November 21, 2023
Corp Fin Staff Offers New Guidance on Universal Proxy, Rule 14a-12 and Schedule 14A
Yesterday, on TheCorporateCounsel.net blog, Dave shared that the Corp Fin Staff issued one revised and five new Proxy Rules and Schedule 14A Compliance and Disclosure Interpretations last Friday. In multiple blogs, Dave included the full text of the CDIs, grouped by topic. Here’s a quick summary of each CDI, with links to Dave’s blogs for more:
Question 126.03: This existing CDI regarding counting the 10 calendar days for Rule 14a-6 was amended to clarify that the explanation in the interpretation assumes that the preliminary proxy statement is submitted before 5:30 pm Eastern and receives the submission date as the EDGAR filing date.
Questions 139.07 to 139.09: These new CDIs clarify the treatment for overvoted, undervoted and signed but unmarked universal proxy cards under Rules 14a-4 and 14a-19.
– In the case of an overvoted proxy card, which cannot be voted in accordance with the shareholder’s specifications, a soliciting party cannot rely on discretionary authority to vote the shares represented by the overvoted proxy card on the election of directors. The shares can be counted for purposes of determining a quorum and can be voted on other matters on the proxy card for which there is no overvote.
– In the case of an undervoted proxy card, the shareholder has specified its choices for the election of directors, and a soliciting party cannot rely on discretionary authority to vote the shares represented by the undervoted proxy card for the remaining seats.
– As long as the form of proxy states in bold-faced type how the proxy holder will vote where no choice is specified, a soliciting party can use discretionary authority to vote shares represented by a signed but unmarked proxy card in accordance with the party’s voting recommendations because the shareholder has not specified any choices.
Question 132.03: A soliciting party can’t satisfy Rule 14a-12(a)(1)(i) through a legend that only includes a general reference to filings made by the soliciting party or the participants since general references don’t sufficiently advise shareholders where they can obtain participant information. Legends must clearly identify the specific filings including by filing date, the specific locations of the participant information in the filings by section headings or captions and include active hyperlinks when possible.
Question 151.02: When an acquisition doesn’t require shareholder approval but the registrant seeks approval for the authorization of additional shares that may be issued upon the conversion of the securities issued in the acquisition, the registrant would have to include information about the acquisition called for by Schedule 14A in the proxy statement because authorization of additional shares is necessary to meet its obligation under the convertible securities issued as consideration.
– Meredith Ervine