Computershare has put together a White Paper that they distributed through Compliance Week: An Explanation of the SEC Notice and Access Rules: What Do They Mean for Your Company? (.pdf)[For Compliance Week Subscribers]
Pamela Eng, Product Manager for Computershare Investor Services takes us through The SEC’s Shareholder Choice Regarding Proxy Materials rules in Release No. 34-56135 (.pdf) issued July 26, 2007.
[I mentioned some of my confusion about the Notice and Access Rules in SEC Requirements for Online Annual Reports and Proxy Statements. (Thankfully, the rule is not in my domain.)]
Pamela points out that there are now three ways to provide annual meeting materials to shareholders:
- Notice Only. You can send just a notice with a link to materials on the website.
- Full-Set. When you send the full set of printed materials.
- Mixed Set. When you send some and leave the rest online.
The idea behind the “notice only” delivery was to save printing and delivery costs. Theoretically, the information is more useful online because it searchable and linkable.
It seems even Pamela is not completely happy with the rule. She offers six recommendations to the SEC on how the rule could be improved.
- Allow more flexible timing for posting online documents
We requested that the SEC allow the online documents to be made available one or two days
after the initial mailing has been sent, rather than on the mailing date. This would give extra
time for companies to get their documents approved and programmed for the website. - Allow more time to fulfill holder requests
The rule gives only three days to fulfill requests for registered holders, yet gives nine days
to fulfill the requests of beneficial holders. Our recommendation was to allow six days for
fulfillment on both sides. - Change the 40-calendar-day timeline
A number of companies had problems meeting the 40-day deadline for notice-only mailings,
which led us to request that the deadline be moved to 30 calendar days before the meeting.
Shareholders will still have plenty of time to request materials before the meeting date. - Allow educational information to be included with the notice-only mailing
Because of shareholder complaints about confusion and issuer concerns about holder
education, we advocated the inclusion of educational information with the notice. This
information could explain the regulations and why holders are receiving a notice. - Allow the voting telephone number to appear on the notice
The SEC was concerned about possible uninformed or capricious voting by registered holders,
who would vote without first viewing the proxy materials, so it did not allow the voting
telephone number to appear on the notice. We believe that holders understand the issues, and
that allowing the number to be placed on the notice will help holders better understand the
overall process. - Issue an FAQ, Q&A or other written clarification of the rules
The new notice and access rules are potentially confusing to both issuers and shareholders, and
confusion may increase as many more companies begin the process in 2009. We asked that the
SEC issue some written clarifications, possibly including a frequently asked questions document
(FA Q); a question and answer bank; or, in some cases, a rewrite of the rules themselves.