persons 

should be required to use to post proxy 

materials on the Web site. This 

disagreement centered on whether most 

shareholders would prefer to be able to 

print out the document and read the 

hard copy version or read the document 

online. The final rules require the 

electronically posted proxy materials to 

be presented on the Internet Web site in 

a format, or formats, convenient for both 

printing and viewing online.82 Under 

technology commonly in use today, this 

may require posting the materials in two 

different formats. First, the materials 

should be posted in a format that 

provides a version of those materials, 

including all charts, tables, graphics, 

and similarly formatted information, 

that is substantially identical to the 

paper version of the materials. 

In addition, to take better advantage of 

the capabilities of the Internet, the 

materials also must be presented in a 

readily searchable format, such as 

HTML. This type of format would make 

the proxy materials easier to read on a 

computer screen. In addition, such a 

version may incorporate additional 

user-friendly features such as 

hyperlinks from a table of contents to 

enable shareholders to quickly and 

easily navigate through the document. 

Many Internet Web sites today provide 

documents in dual formats such as this. 

We believe this requirement will impose 

minimal burden on issuers. We also 

believe that, as technology progresses, 

new formats may be developed that will 

improve shareholders’ ability to print 

copies and read copies on their screens. 

Finally, to the extent a shareholder may 

need additional software to view the 

document, the Web site must contain a 

link to enable the shareholder to obtain 

the software free of charge.83

4. Period of Reliance 

The decision by an issuer or other 

soliciting person to follow the notice 

and access model is effective only with 

respect to a particular meeting. An 

issuer’s choice to rely on the notice and 

access model for one meeting therefore 

does not affect its determination of 

whether to rely on the model for 

subsequent meetings.84 Similarly, a 

shareholder that does not request a 

paper or e-mail copy of the proxy 

materials for one meeting is not bound 

by that decision with respect to any 

other shareholder meeting. Each time an 

issuer chooses to rely on the notice and 

access model for a shareholder meeting, 

it must comply anew with all of the 

requirements under that model, 

including delivery of the Notice and the 

40-day notice period. 

We are adopting one important 

exception to this general principle. 

Numerous commenters were concerned 

that a shareholder desiring a paper or email copy would have to request such 

a copy every year from each issuer in 

which he or she owns securities.85 We 

agree with commenters that this could 

be unduly burdensome for a shareholder 

who owns numerous securities. The 

commenters recommended that a 

provision be made that permits a 

shareholder to make a single election to 

receive a paper or e-mail copy of the 

proxy materials on a continuing basis in 

the future. We agree with those 

commenters and have revised the rules 

to enable shareholders to make a 

permanent election to receive paper or 

e-mail copies from each issuer.86

5. State Law Notices 

State business and corporation laws 

typically set forth shareholder meeting 

requirements, including meeting notice 

and voting requirements. The new rules 

are not intended to affect any applicable 

state law requirement concerning the 

delivery of any document related to a 

shareholder meeting or proxy 

solicitation. Thus, to the extent that 

state law requires a notice of 

shareholder meeting and proxy 

materials to be delivered by a particular 

means, the rules do not alter those 

requirements.87 For example, if the state 

in which an issuer is incorporated 

requires notices of shareholder meetings 

and proxy materials to be transmitted 

directly to shareholders in paper, the 

notice and access model does not 

provide an issuer with an option to 

satisfy its state law obligations by 

posting those materials on an Internet 

Web site. 

6. Additional Soliciting Materials 

New Rule 14a–16 and revised Rules 

14c–2 and 14c–3 require an issuer to 

post any additional soliciting materials 

required to be filed under Rule 14a–6(b) 

on the same Internet Web site on which 

the proxy materials are posted no later 

than the day on which the additional 

soliciting materials are first sent to 

shareholders or made public.88 Beyond 

the posting of the additional soliciting 

materials on the Internet Web site, 

issuers may decide which additional 

means, if any, are most effective for 

disseminating these materials (e.g., 

direct mail, e-mail, newspaper 

publication, etc.). 

7. Requests for Copies of Proxy 

Materials 

An issuer that satisfies its requirement 

to furnish proxy materials through the 

notice and access model has a separate 

requirement under Rule 14a–16(j) 89 to 

deliver a copy of the proxy statement, 

annual report to security holders (if 

applicable) and proxy card to a 

requesting shareholder. Upon receipt of 

a request from a shareholder for a copy 


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90See letters from BRT and SCSGP. 

91See Instruction G(3) to Form 10–K, referenced 

in 17 CFR 249.310. 

92See Rule 14a–3(b)(10) [17 CFR 240.14a–

3(b)(10)]. 

93See Rule 14a–16(j)(3) [17 CFR 240.14a–16(j)(3)]. 

94See, for example, letters from BRT, 

Computershare, ICI, NY State Bar, SCSGP, SIA, and 

Sullivan & Cromwell. 

95See letters from Computershare, ICI, and STA. 

96See letters from Computershare, SCSGP, and 

Sullivan & Cromwell. 

97See Rule 14a–16(d)(1) [17 CFR 240.14a–

16(d)(1)]. This date is intended to be a 

recommendation to shareholders to facilitate timely 

delivery, but does not restrict a shareholder’s ability 

to request copies after that date. 

98A communication to shareholders that is 

limited to explaining the notice and access model 

generally and determining whether shareholders 

wish to receive future proxy materials in paper or 

by e-mail would not be associated with a particular 

solicitation and therefore would not be considered 

a Notice under the new rules. 

99The discussion in this section of ‘‘beneficial 

owners’’ refers to beneficial owners whose names 

and addresses do not appear directly in issuers’

stock registers because they hold their securities 

through a broker, bank, trustee, or similar 

intermediary. 

100 17 CFR 240.14a–13(a). 

101 17 CFR 240.14c–7(a). 

102 In the case of bank intermediaries, Rule 14b–

2 requires a bank to disclose the number of 

customers with accounts opened on or before 

December 28, 1986, who gave affirmative consent 

to disclosure to the issuer and the number of 

customers with accounts opened after December 28, 

1986, who did not object to such disclosure. 

of the proxy statement, annual report, or 

proxy card, the issuer must send a copy 

(in paper or by e-mail, as requested) of 

those proxy materials to the shareholder 

within three business days after 

receiving the request, even if the request 

is made after the date of the shareholder 

meeting or corporate action to which the 

proxy materials relate. However, under 

the final rules, an issuer would be 

obligated to provide copies of the proxy 

materials only up until one year after 

the conclusion of the meeting or 

corporate action to which the materials 

relate. When the issuer provides a paper 

copy of the proxy materials in response 

to a shareholder request, the issuer must 

use first class mail or other reasonably 

prompt means of delivery. 

A few commenters believed that a 

requirement to send copies of the proxy 

statement after the shareholder meeting 

has been held would be an unnecessary 

burden.90 However, the proxy statement 

contains a portion of the total package 

of annual disclosure for public 

companies; in fact, many public 

companies satisfy their obligation to 

include information in Part III of the 

Form 10–K by including the information 

in their proxy statements and 

incorporating that information by 

reference into the Form 10–K.91 Just as 

the proxy rules require issuers to 

undertake in their proxy statements or 

annual reports to shareholders to 

provide copies of annual reports on 

Form 10–K for the most recent fiscal 

year to requesting shareholders,92 we 

believe it is appropriate to require 

issuers to provide copies of the proxy 

materials to requesting shareholders 

even after the shareholder meeting date. 

However, because the proxy statement 

(like the Form 10–K) is filed on EDGAR, 

we believe there should be a limit on 

the length of the period during which a 

shareholder may request a copy of the 

proxy materials from the issuer. 

Therefore, the final rules require issuers 

to provide the proxy statement and 

annual report to security holders only 

for one year after the conclusion of the 

meeting to which those materials 

relate.93

We agree with the views of 

commenters that the proposed twobusiness day timeframe may be too 

short for issuers to respond efficiently to 

paper requests of the proxy materials.94

Further, it is likely that a longer 

response period that enables an issuer to 

better cumulate batches of copies would 

reduce the cost of complying with the 

rules. However, these concerns must be 

balanced against our view that requests 

for copies be handled promptly. Thus, 

we have extended the response time to 

three business days.95

The requirements that an issuer 

deliver the Notice at least 40 calendar 

days before the shareholder meeting 

date and respond to a request for a copy 

of the proxy materials within three 

business days are designed to provide a 

shareholder with sufficient time to 

request a copy, receive it, review the 

proxy materials and make an informed 

voting decision. Several commenters 

believed that placing a deadline on 

shareholders to request copies would be 

appropriate.96 We do not believe such a 

deadline would be appropriate, 

particularly because the proxy statement 

is part of the ‘‘package’’ of disclosures 

we have deemed important for 

investors, as discussed above. However, 

under the rules, it is incumbent on the 

shareholder to request a copy in 

sufficient time to receive the copy of the 

proxy materials, review that copy, and 

execute a proxy. The rules require the 

issuer to insert a date in the Notice by 

which a shareholder should request a 

copy to ensure timely delivery.97

Finally, we recognize that some 

issuers may be hesitant to adopt the 

notice and access model because of the 

potential dangers of significantly 

underestimating, or overestimating, the 

number of paper copies of the proxy 

materials that will be needed. If an 

issuer underestimates that number, the 

cost of printing additional copies may 

be great. Similarly, overestimating that 

number would lead to unnecessary cost. 

We note that there is nothing in the 

rules that would prevent an issuer from 

sending a shareholder a communication 

well in advance of a proxy solicitation 

to determine the shareholder’s interest 

in receiving paper copies.98 Indeed, 

such a communication may be used to 

start creating a list of shareholders that 

wish to receive paper copies in the 

future. This may help issuers to estimate 

the number of paper copies that it needs 

to print for the solicitation. 

B. The Role of Intermediaries 

1. Background 

The process of distributing proxy 

materials to beneficial owners is 

considerably more complicated than 

direct delivery of the materials by an 

issuer to its record holders.99 The proxy 

rules include four rules, Exchange Act 

Rule 14a–13, Rule 14b–1, Rule 14b–2, 

and Rule 14c–7 referred to collectively 

as the ‘‘shareholder communications 

rules,’’ that impose obligations on 

issuers and intermediaries to ensure that 

beneficial owners receive proxy 

materials and are given the opportunity 

to participate in the shareholder voting 

process. Basically, these rules require 

issuers to send their proxy materials to 

intermediaries for forwarding to the 

beneficial owners. 

Exchange Act Rule 14b–1 sets forth 

the obligations of registered brokers and 

dealers in connection with the prompt 

forwarding of certain issuer 

communications to beneficial owners. 

Rule 14b–2 sets forth similar obligations 

of banks, associations, and other entities 

that exercise fiduciary powers. Under 

these rules, upon request by the issuer, 

these intermediaries are required to 

indicate to the issuer within seven 

business days of receiving the request: 

• The approximate number of 

customers of the intermediary that are 

beneficial owners of the issuer that are 

held of record by the intermediary; 

• If the issuer has indicated pursuant 

to Rule 14a–13(a) 100 or 14c–7(a) 101 that 

it will distribute the annual report to 

security holders to beneficial owners 

who have not objected to disclosure to 

the issuer of their names, addresses, and 

securities positions, the number of 

beneficial owners who have objected to 

such disclosure; 102 and 

• The identity of any agents of the 

intermediary acting on the 

intermediary’s behalf to fulfill its 

obligations under the rule. 

Pursuant to Rules 14b–1 and 14b–2, 

within five business days of receiving 


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103 17 CFR 240.14a–13(c). 

104 17 CFR 240.14c–7(c). 

105See Rule 14b–2(b)(3) [17 CFR 240.14b–2(b)(3)]. 

106See Rules 14b–1(d) and 14b–2(d) [17 CFR 

240.14b–1(d) and 240.14b–2(d)]. 

107See, for example, letters from ABA, ACC, 

Computershare, and SCSGP, supporting issuer 

control, as opposed to the letters from SIA, 

Swingvote, and University Bancorp, urging more 

control by intermediaries. 

108See Rule 14a–16(a)(2) [17 CFR 240.14a–

16(a)(2)]. 

109Our rules set forth a series of timeframes 

regarding distribution of proxy materials to 

beneficial owners to facilitate timely delivery of 

those materials. 

110Rule 14a–16(a)(2) requires an issuer to provide 

the information to an intermediary ‘‘in sufficient 

time’’ for the intermediary to prepare its own 

Notice. Other soliciting persons would be expected 

to provide their information to intermediaries in 

sufficient time to meet their applicable deadlines. 

111An intermediary’s Notice prepared in 

accordance with this rule would be impartial for 

purposes of Rule 14a–2(a)(1) [17 CFR 240.14a–

2(a)(1)] and need not be filed pursuant to Rule 14a–

6(b) [17 CFR 240.14a–6(b)] unless an intermediary 

solicits proxies on its own behalf. 

112 In the case of a Notice of a soliciting person 

other than the issuer, the intermediary must send 

the Notice to beneficial owners by the later of: (1) 

40 calendar days prior to the meeting; or (2) 10 

calendar days after the issuer first sends its proxy 

materials to investors. See Section II.C of this 

release. 

113See Rule 14a–16(d) [17 CFR 240.14a–16(d)]. 

114Appropriate changes must be made to the 

Notice if the issuer is providing an information 

statement pursuant to Regulation 14C or if the 

issuer or other soliciting person is seeking to effect 

a corporate action by written consent. 

proxy materials from the issuer, the 

intermediary must forward the materials 

to beneficial owners who will not 

receive those materials directly from the 

issuer pursuant to Rule 14a–13(c) 103 or 

Rule 14c–7(c).104 Beneficial owners 

typically do not execute proxy cards 

because, under most state laws, only the 

record owner (i.e., the intermediary) has 

the authority to vote on matters 

presented to shareholders. As a result, 

intermediaries forward the proxy 

materials, other than the proxy card, 

along with a request for voting 

instructions. The request for voting 

instructions is similar to the proxy card, 

but is prepared by the intermediary 

instead of the issuer and the beneficial 

owner returns his or her voting 

instructions to the intermediary rather 

than to the issuer or independent vote 

tabulator. The intermediary is required 

to vote the beneficial owner’s shares in 

accordance with the owner’s voting 

instructions when formally executing 

the proxy card.105 The intermediary 

then returns the proxy card to the issuer 

or its vote tabulator. 

2. Discussion of the Amendments 

Under the amendments, an 

intermediary may follow the notice and 

access model only if the issuer requests 

it to do so and, in such cases, must 

follow that model. The amendments 

revise Rules 14b–1 and 14b–2 to require 

brokers, banks, and similar 

intermediaries, at the request of an 

issuer, to furnish proxy materials, 

including a Notice of Internet 

Availability of Proxy Materials, to 

beneficial owners of the issuer’s 

securities based on the notice and 

access model.106 If an issuer does not 

request intermediaries to follow the 

notice and access model, an 

intermediary could, on its own 

initiative, continue to rely on any other 

permitted method of furnishing proxy 

materials to beneficial owners, 

including the electronic delivery of 

proxy materials by affirmative consents, 

but could not follow the notice and 

access model on its own initiative. 

Comments varied on whether an 

intermediary should be allowed to 

follow the notice and access model on 

its own initiative.107 We believe that the 

issuer should be allowed to determine 

the best means for distributing its proxy 

materials, because the issuer ultimately 

pays the costs of that distribution. 

With respect to beneficial owners, an 

issuer or other soliciting person relying 

on the notice and access model must 

provide the intermediary with all 

information necessary for the 

intermediary to prepare its own Notice 

of Internet Availability of Proxy 

Materials in sufficient time for the 

intermediary to prepare and send its 

Notice to beneficial owners at least 40 

days before the meeting date.108 We 

understand that issuers, intermediaries 

and their agents currently coordinate a 

similar exchange of information to 

enable intermediaries to prepare and 

print requests for voting instructions 

ahead of their receipt of the proxy 

statement and annual report to security 

holders for forwarding to beneficial 

owners.109 We expect such coordination 

to continue to facilitate timely 

preparation of the intermediary’s 

Notice. Therefore, we have not included 

a specific timeframe in the rules for 

delivery of this information.110 Upon 

receipt of that information, the 

intermediary or its agent must prepare 

its own Notice, tailored for the 

intermediary’s beneficial owner 

customers.111 The intermediary must 

send this Notice to beneficial owners at 

least 40 calendar days before the date of 

the shareholder meeting.112

The intermediary’s Notice will 

generally contain the same information 

as an issuer’s Notice,113 with certain 

revisions to reflect the differences 

between registered holders and 

beneficial owners. Specifically, the 

intermediary’s Notice must contain the 

following information: 

• A prominent legend in bold-face 

type that states: 

Important Notice Regarding the Availability 

of Proxy Materials for the Shareholder 

Meeting to Be Held on [insert meeting 

date].114

• This communication presents only an 

overview of the more complete proxy 

materials that are available to you on the 

Internet. We encourage you to access and 

review all of the important information 

contained in the proxy materials before 

voting. 

• The [proxy statement] [information 

statement] [annual report to security holders] 

[is/are] available at [Insert Web site address]. 

• If you want to receive a paper or e-mail 

copy of these documents, you must request 

one. There is no charge to you for requesting 

a copy. Please make your request for a copy 

as instructed below on or before [Insert a 

date] to facilitate timely delivery.’’

• The date, time, and location of the 

meeting or, if corporate action is to be 

taken by written consent, the earliest 

date on which the corporate action may 

be effected; 

• A clear and impartial identification 

of each separate matter intended to be 

acted on and the issuer’s or other 

soliciting person’s recommendations 

regarding those matters, but no 

supporting statements; and 

• A list of the materials being made 

available at the specified Web site. 

The intermediary may choose 

whether to direct beneficial owners to 

the issuer’s Web site or to its own Web 

site to access the proxy disclosure 

materials. If it directs beneficial owners 

to its own Web site, access to that 

website must be free of charge and may 

not compromise a beneficial owners’

anonymity. If it directs beneficial 

owners to the issuer’s Web site, the 

intermediary must inform beneficial 

owners that they can submit voting 

instructions to the intermediary, but 

cannot execute a proxy directly in favor 

of the issuer unless the intermediary has 

executed a proxy in favor of the 

beneficial owner. In addition, the 

intermediary must provide the 

following information in its Notice, 

which is similar to the information in 

the issuer’s Notice, but applicable only 

to beneficial owners: 

• (1) A toll-free telephone number of 

the intermediary or its agent, (2) an email address of the intermediary or its 

agent, and (3) an Internet Web site of the 

intermediary or its agent where the 

shareholder can request a copy of the 

proxy materials, for all meetings and for 

the particular meeting to which the 

Notice relates; 


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115A beneficial owner wishing to attend the 

meeting and vote in person must obtain proxy 

voting authority from the intermediary through 

which he or she owns the security. 

116See NYSE Rule 452. 

117Thus, the intermediary must request the copy 

from the issuer within three business days of 

receiving the shareholder’s request. Then the issuer 

must send the copy to the intermediary, which is 

a record holder or respondent bank under the final 

rules, within three business days of receiving the 

intermediary’s request. Finally, the intermediary is 

required to forward the copy to the requesting 

shareholder within three business days of receiving 

the copy from the issuer. 

118See NYSE Rule 465. We note that a Proxy 

Working Group established by the NYSE is 

reviewing the NYSE’s current schedule of the 

specific maximum fees that NYSE member firms 

can charge an issuer under our rules requiring 

issuers to reimburse intermediaries for their 

reasonable direct and indirect expenses for 

forwarding proxy materials. We intend to work 

closely with the NYSE to evaluate the types of 

revisions that may be appropriate in light of our 

adoption of the notice and access model, including 

revision of existing fees as well as the creation of 

any new fees that may be reasonable under the 

notice and access model. Although NYSE Rule 465 

applies only to NYSE member firms, other national 

securities exchanges have a similar rule and fee 

schedule. Non-broker intermediaries, such as banks, 

also rely on the fee schedule as an industry 

standard. 

119See Rules 14b–1(d)(4)(iii) and 14b–2(d)(4)(iii) 

[17 CFR 240.14b–1(d)(4)(iii) and 240.14b–

2(d)(4)(iii)]. 

120See letter from ABA. 

121See, for example, letters from BRT, Concerned 

Shareholders, Computershare, Carl Hagberg, 

Mellon, and STA. 

• Any control/identification numbers 

that the beneficial owner needs to 

access his or her request for voting 

instructions; 

• Instructions on how to access the 

request for voting instructions on the 

Web site of the intermediary or its agent, 

provided that such instructions do not 

enable a beneficial owner to provide 

voting instructions without having 

access to the proxy statement and 

annual report; 

• Information on how to obtain 

directions to be able attend the meeting 

and vote in person; 115 and 

• A brief description, if applicable, of 

the rules that permit the intermediary to 

vote the securities if the beneficial 

owner does not return his or her voting 

instructions.116

The intermediary’s Notice must 

contain instructions on how to access 

the request for voting instructions on 

the Web site of the intermediary or its 

agent. Such information should include 

any control or identification numbers 

necessary for the beneficial owner to 

provide voting instructions. However, 

the intermediary’s Notice cannot 

include a means, such as a telephone 

number, which would enable the 

beneficial owner to provide voting 

instructions without having access to 

the proxy statement and annual report. 

A telephone number that a beneficial 

owner can use to provide voting 

instructions may be provided on the 

Internet Web site on which the request 

for voting instructions is posted (as well 

as on a paper request for voting 

instructions sent to shareholders 10 

days or more after the intermediary’s 

Notice was sent). Like an issuer, the 

intermediary cannot include a request 

for voting instructions with its Notice. 

However, at the issuer’s request, the 

intermediary will be required to send a 

copy of the request for voting 

instructions to beneficial owners, 

provided that 10 days have passed since 

the intermediary’s Notice was first sent. 

A copy of the intermediary’s Notice, or 

a copy of the proxy statement, must 

accompany that request for voting 

instructions. 

3. Request for Copies by Beneficial 

Owners 

The intermediary’s Notice must 

provide instructions on how a beneficial 

owner can request a copy of the proxy 

materials from the intermediary, rather 

than from the issuer. Under the new 

rules, a beneficial owner may not 

request a paper or e-mail copy directly 

from the issuer as originally proposed. 

We are making this revision to the 

proposal for several reasons. First, an 

issuer has no means to track the identity 

and preferences of beneficial owners for 

future solicitations because these 

owners are not registered in an issuer’s 

records as shareholders of the company. 

This tracking can be performed most 

efficiently by the intermediary because 

only it maintains records of the 

beneficial owner’s security holdings. 

Second, the intermediary is able to 

apply a beneficial owner’s request for 

paper or e-mail copies across all of a 

beneficial owner’s security holdings on 

an account-wide basis, making it easier 

for beneficial owners to elect to receive 

such copies with respect to all of the 

securities held by the beneficial owner. 

If a beneficial owner requests a copy 

of the materials from the intermediary, 

the intermediary must in turn request 

such a copy from the issuer or other 

soliciting person within three business 

days of receiving the request from the 

beneficial owner. The intermediary also 

would have to forward the materials to 

the beneficial owners within three 

business days after receipt from the 

issuer or other soliciting person.117 As 

originally proposed, the intermediary 

will be allowed to charge the issuer or 

other soliciting person for the cost it 

incurs in forwarding the copy of the 

proxy materials to the requesting 

beneficial owner.118

We also note that intermediaries 

typically keep records of whether a 

beneficial owner has affirmatively 

consented to electronic delivery of 

proxy materials on an account-wide 

basis. That is, a beneficial owner’s 

election for electronic delivery applies 

to all securities in the beneficial owner’s 

account, rather than to specific issuers. 

To make it clear to beneficial owners 

electing to receive copies of the proxy 

materials on an ongoing basis, the 

intermediary’s Notice must clarify that a 

permanent election to receive copies of 

the proxy materials in paper or e-mail 

will apply to all securities in the 

beneficial owner’s account.119

One commenter was concerned that 

the notice and access model only 

complicates an already complicated 

process for transmitting proxy materials 

to beneficial owners and may confuse 

shareholders.120 Other commenters 

recommended that the Commission 

review the proxy delivery process as a 

whole, rather than layer this model over 

the existing distribution regime.121

Although the Commission is sensitive to 

these concerns, a complete review of the 

proxy system at this time would only 

delay the potential benefits to issuers 

and shareholders offered by the notice 

and access model. As we gain additional 

experience with these rules, we will 

consider whether more extensive 

revisions to the proxy rules are 

warranted. 

In summary, the amendments would 

impose the following responsibilities on 

intermediaries that are requested by an 

issuer to follow the notice and access 

model: 

• The intermediary must prepare its 

own Notice and deliver this Notice to its 

beneficial owners after receiving the 

meeting information from the issuer or 

other soliciting person; 

• The intermediary must send its 

Notice to beneficial owners at least 40 

days prior to the meeting; 

• The intermediary must post its 

request for voting instructions on an 

Internet Web site; 

• The intermediary must maintain 

records of beneficial owners who make 

a permanent election to receive paper or 

e-mail copies of the proxy materials for 

all securities held in the beneficial 

owner’s account; and 

• The intermediary must request a 

copy of the proxy materials from the 

issuer or other soliciting person within 

three business days after receiving a 

request from its beneficial owner 

customer and must forward that copy to 

the beneficial owner customer within 

three business days after receiving the 


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122See, for example, letters from CALSTRS, 

Computershare, and Swingvote. 

123See, for example, letters from Glen Buchbaum. 

124See, for example, letters from ABA, ACC, BRT, 

ICI, ISS, Sullivan & Cromwell, and Swingvote. 

125See letters from BRT and Swingvote. 

126See letter from ABA. 

127See letters from ABA, ICI and Sullivan & 

Cromwell. 

128 15 U.S.C. 78n(c). 

129As with the case of an issuer, the soliciting 

person also may solicit shareholders concurrently 

by any other means, for example, by sending a 

proxy statement and proxy card to certain 

shareholders. 

130 17 CFR 240.14a–7. 

131See letter from ABA. 

132The proposing release also discussed the 

possibility of an electronic-only solicitation in 

which the soliciting person publishes a 

communication pursuant to Rule 14a–12 [17 CFR 

240.14a–12], but does not send any Notices to 

shareholders. We are not adopting the electroniconly option that we discussed in the proposing 

release as part of the notice and access model. 

However, as noted in the final rules, the 

amendments do not affect the availability of any 

existing means by which an issuer or other person 

may furnish proxy materials under the proxy rules. 

copy from the issuer or other soliciting 

person. 

C. Soliciting Persons Other Than the 

Issuer 

Under the amendments, a person 

other than the issuer who undertakes 

his or her own proxy solicitation also 

can rely on the notice and access model. 

This situation typically would occur in 

the context of a proxy contest between 

a shareholder and management. We 

anticipate that the notice and access 

model will provide an alternative that 

may decrease significantly the printing 

and mailing costs associated with a 

proxy solicitation. We also believe that 

the same arguments that support 

modifying the existing framework to 

facilitate an alternative dissemination 

option for issuers apply equally to 

soliciting persons other than issuers. 

Several commenters supported 

extending the notice and access model 

to such parties.122 However, some 

commenters were concerned about the 

possibility of abuse of the model by 

shareholders conducting nuisance 

contests.123 These commenters 

recommended that the availability of the 

model be limited for soliciting persons 

other than the issuer.124 The proposed 

limitations included requiring the 

solicitation of all shareholders,125

requiring soliciting persons other than 

the issuer to provide copies of their 

proxy materials upon request,126 and 

imposing a minimum shareholding 

requirement in order for a soliciting 

person to take advantage of the 

model.127 Although the amendments 

would reduce the cost of a proxy 

contest, they do not eliminate all costs, 

such as costs of preparing the soliciting 

materials, legal fees, proxy solicitor fees, 

and other significant soliciting 

expenses. We believe these surviving 

costs should discourage frivolous 

contests. 

Although the mechanics of a 

solicitation under the notice and access 

model for a person other than the issuer 

are similar to those incurred by an 

issuer, we describe below several 

important differences in the way the 

amendments affect soliciting persons 

other than the issuer. 

1. Mechanics of Proxy Solicitations by 

Persons Other Than the Issuer 

The proxy rules currently treat 

persons other than the issuer differently 

from the issuer in a significant respect 

regarding the provision of information 

to shareholders regarding intended 

corporate actions. Specifically, an issuer 

must furnish to each shareholder either 

a proxy statement, if the issuer is 

soliciting proxies or consents from 

shareholders, or an information 

statement pursuant to Section 14(c) of 

the Exchange Act 128 regarding 

shareholder meetings where corporate 

action is to be taken but no proxy 

authority or consent is sought. 

Soliciting persons other than the 

issuer are not subject to the 

requirements of Section 14(c). Thus, 

unlike the issuer, they have no 

obligation to furnish an information 

statement to shareholders from whom 

no proxy authority is sought. As a 

result, soliciting persons can limit the 

cost of a solicitation by soliciting 

proxies only from a select group of 

shareholders, such as those with large 

holdings, without furnishing other 

shareholders with any information. This 

enables a person other than the issuer to 

conduct a proxy contest in a variety of 

ways, some of which are not available 

to an issuer. The amendments that we 

are adopting relate only to the means of 

furnishing information to shareholders, 

and thus do not affect a soliciting 

person’s ability to effect such targeted 

solicitations. 

Under the new rules, a soliciting 

person other than the issuer may follow 

the same procedures as the issuer.129 In 

particular, it may furnish a Notice and 

post the proxy statement on an Internet 

Web site. As with an issuer, such a 

soliciting person may not include a 

proxy card with the Notice. It may, 

however, send a proxy card to the 

shareholders it is soliciting without a 

proxy statement 10 calendar days or 

more after initially sending the Notice to 

them, if the proxy card is accompanied 

either by a copy of the proxy statement 

or by another copy of the Notice. 

A soliciting person other than the 

issuer may selectively solicit 

shareholders under the notice and 

access model, just as it could under the 

current proxy rules (e.g., the soliciting 

person could choose to send the Notice 

only to certain shareholders, such as 

those owning more than a specified 

number of shares). As we discuss in 

more detail below, we have made 

revisions to Rule 14a–7 that will enable 

a soliciting person to distinguish 

between shareholders who have 

requested paper copies of the proxy 

materials and those who have not.130

Under the notice and access model, a 

soliciting person other than the issuer 

may choose to send a Notice only to 

those shareholders who have not 

requested paper copies of the proxy 

materials. 

In the proposing release, we proposed 

a provision that would have permitted 

a soliciting person other than the issuer 

to send a Notice that would condition 

the solicitation on a shareholder’s 

willingness to access the proxy 

materials on an Internet Web site. One 

commenter suggested that a soliciting 

person should not be permitted to 

condition its solicitation in this manner 

and should have to provide a copy of its 

proxy statement to a requesting 

shareholder.131 We are persuaded that a 

shareholder receiving a Notice 

reasonably may conclude that he or she 

is entitled to receive a copy of the 

materials. Therefore, the final rules 

require a soliciting person other than an 

issuer to send a paper or e-mail copy of 

the proxy statement to any requesting 

shareholder to whom it has sent a 

Notice.132

2. Timeframe for Sending Notice of 

Internet Availability of Proxy Materials 

A solicitation in opposition to the 

issuer’s proposals to be voted on at a 

shareholder meeting often is not 

initiated until after the issuer has filed 

its proxy statement. As we noted in the 

proposing release, we therefore believe 

that it may be unfair to apply the same 

timeframe for distributing the Notice to 

soliciting persons as the timeframe that 

applies to issuers. Therefore, the 

amendments require a soliciting person 

other than the issuer that is following 

the notice and access model to send out 

its Notice by the later of: (1) 40 Calendar 

days prior to the meeting; or (2) 10 

calendar days after the issuer first sends 

out its proxy statement or Notice to 

shareholders. This is substantially the 


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133See Rule 14a–16(l)(3)(i) [17 CFR 240.14a–

16(l)(3)(i)]. 

134See Exchange Act Rule 14a–7(b) [17 CFR 

240.14a–7(b)]. If the issuer is soliciting proxies in 

connection with a going-private transaction or a 

roll-up transaction, the shareholder has the option 

to request the shareholder list or have the issuer 

send its materials. 

135See proposed Note 3 to Exchange Act Rule 

14a–7. 

136See letter from SCSGP. 

137As noted above, this election would be 

effective until a shareholder revokes that election. 

138The other soliciting person could, of course, 

provide paper copies of the proxy statement and 

proxy card to the issuer for forwarding to those 

shareholders who have elected to receive paper 

copies. 

139As noted above, the issuer may alternatively 

provide the other soliciting person with a list of 

shareholders pursuant to Rule 14a–7. 

140See Randall S. Thomas & Catherine T. Dixon, 

Aranow & Einhorn on Proxy Contests for Corporate 

Control, at § 8.03(C) (3d ed. 2001). 

141 17 CFR 230.165. This prohibition would 

extend to persons who solicit proxies that are not 

parties to the transaction and any proxy materials 

in opposition to the transaction. 

142See, for example, letters from ABA, Hermes, 

and Sullivan & Cromwell. 

143The prospectus delivery requirements 

applicable to business combination transactions 

were not impacted by our securities offering reform 

initiative because such transactions were excluded. 

See Release No. 33–8591 (July 19, 2005) [70 FR 

44271]. 

144See, for example, letters from BRT, CALSTRS, 

Computershare, ICI, ISS, McData Corp, NY State 

Bar, Swingvote, SCSGP, William Sjostrom, and 

University Bancorp. 

same requirement we proposed, except 

that we have changed the proposed 30- 

day deadline to 40 days to conform it to 

our revision of the deadline for issuers. 

3. Content of the Notice of Internet 

Availability of Proxy Materials of a 

Soliciting Person Other Than the Issuer 

The content of the Notice sent by a 

soliciting person other than the issuer 

could be different from the content of 

the issuer’s Notice. For example, if a 

solicitation in opposition is launched 

before the issuer has sent its own proxy 

statement or Notice, the full shareholder 

meeting agenda may not be known to 

the soliciting person at the time it sends 

its Notice to shareholders. In such a 

case, the soliciting person must include 

the agenda items in its Notice only to 

the extent known.133

Also, there may be circumstances in 

which a person soliciting proxies in 

opposition to the issuer may provide a 

partial proxy card, that is, a proxy card 

soliciting proxy authority only for the 

agenda items in which the soliciting 

person is interested rather than for all of 

the items, or presenting only a partial 

slate of directors. Typically, such a 

proxy would revoke any previouslyexecuted proxy and the shareholder 

may lose his or her ability to vote on 

matters or directors other than those 

presented on the soliciting person’s 

card. To prevent a shareholder from 

unknowingly invalidating his or her 

vote on those other matters, a person 

soliciting in opposition that is 

presenting such a card to shareholders 

must indicate clearly on its Notice 

whether execution of that card will 

invalidate the shareholder’s earlier vote 

on the other matters or directors 

reflected on the issuer’s proxy card. 

4. Shareholder Lists and the Furnishing 

of Proxy Materials by the Issuer 

Exchange Act Rule 14a–7 sets forth 

the obligation of issuers either to 

provide a shareholder list to a 

requesting shareholder or to send the 

shareholder’s proxy materials on the 

shareholder’s behalf. That rule provides 

that the issuer has the option to provide 

the list or send the shareholder’s 

materials, except when the issuer is 

soliciting proxies in connection with a 

going-private transaction or a roll-up 

transaction.134 Under the amendments, 

if the issuer is providing its shareholder 

list to a soliciting person, the issuer 

would be required to indicate which of 

those shareholders have permanently 

requested paper copies of proxy 

materials.135 The proposed rules would 

have required an issuer to share all 

information about its shareholders 

regarding electronic delivery. We have 

decided to limit this requirement. 

One commenter was concerned that a 

requirement to share information on 

affirmative consents may violate the 

issuer’s privacy policies and the terms 

of the consent agreement between the 

issuer and shareholder.136 The 

commenter also was concerned about 

divulging employees’ internal company 

e-mail addresses. We agree with this 

comment and are not adopting that 

aspect of the proposal. However, the 

new rules do require an issuer to share 

information regarding whether a 

shareholder has made a permanent 

election to receive paper copies of the 

proxy materials. Such disclosure would 

not necessitate disclosure of a 

shareholder’s e-mail address. In 

addition, a shareholder who has made a 

permanent election to receive paper 

copies of the issuer’s proxy materials 

might reasonably expect to receive 

paper copies of proxy materials from 

other soliciting persons. Once that 

shareholder has made a permanent 

election, he or she should not be 

required to ask again for a paper copy 

of proxy materials.137

Similarly, if, under Rule 14a–7, the 

issuer elects to send the soliciting 

person’s proxy materials, the 

amendments require the issuer to refrain 

from forwarding the other soliciting 

person’s Notice to any shareholder who 

has made a permanent election to 

receive paper copies.138 If the soliciting 

person requests that the issuer follow 

the notice and access model, the 

soliciting person would be responsible 

for providing the issuer with copies of 

its Notice for all shareholders to whom 

it intends to provide a Notice. In that 

case, the issuer would have to send the 

soliciting person’s Notice with 

reasonable promptness after receipt 

from the soliciting person. An issuer 

could not decide on its own whether to 

send a soliciting person’s materials in 

paper or electronically. If the other 

soliciting person wishes to send a proxy 

card to shareholders 10 or more days 

after it first sends the Notice, the issuer 

would be required to forward those 

proxy cards in a similar fashion.139

5. The Role of Intermediaries With 

Respect to Solicitations by Persons 

Other Than the Issuer 

Intermediaries generally furnish 

proxy materials to beneficial owners on 

behalf of soliciting persons other than 

the issuer under the conditions set forth 

in Exchange Act Rules 14b–1 and 14b–

2.140 Although intermediaries 

historically have transmitted a soliciting 

person’s proxy materials in reliance on 

the procedures set forth in Rules 14b–

1 and 14b–2, these two rules do not 

explicitly address an intermediary’s 

obligations with respect to the 

forwarding of a soliciting person’s proxy 

materials. As proposed, the 

amendments clarify that intermediaries 

are obligated to send proxy materials on 

behalf of soliciting persons other than 

the issuer. 

D. Business Combination Transactions 

As adopted, the notice and access 

model is not available with regard to 

proxy materials related to a business 

combination transaction, which 

includes transactions covered by Rule 

165 under the Securities Act,141 as well 

as transactions for cash consideration 

requiring disclosure under Item 14 of 

Schedule 14A. Several commenters 142

agreed that business combination 

transactions constitute highly 

extraordinary events for some issuers 

and frequently involve an offering of 

securities that must be registered under 

the Securities Act and require delivery 

of the prospectus.143 They also typically 

involve proxy statements of 

considerable length and complexity. 

Other commenters nonetheless believed 

that the model should be extended to 

such transactions.144 They noted that 


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4160 Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations 

145Rules 14a–4(c)(1), 14a–8(e)(2), 14a–8(e)(3), 

14a–8(m)(3), 14a–13(a)(5), 14a–13(c), 14b–

1(c)(2)(ii), 14b–2(c)(2)(ii), 14c–5(a) and 14c–7(a)(5). 

Also Note 2 to Rule 14a–13(a), Instruction 2 to 

paragraph (d)(2)(ii)(L) of Item 7 of Rule 14a–101, 

Note 2 to Rule 14c–7(a) and Instruction 1 to Item 

4 of Rule 14c–101. 

146Rules 14a–7(f), 14a–13(e), 14b–1(a)(2) and 

14b–2(a)(4). 

147Rules 14a–3(b)(1), 14a–3(b)(10), 14a–3(b)(13), 

14a–3(e)(1)(i), 14a–3(e)(1)(i)(A), 14a–3(e)(1)(i)(B), 

14a–3(e)(1)(i)(C), 14a–3(e)(1)(i)(E), 14a–

3(e)(1)(ii)(A), 14a–3(e)(1)(ii)(B)(2), 14a–

3(e)(1)(ii)(B)(2)(ii), 14a–3(e)(1)(ii)(B)(2)(iii), 14a–

3(e)(1)(ii)(B)(3), 14a–3(e)(1)(iii), 14a–3(e)(2), 14a–

3(e)(2)(i), 14a–3(e)(2)(ii), 14a–12(c)(1), 14b–1(b)(2), 

14b–1(c)(2)(ii), 14b–1(c)(3), 14b–2(b)(3), 14b–

2(c)(2)(ii), 14b–2(c)(4), 14c–2(a)(2), 14c–3(a)(1) and 

14c–3(c). Also Note to paragraph (e)(1)(i)(B) of Rule 

14a–3, Note D(3) to Rule 14a–101, Note G(1) to Rule 

14a–101, Instruction 1 to paragraph (d)(2)(ii)(L) of 

Item 7 of Rule 14a–101, paragraph (e)(2) of Item 14 

of Rule 14a–101, Item 23 of Rule 14a–101, 

paragraph (a), (b), (c) and (d) of Item 23 to Rule 14a–

101, Note 1 to paragraph (b)(2) of Rule 14b–1, Note 

1 to paragraph (b)(3) of Rule 14b–2, section heading 

to Rule 14c–3, Item 5 of Rule 14c–101 and 

paragraph (a), (b), (c) and (d) of Item 5 of Rule 14c–

101. 

148See Release No. 33–7760 (Oct. 22, 1999) [64 

FR 61408]. 

149 44 U.S.C. 3501 et seq. 

150 44 U.S.C. 3507(d) and 5 CFR 1320.11. 

151 In the proposing release, we described the 

proposed Notice of Internet Availability of Proxy 

Materials as a new collection of information, rather 

than a part of our existing collections of information 

related to Regulations 14A and 14C. However, we 

subsequently submitted to OMB a PRA analysis 

based on revisions to the Regulation 14A and 

Regulation 14C collections. Based on our burden 

estimates associated with the Notice, the collection 

of information approved by OMB related to 

revisions to existing collections of information 

(Regulations 14A and 14C) and therefore we refer 

to those collections of information in this PRA 

discussion. 

even more savings may be realized by 

extending the model to such larger 

documents. The Commission desires to 

gain more experience with the notice 

and access model before extending it to 

business combination transactions. 

Based on our experience with the model 

once it is being used for more 

straightforward corporate actions, we 

will consider at a later date whether it 

is appropriate to extend the model to 

business combination transactions. 

E. Compliance Date and Monitoring 

No issuer may send a Notice to 

shareholders before July 1, 2007. Issuers 

and intermediaries typically hire third 

parties to handle the logistics of proxy 

distribution. These companies will 

require time to adjust their systems to 

accommodate the notice and access 

model. Therefore, an issuer may not use 

the new model for meetings before 

August 10, 2007 because of the 40-day 

deadline. Similarly, if an issuer’s 

meeting will be on or after August 10, 

2007, it may only send the Notice on or 

after July 1, 2007, even if the issuer 

wishes to send the Notice more than 40 

days prior to the meeting date. 

We desire to track the industry’s 

experience with the notice and access 

model to determine whether the rules 

are achieving their intended purposes. 

However, we do not currently intend to 

impose a requirement for issuers and 

other parties to provide us with data 

and experiences with the model. We 

welcome information from issuers and 

all other parties involved in the proxy 

distribution process about their 

experience with the notice and access 

model on a voluntary basis. Such 

information would include itemized 

costs of proxy solicitation before and 

after adoption of the model, shareholder 

voting data before and after adoption, 

the number of copies requested, and any 

problems encountered with 

implementing the program. Although 

such information may be aggregated 

with the data and experiences of others 

and presented to the public, we do not 

intend to divulge the identity of 

responding parties. 

IV. Conforming and Correcting 

Revisions to the Proxy Rules 

The adopted rules reflect numerous 

amendments to terms used in the 

current proxy rules to explicitly 

accommodate the notice and access 

model. The changes are as follows: 

• We substitute the term ‘‘send’’ and 

other tenses of the verb for the term 

‘‘mail’’ and its other tenses to avoid any 

misunderstanding that ‘‘mail’’ means 

only paper delivery through the U.S. 

mail system.145

• We clarify that the term ‘‘address’’

includes an electronic mail address.146

Furthermore, we clarify the use of the 

term ‘‘annual report(s)’’ in the proxy 

rules by changing all references to either 

‘‘annual report(s) to security holders’’ or 

‘‘annual report(s) on Form 10–K and/or 

Form 10–KSB,’’ as appropriate.147

Finally, we are updating Rule 14a–2 and 

Forms 10–Q, 10–QSB, 10–K, 10–KSB, 

and N–SAR to revise outdated 

references to Exchange Act Rule 14a–11, 

which the Commission rescinded in 

1999.148

V. Paperwork Reduction Act 

A. Background 

The amendments contain ‘‘collection 

of information’’ requirements within the 

meaning of the Paperwork Reduction 

Act of 1995 (PRA).149 We published a 

notice requesting comment on the 

collection of information requirements 

in the proposing release, and submitted 

requests to the Office of Management 

and Budget for approval in accordance 

with the PRA.150 These requests were 

approved by OMB. Some of the 

revisions that we are making to the 

original proposal affect these collections 

of information. We will submit requests 

for approval of the revisions to OMB. 

We are requesting comment in this 

release with respect to these revisions. 

The titles for the collections of 

information are:151

Regulation 14A (OMB Control No. 

3235–0059) 

Regulation 14C (OMB Control No. 3235–

0057) 

An agency may not conduct or 

sponsor, and a person is not required to 

respond to, a collection of information 

unless it displays a currently valid OMB 

control number. 

B. Summary of Amendments 

The amendments will apply to a 

particular issuer or other soliciting 

person only if the issuer or soliciting 

person voluntarily chooses to rely on 

the notice and access model. However, 

if the issuer or soliciting person opts to 

rely on the new alternative model, 

compliance with the components of the 

model is mandatory. The Notices, the 

proxy materials posted on the Web site, 

and copies of the proxy materials sent 

in response to shareholder requests will 

not be kept confidential. 

The Notice must include the 

following prominent legend in bold-face 

type and other information described 

below: 

‘‘Important Notice Regarding the Availability 

of Proxy Materials for the Shareholder 

Meeting to Be Held on [insert meeting 

date].152

• This communication presents only an 

overview of the more complete proxy 

materials that are available to you on the 

Internet. We encourage you to access and 

review all of the important information 

contained in the proxy materials before 

voting. 

• The [proxy statement] [information 

statement] [annual report to security holders] 

[is/are] available at [Insert Web site address]. 

• If you want to receive a paper or e-mail 

copy of these documents, you must request 

one. There is no charge to you for requesting 

a copy. Please make your request for a copy 

as instructed below on or before [Insert a 

date] to facilitate timely delivery.’’

• The date, time, and location of the 

meeting or, if corporate action is to be 

taken by written consent, the earliest 

date on which the corporate action may 

be effected; 

• A clear and impartial identification 

of each separate matter intended to be 

acted upon and the issuer’s or other 

soliciting person’s recommendations 

regarding those matters, but no 

supporting statements; 


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Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations 4161 

153For convenience, the estimated PRA hour 

burdens have been rounded to the nearest whole 

number, and the estimated PRA cost burdens have 

been rounded to the nearest $100. At the proposing 

stage, we used an estimated hourly rate of $300.00 

to determine the estimated cost to public companies 

of executive compensation and related disclosure 

prepared or reviewed by outside counsel. We 

recently have increased this hourly rate estimate to 

$400.00 per hour after consulting with several 

private law firms. The cost estimates in this release 

are based on the $400.00 hourly rate. We request 

comment on this estimated hourly rate. 

154 7,301 notices for 14A filers + 681 notices for 

14C filers = 7,982 total notices. 

155 7,982 notices × 1.5 hours per notice × .75 = 

8,980 hours. 

156 7,982 notices × $400/hour × 1.5 hours/notice 

× .25 = $1,197,300. 

157See the 1995 Interpretive Release. 

158 17 CFR 240.14a–3(e). 

159 7,982 filings with an estimated one filing per 

issuer or soliciting person × 5 hours = 39,910 hours. 

160 7,982 notices × 1 hour per notice = 7,982 

hours. We do not include a cost to intermediaries 

for hiring outside counsel because we expect that 

the substantive contents of an intermediary’s Notice 

would be provided by the issuer or other soliciting 

person. The estimates assume that ADP will 

continue to process over 95% of the proxy 

solicitations on behalf of intermediaries, thereby 

eliminating the need for each intermediary to 

prepare a separate Notice. 

• A list of the materials being made 

available at the specified Web site; 

• (1) A toll-free telephone number; (2) 

an e-mail address; and (3) an Internet 

Web site address where the shareholder 

can request a copy of the proxy 

materials, for all meetings and for the 

particular meeting to which the Notice 

relates; 

• Any control/identification number 

that the shareholder needs to access his 

or her proxy card; 

• Instructions on how to access the 

proxy card, provided that such 

instructions do not enable a shareholder 

to execute a proxy without having 

access to the proxy statement and 

annual report; and 

• Information on how to obtain 

directions to be able to attend the 

meeting and vote in person. 

Intermediaries must provide a similar 

notice to beneficial owners. We expect 

that all of the factual information 

required to appear in the Notice will 

become available as part of the ordinary 

preparations for a shareholder meeting. 

C. Comments on PRA Estimates 

We requested comment on the PRA 

analysis contained in the proposing 

release. In the proposing release, we 

estimated the annual burden for an 

issuer or other soliciting person to 

prepare a Notice to be approximately 1.5 

hours. We estimated that 75% of the 

burden would be prepared by the issuer 

and that 25% of the burden would be 

prepared by outside counsel retained by 

the issuer at an average cost of 

approximately $300 per hour.153 Based 

on our receipt of 7,301 filings on 

Schedule 14A and 681 filings on 

Schedule 14C during our 2005 fiscal 

year, we estimated that 7,982 Notices 

would be filed annually, assuming that 

all issuers and other soliciting persons 

elected to follow the proposed notice 

and access model.154 We further 

estimated that the total annual reporting 

burden would be approximately 8,980 

hours.155 Using the revised $400 average 

cost for retaining outside counsel, we 

are adjusting our annual cost estimate to 

approximately $1,197,300,156 which 

reflects the outside counsel cost. 

Although the notice and access model 

is an alternative to the existing model 

for the distribution of proxy materials to 

shareholders, and reliance upon it will 

be optional, we based our reporting 

burden and cost estimates on the 

assumption that all issuers or other 

soliciting persons in fiscal year 2005 

would have relied on the notice and 

access model even though we realized 

that this would result in an 

overestimation of hour and cost 

burdens. The new alternative is 

voluntary, so the percentage of issuers 

and soliciting persons that will choose 

to rely on the new model is uncertain. 

In response to commenters’ remarks, 

we revised the proposal to require 

issuers to permit shareholders to make 

permanent elections to receive proxy 

materials in paper or by e-mail. An 

issuer must maintain records as to 

which of its shareholders have made 

such an election. Many issuers already 

maintain similar records to keep track of 

their shareholders who have 

affirmatively consented to electronic 

delivery consistent with past 

Commission guidance,157 as well as 

their shareholders who have consented 

to householding of proxy materials 

pursuant to Rule 14a–3(e).158 For 

purposes of the PRA, we estimate that 

a typical issuer will spend an additional 

five hours per year, or a total of 39,910 

hours for all issuers subject to the proxy 

rules, to maintain these records.159

Because this is an internal 

recordkeeping requirement, we do not 

expect a cost for hiring outside counsel. 

The final rules also require an 

intermediary to prepare its own Notice. 

This Notice would be substantially the 

same as an issuer’s Notice, but will be 

modified by the intermediaries to 

provide information that is relevant to 

beneficial owners rather than registered 

holders. According to ADP, it processes 

more than 95% of proxy materials that 

are sent to beneficial owners on behalf 

of intermediaries, reducing the need to 

create multiple intermediary Notices. In 

addition, the issuer or other soliciting 

person will provide the majority of 

information required in the 

intermediary’s Notice. Therefore, we 

estimate that the burden to prepare an 

intermediary’s Notice will be 

approximately one hour, or a total 

annual burden of 7,982 hours for all 

proxy solicitations.160

Intermediaries must also maintain 

records to keep track of which beneficial 

owners have made a permanent election 

to receive proxy materials in paper or by 

e-mail. Like issuers, intermediaries 

already maintain records of 

shareholders’ affirmative consents to 

electronic delivery and householding of 

proxy materials. In addition, 

intermediaries maintain records as to 

whether their beneficial owner 

customers have objected, or not 

objected, to disclosure of their identities 

to the issuer. Like issuers, we believe 

this will result in an annual burden of 

39,910 hours for intermediaries. 

We did not receive any comments on 

the percentage of issuers and persons 

likely to rely on the notice and access 

model, nor did we receive any 

comments on our burden and cost 

estimates associated with preparing the 

Notice. However, several corporate 

commenters indicated that some issuers 

might be reluctant to rely on the notice 

and access model due to a concern that 

the costs of fulfillment of requests for 

paper copies under the model might 

offset some of the potential savings that 

they could realize from the model. We 

have revised the proposed model to 

address some of these concerns about 

fulfillment of requests for paper copies, 

but it is still difficult to predict the 

number of issuers and soliciting persons 

that will rely on the model. Therefore, 

we are not revising the original 

estimates that assume that all issuers 

and soliciting persons will rely on the 

notice and access model. As a result, 

these burden estimates likely are 

overstated. We will adjust them after we 

have actual experience with the notice 

and access model. We request comment 

on all of our hourly and cost burden 

estimates. 

Any member of the public may direct 

to us any comments concerning these 

burden and cost estimates and any 

suggestions for reducing the burdens 

and costs. Persons who desire to submit 

comments on the collections of 

information requirements should direct 

their comments to the OMB, Attention: 

Desk Officer for the Securities and 

Exchange Commission, Office of 

Information and Regulatory Affairs, 

Washington, DC 20503, and send a copy 


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4162 Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations 

161We expect savings per mailing to record 

holders to roughly correspond to savings per 

mailing to beneficial owners. 

162According to ADP data, the 2006 proxy season 

extended from February 15, 2006 to May 1, 2006. 

163 85.3 million mailings × $5.64/mailing = $481.2 

million. 

164According to ADP, in 2005, 90,013,175 of 

179,833,774, or 50%, of proxy pieces were mailed 

during the 2005 proxy season. 

165 $481.2 million / 50% = $962.4 million. 

166This range of potential cost savings depends 

on data on proxy material production, home 

printing costs, and first-class postage rates provided 

by Lexecon and ADP, and supplemented with 

modest 2006 USPS postage rate discounts. The 

fixed costs of notice and proxy material production 

are estimated to be $2.36 per shareholder. The 

variable costs of fulfilling a paper requests, 

including handling, paper, printing and postage, are 

estimated to be $6.11 per copy requested. 

Assumptions about percentages of shareholders 

requesting paper copies are derived from Forrester 

survey data furnished by ADP and adjusted for the 

reported likelihood that an investor will take extra 

steps to get proxy materials. Our estimate of the 

total number of shareholders is based on data 

provided by ADP and SIA. According to SIA’s 

comment letter, 78.49% of shareholders held their 

shares in street name. We estimate that the total 

number of proxy pieces mailed equals the number 

of pieces mailed to beneficial shareholders by ADP 

in 2005 divided by 78.49%, which equals 

179,833,774 / 78.49%, or 229,116,797. 

167ADP commissioned a study by Lexecon to 

provide estimates for the total net cost/savings of 

the amendments to issuers. Lexecon’s study relied 

on 2005 postage rates with no first-class mail 

discounts and a higher share of color printing at 

home than we assume above. It estimated that if all 

issuers adopt the notice and access model, if 9% of 

shareholders choose to print the materials at home, 

and 19% choose to have paper copies sent to them, 

then the amendments would produce a net savings 

of $205 million for issuers in the aggregate. 

However, if 20% of shareholders chose to print and 

39% chose to request paper copies, the 

amendments would produce a net cost of $181 

million. See Lexecon comment letter for more 

details. 

of the comments to Nancy M. Morris, 

Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–9303, with 

reference to File No. S7–10–05. 

Requests for materials submitted to the 

OMB by us with regard to these 

collections of information should be in 

writing, refer to File No. S7–10–05, and 

be submitted to the Securities and 

Exchange Commission, Records 

Management, Office of Filings and 

Information Services, 100 F Street, NE., 

Washington, DC 20549. Because the 

OMB is required to make a decision 

concerning the collections of 

information between 30 and 60 days 

after publication, your comments are 

best assured of having their full effect if 

the OMB receives them within 30 days 

of publication. 

VI. Cost-Benefit Analysis 

A. Background 

The amendments to the proxy rules 

enable issuers to take advantage of 

technological advances that have 

occurred in recent years to more 

efficiently furnish proxy materials to 

shareholders. We expect that these 

amendments will lead to significant cost 

reduction for proxy solicitations. The 

costs of solicitations ultimately are 

borne by shareholders. We are sensitive 

to the costs and benefits that result from 

our rules. In this section, we examine 

those costs and benefits. 

Issuers and other persons soliciting 

proxies must comply with the rule 

amendments only if they elect to furnish 

proxy materials pursuant to the notice 

and access model. No issuer or person 

conducting a proxy solicitation will be 

required to follow the notice and access 

model. We expect that an issuer or other 

soliciting person will follow the model 

only if it believes that it will experience 

cost savings as a result. We expect that 

having a choice among alternative 

models for furnishing proxy materials 

will limit the costs of the amendments 

by enabling issuers and other soliciting 

persons to choose one that is most 

efficient and cost effective under the 

issuer’s or other soliciting person’s 

particular circumstances. 

B. Summary of Amendments 

The amendments provide an 

alternative notice and access model that 

permits an issuer to furnish its proxy 

materials to shareholders by posting 

them on a publicly-accessible Internet 

Web site (other than the Commission’s 

EDGAR Web site) and providing 

shareholders with a notice informing 

them that the materials are available and 

explaining how to access them. Under 

this alternative model, shareholders 

may request paper or e-mail copies of 

the proxy materials at no charge from 

the issuer. 

Under the amendments, an issuer can 

require intermediaries to follow similar 

procedures when forwarding the 

issuer’s proxy materials to beneficial 

owners. In addition, shareholders and 

other persons conducting their own 

proxy solicitations may follow the 

alternative model, under the same 

general requirements that apply to 

issuers. However, such persons will be 

able to limit their solicitations to 

shareholders who have not requested 

paper copies of the proxy materials from 

an issuer in connection with the issuer’s 

solicitation. 

C. Benefits 

The benefits to investors of the 

amendments include the following: (1) 

More rapid dissemination of proxy 

information to shareholders using the 

Internet; and (2) reduced printing and 

mailing costs for issuers, as well as 

other soliciting persons engaging in 

proxy contests. We expect that the 

reductions in printing and mailing costs 

and the potential decrease in the costs 

of proxy contests to be the most 

significant sources of economic benefit 

to investors of the amendments. 

In terms of paper processing alone, 

the benefits of the rule amendments are 

limited by the volume of paper 

processing that would occur otherwise. 

As we noted in the proposing release, 

Automatic Data Processing, Inc. (ADP) 

handles the vast majority of proxy 

mailings to beneficial owners.161 ADP 

publishes statistics that provide useful 

background for evaluating the likely 

consequences of the rule amendments. 

ADP estimates that, during the 2006 

proxy season,162 over 69.7 million proxy 

material mailings were eliminated 

through a variety of means, including 

householding and existing electronic 

delivery methods. During that season, 

ADP mailed 85.3 million paper proxy 

items to beneficial owners. ADP 

estimates that the average cost of 

printing and mailing a paper copy of a 

set of proxy materials during the 2006 

proxy season was $5.64. We estimate 

that issuers and other soliciting persons 

spent, in the aggregate, $481.2 million 

in postage and printing fees alone to 

distribute paper proxy materials to 

beneficial owners.163 Approximately 

50% of all proxy pieces mailed by ADP 

in 2005 were mailed during the proxy 

season.164 Therefore, we estimate that 

issuers and other persons soliciting 

proxies from beneficial owners spent 

approximately $962.4 million in 2006 in 

printing and mailing costs.165

Based on the assumption that 19% of 

shareholders will choose to have paper 

copies sent to them when an issuer 

relies on the notice and access model, 

we estimate that the amendments could 

produce annual paper-related savings 

ranging from $48.3 million (if issuers 

who are responsible for 10% of all 

proxy mailings choose to rely on the 

notice and access model) to $241.4 

million (if issuers who are responsible 

for 50% of all proxy mailings choose to 

rely on the notice and access model).166

This estimate excludes the effect of the 

provision of the amendments that will 

allow shareholders to make a permanent 

request for paper copies. That provision 

will enable issuers and other soliciting 

persons to take advantage of bulk 

printing and mailing rates for those 

requesting shareholders, and therefore 

should reduce the on-demand costs 

reflected in these calculations.167

We estimate that approximately 19% 

of shareholders will request paper 

copies. Commenters provided alternate 


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168See letter from Computershare. 

169See letter from ADP. 

170See letters from CALSTRS, Computershare, 

ISS, and Swingvote. 

171See letter from American Forests. 

172See www.ics.adp.com/release11/public_site/ 

about/stats.html stating that ADP handled 

179,833,774 in fiscal year 2005 and letter from SIA 

stating that beneficial accounts represent 78.49% of 

total accounts. 

173For PRA purposes, we estimate that issuers 

would spend a total of $897,975 on outside 

professionals to prepare this disclosure. We also 

estimate that issuers would spend a total of 8,980 

hours of issuer personnel time preparing this 

disclosure. We estimate the average hourly cost of 

issuer personnel time to be $125, resulting in a total 

cost of $1,122,500 for issuer personnel time. This 

results in a total cost of $2,020,475 for all issuers. 

We expect that costs for posting the materials on a 

Web site will be minimal and are included in this 

calculation. 

estimates. For example, Computershare, 

a large transfer agent, estimated that less 

than 10% of shareholders would request 

paper copies.168 According to a survey 

conducted by Forrester Research for 

ADP, 12% of shareholders report that 

they would always take extra steps to 

get their proxy materials, and as many 

as 68% of shareholders report that they 

would take extra steps to get their proxy 

materials in paper at least some of the 

time. The same survey also finds that 

82% of shareholders report that they 

look at their proxy materials at least 

some of the time. These survey results 

suggest that shareholders may review 

proxy materials even if they do not vote. 

During the 2005 proxy season, only 44% 

of accounts were voted by beneficial 

owners. Put differently, 56%, or 84.8 

million accounts, did not return 

requests for voting instructions. Our 

estimate that 19% of shareholders will 

request paper copies reflects the diverse 

estimates suggested by the available 

data. 

Although we expect the savings to be 

significant, the actual paper-related 

benefits will be influenced by several 

factors that we estimate will become 

less important over time. First, some 

issuers and other soliciting persons will 

likely not elect to follow the alternative 

model. We estimate that issuers who are 

responsible for between 10% and 50% 

of all current proxy mailings will adopt 

the notice and access model during the 

first year of implementation of the 

amendments. Several commenters noted 

that some issuers may not be willing to 

try the model the first year, but rather 

will opt to wait and monitor the 

experience of other issuers that do try 

the model. Second, to the extent that 

some shareholders request paper copies 

of the proxy materials, the benefits of 

the amendments in terms of savings in 

printing and mailing costs will be 

reduced. Issuers are concerned that the 

cost per paper copy would be 

significantly greater if they have to mail 

copies of paper proxy materials to 

shareholders on an on-demand basis, 

rather than mailing the paper copies in 

bulk. Thus, if a significant number of 

shareholders request paper, the savings 

will be substantially reduced. Third, 

after adopting the notice and access 

model, issuers may face a high degree of 

uncertainty about the number of 

requests that they may get for paper 

proxy materials and may maintain 

unnecessarily large inventories of paper 

copies as a precaution. As issuers gain 

familiarity with the continued use of 

paper materials and as shareholders 

become more comfortable with 

receiving disclosures via the Internet, 

the number of paper copies are likely to 

decline, as will issuers’ tendency to 

print many more copies than ultimately 

are requested. This will lead to growth 

in paper-related savings from the rule 

amendments over time. 

Additional benefits will accrue from 

reductions in the costs of proxy 

solicitations by persons other than the 

issuer. Under the amendments, persons 

other than the issuer also can rely on the 

notice and access model, but will be 

able to limit the scope of their proxy 

solicitations to shareholders who have 

not requested paper copies of the proxy 

materials. We expect that the flexibility 

afforded to persons other than the issuer 

under the amendments will reduce the 

cost of engaging in proxy contests, 

thereby increasing the effectiveness and 

efficiency of proxy contests as a source 

of discipline in the corporate 

governance process. 

The effect of the amendments of 

lessening the costs associated with a 

proxy contest will be limited by the 

persistence of other costs, even under 

the notice and access model. One 

commenter noted that a large percentage 

of the costs of effecting a proxy contest 

go to legal, document preparation, and 

solicitation fees, while a much smaller 

percentage of the costs is associated 

with printing and distribution of 

materials.169 However, other 

commenters suggested that the paperrelated cost savings that can be realized 

from the rule amendments are 

substantial enough to change the way 

many contests are conducted.170

Finally, some benefits from the 

amendments may arise from a reduction 

in what may be regarded as the 

environmental costs of the proxy 

solicitation process.171 Specifically, 

proxy solicitation involves the use of a 

significant amount of paper and printing 

ink. Paper production and distribution 

can adversely affect the environment, 

due to the use of trees, fossil fuels, 

chemicals such as bleaching agents, 

printing ink (which contains toxic 

metals), and cleanup washes. To the 

extent that paper producers internalize 

these costs and the costs are reflected in 

the price of paper and other materials 

consumed during the proxy solicitation 

process, our dollar estimates of the 

paper-related benefits reflect the 

elimination of these adverse 

environmental consequences under the 

amendments. 

D. Costs 

An issuer’s decision to use the notice 

and access model will introduce several 

new costs into the process of proxy 

distribution, including the following: (1) 

The cost of preparing, producing, and 

sending the Notice to shareholders; (2) 

the cost of processing shareholders’

requests for copies of the proxy 

materials and maintaining their 

permanent election preferences; and (3) 

the cost to shareholders of printing 

proxy materials at home that would 

otherwise be printed by issuers. 

The paper-related savings to issuers 

and other soliciting persons discussed 

under the benefits section above are 

adjusted for the cost of printing and 

sending Notices. If Notices are sent by 

mail, then the mailing costs may vary 

widely among parties. Postage rates 

likely would vary from $0.14 to $0.39 

per Notice mailed, depending on 

numerous factors. In our estimates of 

the paper-related benefits above, we 

assume that each Notice costs a total of 

$0.42 to print and mail. Based on data 

from ADP and SIA, we estimate that 

issuers and other soliciting persons 

process a total of 229,116,797 accounts 

per year.172 The alternative model also 

requires minimal added disclosures in 

the form of a Notice to shareholders, 

informing them that the proxy materials 

are available at a specified Internet Web 

site. For purposes of the PRA, we have 

presented the extremely conservative 

estimate that the preparation and filing 

costs of the amendments, assuming that 

all issuers and other soliciting persons 

elect to follow the procedures, will be 

approximately $2,020,475.173 Under the 

alternate scenario presented above, 

these costs could range between 

$202,048 if 10% of issuers adopt the 

model and $1,010,238 if 50% of issuers 

adopt. The amendments also require 

issuers and intermediaries to maintain 

records of shareholders who have 

requested paper and e-mail copies for 

future proxy solicitations. We estimate 

that this cost to issuers and 

intermediaries will be approximately 


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174For PRA purposes, we estimate that issuers 

and intermediaries would spend a total of 79,820 

hours of issuer and intermediary personnel time 

maintaining these records. We estimate the average 

hourly cost of issuer and intermediary personnel 

time to be $125, resulting in a total cost of 

$9,977,500 for issuer and intermediary personnel 

time. 

175This range of potential home printing costs 

depends on data provided by Lexecon and ADP. 

See letter from ADP. The Lexecon data was 

included in the ADP comment letter. To calculate 

home printing cost, we assume that 50% of annual 

report pages are printed in color and 100% of proxy 

statement pages are printed in black and white. The 

estimated percentage of shareholders printing at 

home is derived from Forrester survey data 

furnished by ADP and adjusted for the reported 

likelihood that an investor will take extra steps to 

get proxy materials. Total number of shareholders 

estimated as above based on data provided by ADP 

and SIA. See letters from ADP and SIA. 

176 15 U.S.C. 78w(a)(2). 

177 15 U.S.C. 78c(f). 

178 15 U.S.C. 80a–2(c). 

179See Section III.C.1 of Release No. 34–52926 

(Dec. 8, 2005) [70 FR 74597]. 

$9,977,500 if all issuers adopt the notice 

and access model,174 $997,500 if 10% of 

issuers adopt the model, and $4,988,750 

if 50% of issuers adopt the model. 

Issuers who adopt the notice and 

access model and their intermediaries 

will incur additional processing costs. 

The amendments will require an 

intermediary such as a bank, brokerdealer, or other association to follow the 

notice and access model if an issuer so 

requests. An intermediary that follows 

the notice and access model will be 

required to prepare its own Notice to 

beneficial owners, along with 

instructions on when and how to 

request paper copies and the Web site 

where the beneficial owner can access 

his or her request for voting 

instructions. Since issuers reimburse 

intermediaries for their reasonable 

expenses of forwarding proxy materials 

and intermediaries and their agents 

already have systems to prepare and 

deliver requests for voting instructions, 

we do not expect the intermediaries’

role in sending their Notices to 

beneficial owners to significantly affect 

the costs associated with the rule. 

Under the notice and access model, a 

beneficial owner must request a copy of 

proxy materials from its intermediary 

rather than from the issuer. The costs of 

collecting and processing requests from 

beneficial owners may be significant, 

particularly if the intermediary receives 

the requests of beneficial owners 

associated with many different issuers 

that specify different methods of 

furnishing the proxy. We expect that 

these processing costs will be highest in 

the first year after adoption but will 

subsequently decline as intermediaries 

develop the necessary systems and 

procedures and as beneficial owners 

increasingly become comfortable with 

accessing proxy materials online. In 

addition, the final rules permit a 

beneficial owner to specify its 

preference on an account-wide basis, 

which should reduce the cost of 

processing requests for copies. These 

costs are ultimately paid by the issuer 

and therefore would be included in an 

issuer’s assessment of whether to adopt 

the alternative model. 

Shareholders obtaining proxy 

materials online would incur any 

necessary costs associated with gaining 

access to the Internet. In addition, some 

shareholders may choose to print out 

the posted materials, which will entail 

paper and printing costs. We estimate 

that approximately 10% of all 

shareholders will print out the posted 

materials at home at an estimated cost 

of $7.05 per proxy package. Based on 

these assumptions, the amendments are 

estimated to produce annual home 

printing costs ranging from $16 million 

(if issuers who are responsible for 10% 

of all current proxy mailings choose to 

rely on the notice and access model) to 

$80 million (if issuers who are 

responsible for 50% of all current proxy 

mailings choose to rely on the notice 

and access model).175 Investors have the 

option to incur no additional cost by 

either accessing the proxy materials 

online or requesting paper copies of the 

materials from the issuer. 

VII. Consideration of Burden on 

Competition and Promotion of 

Efficiency, Competition and Capital 

Formation 

Section 23(a)(2) of the Exchange 

Act 176 requires us, when adopting rules 

under the Exchange Act, to consider the 

impact that any new rule would have on 

competition. In addition, Section 

23(a)(2) prohibits us from adopting any 

rule that would impose a burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Exchange Act. Section 

3(f) of the Exchange Act 177 and Section 

2(c) of the Investment Company Act of 

1940 178 require us, when engaging in 

rulemaking that requires us to consider 

or determine whether an action is 

necessary or appropriate in the public 

interest, to consider, in addition to the 

protection of investors, whether the 

action will promote efficiency, 

competition, and capital formation. We 

have also discussed other impacts of the 

amendments in our Cost-Benefit, 

Paperwork Reduction Act and Final 

Regulatory Flexibility Act Analyses. 

The amendments to the proxy rules 

are intended to improve efficiency by 

providing an alternative for issuers and 

other soliciting persons that could 

reduce the cost of soliciting proxies and 

sending information statements 

regarding shareholder meetings. 

Currently, many issuers must devote a 

significant amount of time and 

resources to proxy mailings. Similarly, 

undertaking a proxy contest is often a 

very costly endeavor. We expect that the 

amendments will reduce the time and 

resources related to such distributions. 

These costs include reimbursing 

intermediaries for their part in the 

process. 

As noted elsewhere in this release, 

commenters expressed concern that the 

amendments might reduce shareholder 

participation in the proxy voting 

process, making issuers more dependent 

on broker discretionary voting. Such a 

result would affect the efficiency of the 

current proxy voting process. We have 

made revisions to the amendments to 

minimize such effect, by making it 

easier for shareholders to continue to 

receive paper copies of the proxy 

materials. Similarly, there was concern 

that the amendments would increase the 

risk of shareholders conducting 

frivolous proxy contests. We have also 

revised the final rules to minimize this 

possibility, by eliminating the proposed 

conditional solicitation.179

Some commenters were concerned 

that the added procedures would 

complicate the proxy distribution 

process, reducing the efficiency of the 

process. The final rules are voluntary. 

No issuer or other soliciting person is 

required to rely on the notice and access 

model. Those that choose to rely on the 

model presumably have determined that 

the additional procedures that they 

must follow would reduce their cost of 

soliciting proxies, thereby increasing the 

efficiency of the process. 

We considered the effects that the 

amendments would have on capital 

formation. The final rules do not 

directly affect the ability of issuers to 

raise capital. However, they are 

intended to reduce the cost of soliciting 

proxies. In addition, they facilitate 

proxy disclosure via the Internet, which 

may improve the manner in which 

investors receive those disclosures, 

thereby improving shareholder 

relations. 

We considered the possible effects of 

the amendments on competition. As 

noted elsewhere in this release, 

companies in, and related to, the 

financial printing industry were 

concerned about the negative effects 

that the rules may have on that industry. 

Conversely, these rules may create 

alternative industries that promote more 

user-friendly, computer-based systems 


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180Release No. 34–52926 (Dec. 8, 2005) [70 FR 

74597]. 

181See letter from ABC. 

182 17 CFR 240.0–10(a). 

183See Rule 0–10 under the Investment Company 

Act of 1940 [17 CFR 270.0–10]. 

184 17 CFR 240.0–10(c)(1). 

185These numbers are based on a review by the 

Commission’s Office of Economic Analysis of 2005 

Financial and Operational Combined Uniform 

Single (FOCUS) Report filings reflecting registered 

broker-dealers. This number does not include 

broker-dealers that are delinquent in their FOCUS 

Report filings. 

186 13 CFR 121.201. 

for interaction with shareholders, thus 

creating new jobs and industries in this 

field. 

VIII. Final Regulatory Flexibility 

Analysis 

This Final Regulatory Flexibility 

Analysis has been prepared in 

accordance with 5 U.S.C. 603. It relates 

to amendments to the proxy rules under 

the Exchange Act that will provide an 

alternative model for issuers and other 

persons soliciting proxies to satisfy 

certain of their obligations under the 

Commission’s proxy rules. An Initial 

Regulatory Flexibility Analysis (IRFA) 

was prepared in accordance with the 

Regulatory Flexibility Act in 

conjunction with the proposing release. 

The proposing release included, and 

solicited comment on, the IRFA. 

A. Need for the Amendments 

On December 8, 2005, we proposed 

amendments to the rules regarding 

provision of proxy materials to 

shareholders.180 We are adopting those 

amendments, substantially as proposed, 

but with a few modifications in 

response to public comment. 

Specifically, the amendments create an 

alternative notice and access model by 

which issuers and other soliciting 

persons can electronically furnish their 

proxy materials to shareholders. The 

amendments are intended to put into 

place processes that will provide 

shareholders with notice of, and access 

to, proxy materials while taking 

advantage of technological 

developments and the growth of the 

Internet and electronic communications. 

Issuers that rely on the amendments 

may be able to significantly lower the 

costs of their proxy solicitations that 

ultimately are borne by shareholders. 

The fact that the amendments also apply 

to a soliciting person other than the 

issuer might help to reduce the costs of 

engaging in a proxy contest. 

The amendments also have the 

potential to improve the ability of 

shareholders to participate meaningfully 

in the proxy process by reducing the 

cost of undertaking a proxy contest and 

may increase management’s 

accountability and responsiveness to 

shareholders due to heightened concern 

about the possibility of a proxy contest. 

This, in turn, may enhance the value of 

shareholders’ investments. 

B. Significant Issues Raised by Public 

Comment 

In the proposing release, we requested 

comment on any aspect of the Initial 

Regulatory Flexibility Act Analysis, 

including the number of small entities 

that would be affected by the proposals, 

and both the qualitative and 

quantitative nature of the impact. We 

did not receive comment on the number 

of small entities that would be affected 

by the proposals. Also, no commenters 

noted any difference in the potential 

effect of the amendments on small 

entities as opposed to other entities. 

One commenter remarked that smaller 

companies depend more heavily on 

broker discretionary voting than larger 

companies in order to meet state law 

quorum requirements.181 Although the 

new rules do not affect the NYSE’s 

broker discretionary voting rule, that 

commenter noted that if the final rules 

reduce shareholder voting, such smaller 

companies would become even more 

dependent on broker discretionary 

voting. As noted elsewhere in this 

release, we have made revisions to the 

amendments to minimize such effect, by 

making it easier for shareholders to 

continue to receive paper copies of the 

proxy materials. 

C. Small Entities Subject to the 

Amendments 

Exchange Act Rule 0–;10(a) 182 defines 

an issuer to be a ‘‘small business’’ or 

‘‘small organization’’ for purposes of the 

Regulatory Flexibility Act if it had total 

assets of $5 million or less on the last 

day of its most recent fiscal year. We 

estimate that there are approximately 

2,500 public companies, other than 

investment companies, that may be 

considered small entities. 

For purposes of the Regulatory 

Flexibility Act, an investment company 

is a small entity if it, together with other 

investment companies in the same 

group of related investment companies, 

has net assets of $50 million or less as 

of the end of its most recent fiscal 

year.183 Approximately 157 registered 

investment companies meet this 

definition. Moreover, approximately 53 

business development companies may 

be considered small entities. 

Paragraph (c)(1) of Rule 0–10 under 

the Exchange Act 184 states that the term 

‘‘small business’’ or ‘‘small 

organization,’’ when referring to a 

broker-dealer, means a broker or dealer 

that had total capital (net worth plus 

subordinated liabilities) of less than 

$500,000 on the date in the prior fiscal 

year as of which its audited financial 

statements were prepared pursuant to 

§ 240.17a–5(d); and is not affiliated with 

any person (other than a natural person) 

that is not a small business or small 

organization. As of 2005, the 

Commission estimates that there were 

approximately 910 broker-dealers that 

qualified as small entities as defined 

above.185 Small Business 

Administration regulations define 

‘‘small entities’’ to include banks and 

savings associations with total assets of 

$165 million or less.186 The 

Commission estimates that the rules 

will apply to approximately 9,475 

banks, approximately 5,816 of which 

could be considered small banks with 

assets of $165 million or less. 

No issuer is required to follow the 

notice and access model. However, we 

expect that many issuers will choose to 

follow the alternative model because of 

the substantial cost savings that they 

may realize. These issuers likely will 

include many small entities. Brokerdealer and bank intermediaries are 

required to comply with the notice and 

access model if an issuer or other 

soliciting person requests such 

intermediaries to follow the alternative 

model. 

D. Reporting, Recordkeeping and Other 

Compliance Requirements 

If an issuer chooses to follow the 

model, it will be required to prepare, 

file, and furnish a Notice to 

shareholders. Similarly, upon request 

from an issuer or other soliciting person, 

a broker-dealer or bank intermediary 

will be required to prepare and furnish 

its own Notice to beneficial owners. 

These Notices must include factual 

information that is readily available to 

the issuer and intermediary. An issuer 

relying on the notice and access model 

also will be required to provide copies 

of the proxy materials to requesting 

shareholders and to maintain a Web site 

on which to post the proxy materials. 

Intermediaries will be required to 

forward copies of the proxy materials to 

requesting beneficial owners and to 

maintain a Web site on which to post its 

request for voting instructions. Those 

Web sites must be maintained in a 

manner to ensure that the anonymity of 

persons accessing the Web sites is 

preserved. Finally, issuers and 

intermediaries must maintain records 

regarding which shareholders have 

indicated a preference to receive paper 


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or e-mail copies of the proxy materials 

in the future. 

E. Agency Action To Minimize Effect on 

Small Entities 

Compliance with the alternative 

notice and access model is voluntary for 

issuers. An issuer that is a small entity, 

like other types of entities subject to the 

proxy rules, need not elect to follow the 

alternative model. This flexibility to 

comply with traditional methods of 

distributing proxy materials to 

shareholders or to comply with the 

notice and access model will allow a 

small entity to choose the compliance 

means that will be most cost effective 

for its particular situation. It is likely 

that only the issuers that believe they 

will realize cost savings or other 

benefits as a result of following the 

notice and access model will choose to 

do so. 

Broker-dealer and bank intermediaries 

that are small entities must comply with 

the requirements of the voluntary model 

upon request from an issuer or other 

soliciting person. However, an 

intermediary is not required to forward 

proxy materials to beneficial owners 

unless the issuer or other soliciting 

person provides assurance of 

reimbursement of the intermediary’s 

reasonable expenses incurred in 

connection with forwarding those 

materials. Therefore, any costs imposed 

on intermediaries by the rules will be 

borne by the issuer or other soliciting 

person, and ultimately shareholders. 

Exempting broker-dealers and banks 

that are small entities would lead to 

inconsistent means by which beneficial 

owners receive their proxy materials, 

which we believe would not be 

appropriate. 

We considered alternatives, such as 

permitting an intermediary to merely 

forward an issuer’s Notice rather than 

preparing its own Notice and permitting 

beneficial owners to request copies 

directly from the issuer. However, we 

believe that those alternatives create a 

high likelihood of confusion with 

respect to whether a beneficial owner 

would be entitled to execute a proxy 

card rather than provide voting 

instructions to his or her intermediary. 

To prevent such confusion, we have 

decided that such alternatives would 

not be appropriate. 

IX. Statutory Basis and Text of 

Amendments 

We are adopting the amendments 

pursuant to Sections 3(b), 10, 13, 14, 15, 

23(a), and 36 of the Securities Exchange 

Act of 1934, as amended, and Sections 

20(a), 30, and 38 of the Investment 

Company Act of 1940, as amended. 

List of Subjects 

17 CFR Parts 240 and 249 

Reporting and recordkeeping 

requirements, Securities. 

17 CFR Part 274 

Investment companies, Reporting and 

recordkeeping requirements, Securities. 

PART 240—GENERAL RULES AND 

REGULATIONS, SECURITIES 

EXCHANGE ACT OF 1934 

■ 1. The general authority citation for 

part 240 is revised to read as follows: 

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 

77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn, 

77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j, 

78j–1, 78k, 78k–1, 78l, 78m, 78n, 78o, 78p, 

78q, 78s, 78u–5, 78w, 78x, 78ll, 78mm, 80a–

20, 80a–23, 80a–29, 80a–37, 80b–3, 80b–4, 

80b–11, and 7201 et seq.; and 18 U.S.C. 1350, 

unless otherwise noted. 

* * * * * 

■ 2. Amend § 240.14a–2 by: 

■ a. Removing the period and adding a 

semicolon at the end of paragraph 

(b)(3)(ii); and 

■ b. Revising paragraph (b)(3)(iv). 

The revision reads as follows: 

§ 240.14a–2 Solicitations to which 

§ 240.14a–3 to § 240.14a–15 apply. 

* * * * * 

(b) * * * 

(3) * * * 

(iv) The proxy voting advice is not 

furnished on behalf of any person 

soliciting proxies or on behalf of a 

participant in an election subject to the 

provisions of § 240.14a–12(c); and 

* * * * * 

■ 3. Amend § 240.14a–3 by: 

■ a. Revising paragraphs (a), (e)(1)(i), the 

introductory text of paragraphs 

(e)(1)(ii)(A) and (e)(1)(ii)(B)(2), 

paragraphs (e)(1)(ii)(B)(2)(ii), 

(e)(1)(ii)(B)(2)(iii), (e)(1)(ii)(B)(3), 

(e)(1)(iii), and (e)(2); and 

■ b. Revising the term ‘‘annual report’’

to read ‘‘annual report to security 

holders’’ in paragraph (b)(13). 

The revisions read as follows: 

§ 240.14a–3 Information to be furnished to 

security holders. 

(a) No solicitation subject to this 

regulation shall be made unless each 

person solicited is concurrently 

furnished or has previously been 

furnished with: 

(1) A publicly-filed preliminary or 

definitive written proxy statement 

containing the information specified in 

Schedule 14A (§ 240.14a–101); 

(2) A publicly-filed preliminary or 

definitive proxy statement, in the form 

and manner described in § 240.14a–16, 

containing the information specified in 

Schedule 14A (§ 240.14a–101); or 

(3) A preliminary or definitive written 

proxy statement included in a 

registration statement filed under the 

Securities Act of 1933 on Form S–4 or 

F–4 (§ 239.25 or § 239.34 of this chapter) 

or Form N–14 (§ 239.23 of this chapter) 

and containing the information 

specified in such Form. 

* * * * * 

(e)(1)(i) A registrant will be 

considered to have delivered an annual 

report to security holders, proxy 

statement or Notice of Internet 

Availability of Proxy Materials, as 

described in § 240.14a–16, to all 

security holders of record who share an 

address if: 

(A) The registrant delivers one annual 

report to security holders, proxy 

statement or Notice of Internet 

Availability of Proxy Materials, as 

applicable, to the shared address; 

(B) The registrant addresses the 

annual report to security holders, proxy 

statement or Notice of Internet 

Availability of Proxy Materials, as 

applicable, to the security holders as a 

group (for example, ‘‘ABC Fund [or 

Corporation] Security Holders,’’ ‘‘Jane 

Doe and Household,’’ ‘‘The Smith 

Family’’), to each of the security holders 

individually (for example, ‘‘John Doe 

and Richard Jones’’) or to the security 

holders in a form to which each of the 

security holders has consented in 

writing; 

Note to paragraph (e)(1)(i)(B): Unless 

the registrant addresses the annual 

report to security holders, proxy 

statement or Notice of Internet 

Availability of Proxy Materials to the 

security holders as a group or to each of 

the security holders individually, it 

must obtain, from each security holder 

to be included in the household group, 

a separate affirmative written consent to 

the specific form of address the 

registrant will use. 

(C) The security holders consent, in 

accordance with paragraph (e)(1)(ii) of 

this section, to delivery of one annual 

report to security holders or proxy 

statement, as applicable; 

(D) With respect to delivery of the 

proxy statement or Notice of Internet 

Availability of Proxy Materials, the 

registrant delivers, together with or 

subsequent to delivery of the proxy 

statement, a separate proxy card for 

each security holder 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 to security holders, proxy 


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statement or Notice of Internet 

Availability of Proxy Materials, as 

applicable, to a security holder at a 

shared address to which a single copy 

of the document was delivered. 

(ii) Consent. (A) Affirmative written 

consent. Each security holder must 

affirmatively consent, in writing, to 

delivery of one annual report to security 

holders or proxy statement, as 

applicable. A security holder’s 

affirmative written consent will be 

considered valid only if the security 

holder has been informed of: 

* * * * * 

(B) * * * 

(2) The registrant has sent the security 

holder a notice at least 60 days before 

the registrant begins to rely on this 

section concerning delivery of annual 

reports to security holders, proxy 

statements or Notices of Internet 

Availability of Proxy Materials to that 

security holder. The notice must: 

* * * * * 

(ii) State that only one annual report 

to security holders, proxy statement or 

Notice of Internet Availability of Proxy 

Materials, as applicable, will be 

delivered to the shared address unless 

the registrant receives contrary 

instructions; 

(iii) 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 to security 

holders, proxy statement or Notice of 

Internet Availability of Proxy Materials; 

* * * * * 

(3) 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 to 

security holders, proxy statement or 

Notice of Internet Availability of Proxy 

Materials, as applicable, within 60 days 

after the registrant sent the notice 

required by paragraph (e)(1)(ii)(B)(2) of 

this section; and 

* * * * * 

(iii) Revocation of consent. If a 

security holder, orally or in writing, 

revokes consent to delivery of one 

annual report to security holders, proxy 

statement or Notice of Internet 

Availability of Proxy Materials 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. 

* * * * * 

(2) Notwithstanding paragraphs (a) 

and (b) of this section, unless state law 

requires otherwise, a registrant is not 

required to send an annual report to 

security holders, proxy statement or 

Notice of Internet Availability of Proxy 

Materials to a security holder if: 

(i) An annual report to security 

holders and a proxy statement, or a 

Notice of Internet Availability of Proxy 

Materials, for two consecutive annual 

meetings; or 

(ii) All, and at least two, payments (if 

sent by first class mail) of dividends or 

interest on securities, or dividend 

reinvestment confirmations, during a 

twelve month period, have been mailed 

to such security holder’s address and 

have been returned as undeliverable. If 

any such security holder delivers or 

causes to be delivered to the registrant 

written notice setting forth his then 

current address for security holder 

communications purposes, the 

registrant’s obligation to deliver an 

annual report to security holders, a 

proxy statement or a Notice of Internet 

Availability of Proxy Materials under 

this section is reinstated. 

* * * * * 

§ 240.14a–4 [Amended] 

■ 4. Amend § 240.14a–4 by: 

■ a. Removing the authority citation 

following the section; 

■ b. Revising the word ‘‘mailed’’ to read 

‘‘sent’’ in the first sentence of paragraph 

(c)(1); and 

■ c. Revising the word ‘‘mails’’ to read 

‘‘sends’’ in the last sentence of 

paragraph (c)(1). 

■ 5. Amend § 240.14a–7 by: 

■ a. Revising paragraphs (a)(2)(i) and 

(a)(2)(ii); 

■ b. Adding paragraph (a)(2)(iii); and 

■ c. In the ‘‘Notes to § 240.14a–7’’, 

revising the numerical designation ‘‘1.’’

to read ‘‘Note 1 to § 240.14a–7’’, revising 

the numerical designation ‘‘2.’’ to read 

‘‘Note 2 to § 240.14a–7’’ and adding 

‘‘Note 3 to § 240.14a–7’’. 

The revisions and additions read as 

follows: 

§ 240.14a–7 Obligations of registrants to 

provide a list of, or mail soliciting material 

to, security holders. 

* * * * * 

(a) * * * 

(2) * * * 

(i) Send copies of any proxy 

statement, form of proxy, or other 

soliciting material, including a Notice of 

Internet Availability of Proxy Materials 

(as described in § 240.14a–16), 

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 sent to the 

banks, brokers, and similar entities for 

distribution to all beneficial owners 

designated by the security holder. The 

security holder may designate only 

record holders and/or beneficial owners 

who have not requested paper and/ 

or e-mail copies of the proxy statement. 

If the registrant has received affirmative 

written or implied consent to deliver a 

single proxy statement to security 

holders at a shared address in 

accordance with the procedures in 

§ 240.14a–3(e)(1), a single copy of the 

proxy statement or Notice of Internet 

Availability of Proxy Materials 

furnished by the security holder shall be 

sent to that address, provided that if 

multiple copies of the Notice of Internet 

Availability of Proxy Materials are 

furnished by the security holder for that 

address, the registrant shall deliver 

those copies in a single envelope to that 

address. The registrant shall send the 

security holder material with reasonable 

promptness after tender of the material 

to be sent, envelopes or other containers 

therefore, postage or payment for 

postage and other reasonable expenses 

of effecting such distribution. 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) 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; 

(B) The most recent list of names, 

addresses and security positions of 

beneficial owners as specified in 

§ 240.14a–13(b), in the possession, or 

which subsequently comes into the 

possession, of the registrant; 

(C) The names of security holders 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 written or 

implied consent in accordance with 

§ 240.14a–3(e)(1); and 

(D) If the registrant has relied on 

§ 240.14a–16, the names of security 

holders who have requested paper 

copies of the proxy materials for all 

meetings and the names of security 

holders who, as of the date that the 

registrant receives the request, have 

requested paper copies of the proxy 

materials only for the meeting to which 

the solicitation relates. 


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4168 Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations 

(iii) 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. 

* * * * * 

Notes to § 240.14a–7. 

* * * * * 

Note 3 to § 240.14a–7. If the registrant 

is sending the requesting security 

holder’s materials under § 240.14a–7 

and receives a request from the security 

holder to furnish the materials in the 

form and manner described in 

§ 240.14a–16, the registrant must 

accommodate that request. 

■ 6. Amend § 240.14a–8 by revising the 

word ‘‘mail’’ to read ‘‘send’’ in the last 

sentence of paragraph (e)(2) and in 

paragraph (e)(3) and the word ‘‘mails’’

to read ‘‘sends’’ in the introductory text 

of paragraph (m)(3). 

■ 7. Amend § 240.14a–12 by revising 

the term ‘‘annual report’’ to read 

‘‘annual report to security holders’’ in 

the heading of paragraph (c)(1) and the 

first sentence of paragraph (c)(1). 

■ 8. Amend § 240.14a–13 by revising 

the word ‘‘mailing’’ to read ‘‘sending’’ in 

paragraph (a)(5) and the word ‘‘mail’’ to 

read ‘‘send’’ in Note 2 following 

paragraph (a) and in paragraph (c), each 

time it appears. 

■ 9. Add § 240.14a–16 to read as 

follows: 

§ 240.14a–16 Internet availability of proxy 

materials. 

(a)(1) A registrant may furnish a proxy 

statement pursuant to § 240.14a–3(a), or 

an annual report to security holders 

pursuant to § 240.14a–3(b), to a security 

holder by sending the security holder a 

Notice of Internet Availability of Proxy 

Materials, as described in this section, 

40 calendar days or more prior to the 

security holder meeting date, or if no 

meeting is to be held, 40 calendar days 

or more prior to the date the votes, 

consents or authorizations may be used 

to effect the corporate action, and 

complying with all other requirements 

of this section. 

(2) If the registrant chooses to provide 

the proxy statement or annual report to 

security holders to beneficial owners 

pursuant to this section, it must provide 

the record holder or respondent bank 

with all information listed in paragraph 

(d) of this section in sufficient time for 

the record holder or respondent bank to 

prepare, print and send a Notice of 

Internet Availability of Proxy Materials 

to beneficial owners at least 40 calendar 

days before the meeting date. 

(b)(1) All materials identified in the 

Notice of Internet Availability of Proxy 

Materials must be publicly accessible, 

free of charge, at the Web site address 

specified in the notice on or before the 

time that the notice is sent to the 

security holder and such materials must 

remain available on that Web site 

through the conclusion of the meeting of 

security holders. 

(2) All additional soliciting materials 

sent to security holders or made public 

after the Notice of Internet Availability 

of Proxy Materials has been sent must 

be made publicly accessible at the 

specified Web site address no later than 

the day on which such materials are 

first sent to security holders or made 

public. 

(3) The Web site address relied upon 

for compliance under this section may 

not be the address of the Commission’s 

electronic filing system. 

(4) The registrant must provide 

security holders with a means to 

execute a proxy as of the time the Notice 

of Internet Availability of Proxy 

Materials is first sent to security 

holders. 

(c) The materials must be presented 

on the Web site in a format, or formats, 

convenient for both reading online and 

printing on paper. 

(d) The Notice of Internet Availability 

of Proxy Materials must contain the 

following: 

(1) A prominent legend in bold-face 

type that states: 

‘‘Important Notice Regarding the Availability 

of Proxy Materials for the Shareholder 

Meeting To Be Held on [insert meeting date]. 

1. This communication presents only an 

overview of the more complete proxy 

materials that are available to you on the 

Internet. We encourage you to access and 

review all of the important information 

contained in the proxy materials before 

voting. 

2. The [proxy statement] [information 

statement] [annual report to security holders] 

[is/are] available at [Insert Web site address]. 

3. If you want to receive a paper or e-mail 

copy of these documents, you must request 

one. There is no charge to you for requesting 

a copy. Please make your request for a copy 

as instructed below on or before [Insert a 

date] to facilitate timely delivery.’’; 

(2) The date, time, and location of the 

meeting, or if corporate action is to be 

taken by written consent, the earliest 

date on which the corporate action may 

be effected; 

(3) A clear and impartial 

identification of each separate matter 

intended to be acted on and the 

soliciting person’s recommendations 

regarding those matters, but no 

supporting statements; 

(4) A list of the materials being made 

available at the specified Web site; 

(5) A toll-free telephone number, an 

e-mail address, and an Internet Web site 

where the security holder can request a 

copy of the proxy statement, annual 

report to security holders, and form of 

proxy, relating to all of the registrant’s 

future security holder meetings and for 

the particular meeting to which the 

proxy materials being furnished relate; 

(6) Any control/identification 

numbers that the security holder needs 

to access his or her form of proxy; 

(7) Instructions on how to access the 

form of proxy, provided that such 

instructions do not enable a security 

holder to execute a proxy without 

having access to the proxy statement 

and, if required by § 240.14a–3(b), the 

annual report to security holders; and 

(8) Information on how to obtain 

directions to be able to attend the 

meeting and vote in person. 

(e)(1) The Notice of Internet 

Availability of Proxy Materials may not 

be incorporated into, or combined with, 

another document, except that it may be 

incorporated into, or combined with, a 

notice of security holder meeting 

required under state law, unless state 

law prohibits such incorporation or 

combination. 

(2) The Notice of Internet Availability 

of Proxy Materials may contain only the 

information required by paragraph (d) of 

this section and any additional 

information required to be included in 

a notice of security holders meeting 

under state law; provided that: 

(i) The registrant must revise the 

information on the Notice of Internet 

Availability of Proxy Materials, 

including any title to the document, to 

reflect the fact that: 

(A) The registrant is conducting a 

consent solicitation rather than a proxy 

solicitation; or 

(B) The registrant is not soliciting 

proxy or consent authority, but is 

furnishing an information statement 

pursuant to § 240.14c–2; and 

(ii) The registrant may include a 

statement on the Notice to educate 

security holders that no personal 

information other than the identification 

or control number is necessary to 

execute a proxy. 

(f)(1) Except as provided in paragraph 

(h) of this section, the Notice of Internet 

Availability of Proxy Materials must be 

sent separately from other types of 

security holder communications and 

may not accompany any other 


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Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations 4169 

document or materials, including the 

form of proxy. 

(2) Notwithstanding paragraph (f)(1) 

of this section, the registrant may 

accompany the Notice of Internet 

Availability of Proxy Materials with: 

(i) A pre-addressed, postage-paid 

reply card for requesting a copy of the 

proxy materials; and 

(ii) A copy of any notice of security 

holder meeting required under state law 

if that notice is not combined with the 

Notice of Internet Availability of Proxy 

Materials. 

(g) Plain English. 

(1) To enhance the readability of the 

Notice of Internet Availability of Proxy 

Materials, the registrant must use plain 

English principles in the organization, 

language, and design of the notice. 

(2) The registrant must draft the 

language in the Notice of Internet 

Availability of Proxy Materials so that, 

at a minimum, it substantially complies 

with each of the following plain English 

writing 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 

business terms; and 

(vi) No multiple negatives. 

(3) In designing the Notice of Internet 

Availability of Proxy Materials, the 

registrant may include pictures, logos, 

or similar design elements so long as the 

design is not misleading and the 

required information is clear. 

(h) The registrant may, at its 

discretion, choose to furnish some 

proxy materials pursuant to § 240.14a–

3(a)(1) and other proxy materials 

pursuant to this section, provided that 

the registrant may not send a form of 

proxy to security holders until 10 

calendar days or more after the date it 

sent the Notice of Internet Availability 

of Proxy Materials to security holders, 

unless the form of proxy is accompanied 

or has been preceded by a copy of the 

proxy statement and any annual report 

to security holders that is required by 

§ 240.14a–3(b) through the same 

delivery medium. If the registrant sends 

a form of proxy after the expiration of 

such 10-day period and the form of 

proxy is not accompanied or preceded 

by a copy, via the same medium, of the 

proxy statement and any annual report 

to security holders that is required by 

§ 240.14a–3(b), then the registrant shall 

accompany the form of proxy with a 

Notice of Internet Availability of Proxy 

Materials. 

(i) The registrant must file a form of 

the Notice of Internet Availability of 

Proxy Materials with the Commission 

pursuant to § 240.14a–6(b) no later than 

the date that the registrant first sends 

the notice to security holders. 

(j) Obligation to provide copies. 

(1) The registrant must send, at no 

cost to the record holder or respondent 

bank and by U.S. first class mail or other 

reasonably prompt means, a paper copy 

of the proxy statement, information 

statement, annual report to security 

holders, and form of proxy (to the extent 

each of those documents is applicable) 

to any record holder or respondent bank 

requesting such a copy within three 

business days after receiving a request 

for a paper copy. 

(2) The registrant must send, at no 

cost to the record holder or respondent 

bank and via e-mail, an electronic copy 

of the proxy statement, information 

statement, annual report to security 

holders, and form of proxy (to the extent 

each of those documents is applicable) 

to any record holder or respondent bank 

requesting such a copy within three 

business days after receiving a request 

for an electronic copy via e-mail. 

(3) The registrant is required to 

provide copies of the proxy materials 

pursuant to paragraphs (j)(1) and (j)(2) of 

this section for one year after the 

conclusion of the meeting or corporate 

action to which the proxy materials 

relate. 

(4) The registrant must maintain 

records of security holder requests to 

receive materials in paper or via e-mail 

for future solicitations and must 

continue to provide copies of the 

materials to a security holder who has 

made such a request until the security 

holder revokes such request. 

(k) Security holder information. 

(1) A registrant or its agent shall 

maintain the Internet Web site on which 

it posts its proxy materials in a manner 

that does not infringe on the anonymity 

of a person accessing such Web site. 

(2) The registrant and its agents shall 

not use any e-mail address obtained 

from a security holder solely for the 

purpose of requesting a copy of proxy 

materials pursuant to paragraph (j) of 

this section for any purpose other than 

to send a copy of those materials to that 

security holder. The registrant shall not 

disclose such information to any person 

other than an employee or agent to the 

extent necessary to send a copy of the 

proxy materials pursuant to paragraph 

(j) of this section. 

(l) A person other than the registrant 

may solicit proxies pursuant to the 

conditions imposed on registrants by 

this section, provided that: 

(1) A soliciting person other than the 

registrant is required to provide copies 

of its proxy materials only to security 

holders to whom it has sent a Notice of 

Internet Availability of Proxy Materials; 

and 

(2) A soliciting person other than the 

registrant must send its Notice of 

Internet Availability of Proxy Materials 

by the later of: 

(i) 40 Calendar days prior to the 

security holder meeting date or, if no 

meeting is to be held, 40 calendar days 

prior to the date the votes, consents, or 

authorizations may be used to effect the 

corporate action; or 

(ii) 10 calendar days after the date that 

the registrant first send its proxy 

statement or Notice of Internet 

Availability of Proxy Materials to 

security holders. 

(3) Content of the soliciting person’s 

Notice of Internet Availability of Proxy 

Materials. 

(i) If, at the time a soliciting person 

other than the registrant sends its Notice 

of Internet Availability of Proxy 

Materials, the soliciting person is not 

aware of all matters on the registrant’s 

agenda for the meeting of security 

holders, the soliciting person’s Notice 

on Internet Availability of Proxy 

Materials must provide a clear and 

impartial identification of each separate 

matter on the agenda to the extent 

known by the soliciting person at that 

time. The soliciting person’s notice also 

must include a clear statement 

indicating that there may be additional 

agenda items of which the soliciting 

person is not aware and that the security 

holder cannot direct a vote for those 

items on the soliciting person’s proxy 

card provided at that time. 

(ii) If a soliciting person other than 

the registrant sends a form of proxy not 

containing all matters intended to be 

acted upon, the Notice of Internet 

Availability of Proxy Materials must 

clearly state whether execution of the 

form of proxy will invalidate a security 

holder’s prior vote on matters not 

presented on the form of proxy. 

(m) This section shall not apply to a 

proxy solicitation in connection with a 

business combination transaction, as 

defined in § 230.165 of this chapter. 

(n) This section provides a nonexclusive alternative by which an issuer 

or other person may furnish a proxy 

statement pursuant to § 240.14a–3(a) or 

an annual report to security holders 

pursuant to § 240.14a–3(b) to a security 

holder. This section does not affect the 

availability of any other means by 

which an issuer or other person may 

furnish a proxy statement pursuant to 

§ 240.14a–3(a), or an annual report to 


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4170 Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations 

security holders pursuant to § 240.14a–

3(b), to a security holder. 

■ 10. Amend § 240.14a–101 by: 

■ a. Revising the term ‘‘annual report’’

to read ‘‘annual report on Form 10–K or 

Form 10–KSB’’ in Instruction 1 to 

paragraph (d)(2)(ii)(L) of Item 7; 

■ b. Revising the word ‘‘mail’’ to read 

‘‘send’’ in Instruction 2 to paragraph 

(d)(2)(ii)(L) of Item 7; and 

■ c. Revising Item 23. 

The revision reads as follows. 

§ 240.14a–101 Schedule 14A. Information 

required in proxy statement. 

* * * * * 

Item 23. Delivery of documents to 

security holders sharing an address. If 

one annual report to security holders, 

proxy statement, or Notice of Internet 

Availability of Proxy Materials is being 

delivered to two or more security 

holders who share an address in 

accordance with § 240.14a–3(e)(1), 

furnish the following information: 

(a) State that only one annual report 

to security holders, proxy statement, or 

Notice of Internet Availability of Proxy 

Materials, as applicable, is being 

delivered to multiple security holders 

sharing an 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 to security 

holders, proxy statement, or Notice of 

Internet Availability of Proxy Materials, 

as applicable, to a security holder at a 

shared address to which a single copy 

of the documents was delivered and 

provide instructions as to how a 

security holder can notify the registrant 

that the security holder wishes to 

receive a separate copy of an annual 

report to security holders, proxy 

statement, or Notice of Internet 

Availability of Proxy Materials, as 

applicable; 

(c) Provide the phone number and 

mailing address to which a security 

holder can direct a notification to the 

registrant that the security holder 

wishes to receive a separate annual 

report to security holders, proxy 

statement, or Notice of Internet 

Availability of Proxy Materials, as 

applicable, in the future; and 

(d) Provide instructions how security 

holders sharing an address can request 

delivery of a single copy of annual 

reports to security holders, proxy 

statements, or Notices of Internet 

Availability of Proxy Materials if they 

are receiving multiple copies of annual 

reports to security holders, proxy 

statements, or Notices of Internet 

Availability of Proxy Materials. 

■ 11. Amend § 240.14b–1 by: 

■ a. Revising paragraphs (b)(2) 

including the Note and (c)(2)(i); 

■ b. Revising the term ‘‘annual reports’’

to read ‘‘annual reports to security 

holders’’ in paragraphs (c)(2)(ii) and 

(c)(3); 

■ c. Revising the term ‘‘annual report’’

to read ‘‘annual report to security 

holders’’ in paragraph (c)(2)(ii); 

■ d. Revising the word ‘‘mail’’ to read 

‘‘send’’ in paragraph (c)(2)(ii); and 

■ e. Adding paragraphs (d) and (e). 

The revisions and additions read as 

follows: 

§ 240.14b–1 Obligation of registered 

brokers and dealers in connection with the 

prompt forwarding of certain 

communications to beneficial owners. 

(b) * * * 

(2) The broker or dealer shall, upon 

receipt of the proxy, other proxy 

soliciting material, information 

statement, and/or annual report to 

security holders from the registrant or 

other soliciting person, forward such 

materials to its customers who are 

beneficial owners of the registrant’s 

securities no later than five business 

days after receipt of the proxy material, 

information statement or annual report 

to security holders. 

Note to Paragraph (b)(2): At the 

request of a registrant, or on its own 

initiative so long as the registrant does 

not object, a broker or dealer may, but 

is not required to, deliver one annual 

report to security holders, proxy 

statement, information statement, or 

Notice of Internet Availability of Proxy 

Materials to more than one beneficial 

owner sharing an address if the 

requirements set forth in § 240.14a–

3(e)(1) (with respect to annual reports to 

security holders, proxy statements, and 

Notices of Internet Availability of Proxy 

Materials) and § 240.14c–3(c) (with 

respect to annual reports to security 

holders, information statements, and 

Notices of Internet Availability of Proxy 

Materials) applicable to registrants, with 

the exception of § 240.14a–3(e)(1)(i)(E), 

are satisfied instead by the broker or 

dealer. 

(c) * * * 

(2) * * * 

(i) Its obligations under paragraphs 

(b)(2), (b)(3) and (d) of this section if the 

registrant or other soliciting person, as 

applicable, does not provide assurance 

of reimbursement of the broker’s or 

dealer’s reasonable expenses, both 

direct and indirect, incurred in 

connection with performing the 

obligations imposed by paragraphs 

(b)(2), (b)(3) and (d) of this section; or 

* * * * * 

(d) Compliance with § 240.14a–16. If 

a registrant or other soliciting person 

informs the broker or dealer that it 

intends to rely on § 240.14a–16 to 

furnish proxy materials to beneficial 

owners and provides all of the relevant 

information listed in § 240.14a–16(d) to 

the broker or dealer, the broker or dealer 

shall: 

(1) Prepare and send a Notice of 

Internet Availability of Proxy Materials 

containing the information required in 

paragraph (e) of this section to 

beneficial owners no later than: 

(i) With respect to a registrant, 40 

calendar days prior to the security 

holder meeting date or, if no meeting is 

to be held, 40 calendar days prior to the 

date the votes, consents, or 

authorizations may be used to effect the 

corporate action; and 

(ii) With respect to a soliciting person 

other than the registrant, the later of: 

(A) 40 calendar days prior to the 

security holder meeting date or, if no 

meeting is to be held, 40 calendar days 

prior to the date the votes, consents, or 

authorizations may be used to effect the 

corporate action; or 

(B) 10 calendar days after the date that 

the registrant first sends its proxy 

statement or Notice of Internet 

Availability of Proxy Materials to 

security holders. 

(2) Establish a Web site at which 

beneficial owners are able to access the 

broker or dealer’s request for voting 

instructions and, at the broker or 

dealer’s option, establish a Web site at 

which beneficial owners are able to 

access the proxy statement and other 

soliciting materials, provided that such 

Web sites are maintained in a manner 

consistent with paragraphs (b), (c), and 

(k) of § 240.14a–16; 

(3) Upon receipt of a request from the 

registrant or other soliciting person, 

send to security holders specified by the 

registrant or other soliciting person a 

copy of the request for voting 

instructions accompanied by a copy of 

the intermediary’s Notice of Internet 

Availability of Proxy Materials 10 

calendar days or more after the broker 

or dealer sends its Notice of Internet 

Availability of Proxy Materials pursuant 

to paragraph (d)(1); and 

(4) Upon receipt of a request for a 

copy of the materials from a beneficial 

owner: 

(i) Request a copy of the soliciting 

materials from the registrant or other 

soliciting person, in the form requested 

by the beneficial owner, within three 

business days after receiving the 

beneficial owner’s request; 

(ii) Forward a copy of the soliciting 

materials to the beneficial owner, in the 

form requested by the beneficial owner, 

within three business days after 


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Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations 4171 

receiving the materials from the 

registrant or other soliciting person; and 

(iii) Maintain records of security 

holder requests to receive a paper or email copy of the proxy materials in 

connection with future proxy 

solicitations and provide copies of the 

proxy materials to a security holder who 

has made such a request for all 

securities held in the account of that 

security holder until the security holder 

revokes such request. 

(e) Content of Notice of Internet 

Availability of Proxy Materials. The 

broker or dealer’s Notice of Internet 

Availability of Proxy Materials shall: 

(1) Include all information, as it 

relates to beneficial owners, required in 

a registrant’s Notice of Internet 

Availability of Proxy Materials under 

§ 240.14a–16(d), provided that the 

broker or dealer shall provide its own, 

or its agent’s, toll-free telephone 

number, an e-mail address, and an 

Internet Web site to service requests for 

copies from beneficial owners; 

(2) Include a brief description, if 

applicable, of the rules that permit the 

broker or dealer to vote the securities if 

the beneficial owner does not return his 

or her voting instructions; and 

(3) Otherwise be prepared and sent in 

a manner consistent with paragraphs (e), 

(f), and (g) of § 240.14a–16. 

■ 12. Amend § 240.14b–2 by: 

■ a. Revising the introductory text of 

paragraph (b)(3), the Note to paragraph 

(b)(3), and paragraph (c)(2)(i); 

■ b. Revising the term ‘‘annual reports’’

to read ‘‘annual reports to security 

holders’’ in paragraph (c)(2)(ii) and 

(c)(4); 

■ c. Revising the term ‘‘annual report’’

to read ‘‘annual report to security 

holders’’ in paragraph (c)(2)(ii); 

■ d. Revising the word ‘‘mail’’ to read 

‘‘send’’ in paragraph (c)(2)(ii); and 

■ e. Adding paragraphs (d) and (e). 

The additions and revisions read as 

follows: 

§ 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) Upon receipt of the proxy, other 

proxy soliciting material, information 

statement, and/or annual report to 

security holders from the registrant or 

other soliciting person, the bank shall 

forward such materials to each 

beneficial owner on whose behalf it 

holds securities, no later than five 

business days after the date it receives 

such material and, where a proxy is 

solicited, the bank shall forward, with 

the other proxy soliciting material and/ 

or the annual report to security holders, 

either: 

* * * * * 

Note to Paragraph (b)(3): At the 

request of a registrant, or on its own 

initiative so long as the registrant does 

not object, a bank may, but is not 

required to, deliver one annual report to 

security holders, proxy statement, 

information statement, or Notice of 

Internet Availability of Proxy Materials 

to more than one beneficial owner 

sharing an address if the requirements 

set forth in § 240.14a–3(e)(1) (with 

respect to annual reports to security 

holders, proxy statements, and Notices 

of Internet Availability of Proxy 

Materials) and § 240.14c–3(c) (with 

respect to annual reports to security 

holders, information statements, and 

Notices of Internet Availability of Proxy 

Materials) applicable to registrants, with 

the exception of § 240.14a–3(e)(1)(i)(E), 

are satisfied instead by the bank. 

* * * * * 

(c) * * * 

(2) * * * 

(i) Its obligations under paragraphs 

(b)(2), (b)(3), (b)(4) and (d) of this 

section if the registrant or other 

soliciting person, as applicable, does not 

provide assurance of reimbursement of 

its reasonable expenses, both direct and 

indirect, incurred in connection with 

performing the obligations imposed by 

paragraphs (b)(2), (b)(3), (b)(4) and (d) of 

this section; or 

* * * * * 

(d) Compliance with § 240.14a–16. If 

a registrant or other soliciting person 

informs the bank that it intends to rely 

on § 240.14a–16 to furnish proxy 

materials to beneficial owners and 

provides all of the relevant information 

listed in § 240.14a–16(d) to the bank, the 

bank shall: 

(1) Prepare and send a Notice of 

Internet Availability of Proxy Materials 

containing the information required in 

paragraph (e) of this section to 

beneficial owners no later than: 

(i) With respect to a registrant, 40 

calendar days prior to the security 

holder meeting date or, if no meeting is 

to be held, 40 calendar days prior to the 

date the votes, consents, or 

authorizations may be used to effect the 

corporate action; and 

(ii) With respect to a soliciting person 

other than the registrant, the later of: 

(A) 40 calendar days prior to the 

security holder meeting date or, if no 

meeting is to be held, 40 calendar days 

prior to the date the votes, consents, or 

authorizations may be used to effect the 

corporate action; or 

(B) 10 calendar days after the date that 

the registrant first sends its proxy 

statement or Notice of Internet 

Availability of Proxy Materials to 

security holders. 

(2) Establish a Web site at which 

beneficial owners are able to access the 

bank’s request for voting instructions 

and, at the bank’s option, establish a 

Web site at which beneficial owners are 

able to access the proxy statement and 

other soliciting materials, provided that 

such Web sites are maintained in a 

manner consistent with paragraphs (b), 

(c), and (k) of § 240.14a–16; 

(3) Upon receipt of a request from the 

registrant or other soliciting person, 

send to security holders specified by the 

registrant or other soliciting person a 

copy of the request for voting 

instructions accompanied by a copy of 

the intermediary’s Notice of Internet 

Availability of Proxy Materials 10 days 

or more after the bank sends its Notice 

of Internet Availability of Proxy 

Materials pursuant to paragraph (d)(1); 

and 

(4) Upon receipt of a request for a 

copy of the materials from a beneficial 

owner: 

(i) Request a copy of the soliciting 

materials from the registrant or other 

soliciting person, in the form requested 

by the beneficial owner, within three 

business days after receiving the 

beneficial owner’s request; 

(ii) Forward a copy of the soliciting 

materials to the beneficial owner, in the 

form requested by the beneficial owner, 

within three business days after 

receiving the materials from the 

registrant or other soliciting person; and 

(iii) Maintain records of security 

holder requests to receive a paper or email copy of the proxy materials in 

connection with future proxy 

solicitations and provide copies of the 

proxy materials to a security holder who 

has made such a request for all 

securities held in the account of that 

security holder until the security holder 

revokes such request. 

(e) Content of Notice of Internet 

Availability of Proxy Materials. The 

bank’s Notice of Internet Availability of 

Proxy Materials shall: 

(1) Include all information, as it 

relates to beneficial owners, required in 

a registrant’s Notice of Internet 

Availability of Proxy Materials under 

§ 240.14a–16(d), provided that the bank 

shall provide its own, or its agent’s, tollfree telephone number, e-mail address, 

and Internet Web site to service requests 

for copies from beneficial owners; and 

(2) Otherwise be prepared and sent in 

a manner consistent with paragraphs (e), 

(f), and (g) of § 240.14a–16. 

■ 13. Amend § 240.14c–2 by: 

■ a. Revising paragraph (a); and 


rwilkins on PROD1PC63 with RULES
4172 Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations 

■ b. Adding paragraph (d). 

The revision and addition read as 

follows: 

§ 240.14c–2 Distribution of information 

statement. 

(a)(1) In connection with every annual 

or other meeting of the holders of the 

class of securities registered pursuant to 

section 12 of the Act or of a class of 

securities issued by an investment 

company registered under the 

Investment Company Act of 1940 that 

has made a public offering of securities, 

including the taking of corporate action 

by the written authorization or consent 

of security holders, the registrant shall 

transmit to every security holder of the 

class that is entitled to vote or give an 

authorization or consent in regard to 

any matter to be acted upon and from 

whom proxy authorization or consent is 

not solicited on behalf of the registrant 

pursuant to section 14(a) of the Act: 

(i) A written information statement 

containing the information specified in 

Schedule 14C (§ 240.14c–101); 

(ii) A publicly-filed information 

statement, in the form and manner 

described in § 240.14c–3(d), containing 

the information specified in Schedule 

14C (§ 240.14c–101); or 

(iii) A written information statement 

included in a registration statement 

filed under the Securities Act of 1933 on 

Form S–4 or F–4 (§ 239.25 or § 239.34 of 

this chapter) or Form N–14 (§ 239.23 of 

this chapter) and containing the 

information specified in such Form. 

(2) Notwithstanding paragraph (a)(1) 

of this section: 

(i) In the case of a class of securities 

in unregistered or bearer form, such 

statements need to be transmitted only 

to those security holders whose names 

are known to the registrant; and 

(ii) No such statements need to be 

transmitted to a security holder if a 

registrant would be excused from 

delivery of an annual report to security 

holders or a proxy statement under 

§ 240.14a–3(e)(2) if such section were 

applicable. 

* * * * * 

(d) A registrant may transmit an 

information statement to security 

holders pursuant to paragraph (a) of this 

section by satisfying the requirements 

set forth in § 240.14a–16; provided, 

however, that the registrant may revise 

the information required in the Notice 

of Internet Availability of Proxy 

Materials to reflect the fact that the 

registrant is not soliciting proxies for the 

meeting. This paragraph (d) provides a 

non-exclusive alternative by which a 

registrant may transmit an information 

statement pursuant to paragraph (a) of 

this section to a security holder. This 

paragraph (d) does not affect the 

availability of any other means by 

which a registrant may transmit an 

information statement pursuant to 

paragraph (a) of this section to a security 

holder. 

■ 14. Amend § 240.14c–3 by: 

■ a. Removing the authority citation 

following this section; 

■ b. Revising paragraphs (a)(1) and (c); 

and 

■ c. Adding paragraph (d). 

The revisions and addition read as 

follows: 

§ 240.14c–3 Annual report to be furnished 

security holders. 

(a) * * * 

(1) The annual report to security 

holders shall contain the information 

specified in paragraphs (b)(1) through 

(b)(11) of § 240.14a–3. 

* * * * * 

(c) A registrant will be considered to 

have delivered a Notice of Internet 

Availability of Proxy Materials, annual 

report to security holders or information 

statement to security holders of record 

who share an address if the 

requirements set forth in § 240.14a–

3(e)(1) are satisfied with respect to the 

Notice of Internet Availability of Proxy 

Materials, annual report to security 

holders or information statement, as 

applicable. 

(d) A registrant may furnish an annual 

report to security holders pursuant to 

paragraph (a) of this section by 

satisfying the requirements set forth in 

§ 240.14a–16. This paragraph (d) 

provides a non-exclusive alternative by 

which a registrant may furnish an 

annual report pursuant to paragraph (a) 

of this section to a security holder. This 

paragraph (d) does not affect the 

availability of any other means by 

which a registrant may furnish an 

annual report pursuant to paragraph (a) 

of this section to a security holder. 

■ 15. Amend § 240.14c–5 by revising 

the word ‘‘mailed’’ to read ‘‘sent’’ in the 

second sentence of the introductory text 

of paragraph (a). 

■ 16. Amend § 240.14c–7 by revising 

paragraph (a)(5) before the Note and the 

word ‘‘mail’’ to read ‘‘send’’ in Note 2 

following paragraph (a). 

The revision reads as follows: 

§ 240.14c–7 Providing copies of material 

for certain beneficial owners. 

(a) * * * 

(5) Upon the request of any record 

holder or respondent bank that is 

supplied with Notices of Internet 

Availability of Proxy Materials, 

information statements and/or annual 

reports to security holders pursuant to 

paragraph (a)(3) of this section, pay its 

reasonable expenses for completing the 

sending of such material to beneficial 

owners. 

* * * * * 

■ 17. Amend § 240.14c–101 by: 

■ a. Revising the word ‘‘mailing’’ to read 

‘‘sending’’ in Item 4, Instruction 1; and 

■ b. Revising Item 5. 

The revision reads as follows. 

§ 240.14c–101 Schedule 14C. Information 

required in information statement. 

* * * * * 

Item 5. Delivery of documents to 

security holders sharing an address. If 

one annual report to security holders, 

information statement, or Notice of 

Internet Availability of Proxy Materials 

is being delivered to two or more 

security holders who share an address, 

furnish the following information in 

accordance with § 240.14a–3(e)(1): 

(a) State that only one annual report 

to security holders, information 

statement, or Notice of Internet 

Availability of Proxy Materials, as 

applicable, is being delivered to 

multiple security holders sharing an 

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 to security 

holders, information statement, or 

Notice of Internet Availability of Proxy 

Materials, as applicable, to a security 

holder at a shared address to which a 

single copy of the documents was 

delivered and provide instructions as to 

how a security holder can notify the 

registrant that the security holder 

wishes to receive a separate copy of an 

annual report to security holders, 

information statement, or Notice of 

Internet Availability of Proxy Materials, 

as applicable; 

(c) Provide the phone number and 

mailing address to which a security 

holder can direct a notification to the 

registrant that the security holder 

wishes to receive a separate annual 

report to security holders, information 

statement, or Notice of Internet 

Availability of Proxy Materials, as 

applicable, in the future; and 

(d) Provide instructions how security 

holders sharing an address can request 

delivery of a single copy of annual 

reports to security holders, information 

statements, or Notices of Internet 

Availability of Proxy Materials if they 

are receiving multiple copies of annual 

reports to security holders, information 

statements, or Notices of Internet 

Availability of Proxy Materials. 


rwilkins on PROD1PC63 with RULES
Federal Register / Vol. 72, No. 18 / Monday, January 29, 2007 / Rules and Regulations 4173 

PART 249—FORMS, SECURITIES 

EXCHANGE ACT OF 1934 

■ 18. The general authority citation for 

part 249 is revised to read as follows: 

Authority: 15 U.S.C. 78a et seq., 7202, 

7233, 7241, 7262, 7264, and 7265; and 18 

U.S.C. 1350, unless otherwise noted. 

* * * * * 

■ 19. Amend Item 4 to ‘‘Part II—Other 

Information’’ of Form 10–Q (referenced 

in § 249.308a) by revising paragraph (d) 

to read as follows: 

Note: The text of Form 10–Q does not, and 

this amendment will not, appear in the Code 

of Federal Regulations. 

Form 10–Q 

* * * * * 

Part II—Other Information 

* * * * * 

Item 4. Submission of Matters to a Vote 

of Security Holders. 

* * * * * 

(d) A description of the terms of any 

settlement between the registrant and 

any other participant (as defined in 

Instruction 3 to Item 4 of Schedule 14A 

(§ 240.14a–101)) terminating any 

solicitation subject to § 240.14a–12(c), 

including the cost or anticipated cost to 

the registrant. 

* * * * * 

■ 20. Amend Item 4 to ‘‘Part II—Other 

Information’’ of Form 10–QSB 

(referenced in § 249.308b) by revising 

paragraph (d) to read as follows: 

Note: The text of Form 10–QSB does not, 

and this amendment will not, appear in the 

Code of Federal Regulations. 

Form 10–QSB 

* * * * * 

Part II—Other Information 

* * * * * 

Item 4. Submission of Matters to a Vote 

of Security Holders. 

* * * * * 

(d) A description of the terms of any 

settlement between the registrant and 

any other participant (as defined in 

Instruction 3 to Item 4 of Schedule 14A 

(§ 240.14a–101)) terminating any 

solicitation subject to § 240.14a-12(c), 

including the cost or anticipated cost to 

the registrant. 

* * * * * 

■ 21. Amend Item 4 to Part I of Form 

10–K (referenced in § 249.310) by 

revising paragraph (d) to read as 

follows: 

Note: The text of Form 10–K does not, and 

this amendment will not, appear in the Code 

of Federal Regulations. 

Form 10–K 

* * * * * 

Part I 

* * * * * 

Item 4. Submission of Matters to a Vote 

of Security Holders. 

* * * * * 

(d) A description of the terms of any 

settlement between the registrant and 

any other participant (as defined in 

Instruction 3 to Item 4 of Schedule 14A 

(§ 240.14a–101)) terminating any 

solicitation subject to § 240.14a–12(c), 

including the cost or anticipated cost to 

the registrant. 

* * * * * 

■ 22. Amend Item 4 to Part I of Form 

10–KSB (referenced in § 249.310b) by 

revising paragraph (d) to read as 

follows: 

Note: The text of Form 10–KSB does not, 

and this amendment will not, appear in the 

Code of Federal Regulations. 

Form 10–KSB 

* * * * * 

Part I 

* * * * * 

Item 4. Submission of Matters to a Vote 

of Security Holders. 

* * * * * 

(d) A description of the terms of any 

settlement between the registrant and 

any other participant (as defined in 

Instruction 3 to Item 4 of Schedule 14A 

(§ 240.14a–101)) terminating any 

solicitation subject to § 240.14a–12(c), 

including the cost or anticipated cost to 

the registrant. 

* * * * * 

PART 274—FORMS PRESCRIBED 

UNDER THE INVESTMENT COMPANY 

ACT OF 1940 

■ 23. The authority citation for part 274 

continues to read, in part, as follows: 

Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 

78c(b), 78l, 78m, 78n, 78o(d), 80a–8, 80a–24, 

80a–26, and 80a–29, unless otherwise noted. 

* * * * * 

■ 24. Amend Sub-Item 77C to 

‘‘Instructions to Specific Items’’ of Form 

N–SAR (referenced in §§ 249.330 and 

274.101) by revising paragraph (d) to 

read as follows: 

Note: The text of Form N–SAR does not, 

and this amendment will not, appear in the 

Code of Federal Regulations. 

Form N–SAR 

* * * * * 

Instructions to Specific Items 

* * * * * 

SUB–ITEM 77C: Submission of matters 

to a vote of security holders 

* * * * * 

(d) Describe the terms of any 

settlement between the registrant and 

any other participant (as defined in 

Instruction 3 to Item 4 of Schedule 14A 

(§ 240.14a–101)) terminating any 

solicitation subject to § 240.14a–12(c), 

including the cost or anticipated cost to 

the registrant. 

* * * * * 

Dated: January 22, 2007. 

By the Commission. 

Nancy M. Morris, 

Secretary. 

[FR Doc. 07–327 Filed 1–26–07; 8:45 am] 

BILLING CODE 8011–01–P 


rwilkins on PROD1PC63 with RULES