[Federal Register Volume 59, Number 55 (Tuesday, March 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-6601]


[[Page Unknown]]

[Federal Register: March 22, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-33768]

 

Timely Distribution of Proxy and Other Soliciting Material

AGENCY: Securities and Exchange Commission.

ACTION: Notice.

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SUMMARY: To give shareholders sufficient time to make an informed 
voting decision, registrants are reminded of their obligation to 
distribute proxy and other soliciting material to banks and brokers on 
a timely basis for forwarding to beneficial owners.

FOR FURTHER INFORMATION CONTACT:
Barbara C. Jacobs or Elizabeth M. Murphy, Office of Disclosure Policy, 
Division of Corporation Finance at (202) 272-2589, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549.

SUPPLEMENTARY INFORMATION: During the 1993 proxy season, the Division 
of Corporation Finance (``Division'') received complaints from 
beneficial owners who did not receive their proxy and other soliciting 
material in a timely manner. In certain instances, these owners did not 
receive the materials in sufficient time to make an informed voting 
decision. Accordingly, the Securities and Exchange Commission is 
reminding registrants of their obligations to distribute proxy and 
other soliciting material to banks and brokers on a timely basis for 
forwarding to beneficial owners. Under rule 14a-13(a)(4)\1\ of the 
Securities Exchange Act of 1934,\2\ registrants subject to the proxy 
rules are required, among other things: (1) to inquire of each bank and 
broker of the number of copies of proxy, proxy soliciting material 
(and, if directors are to be elected, annual reports to shareholders) 
necessary to furnish to beneficial owners;\3\ and
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    \1\17 CFR 240.14a-13(a)(4).
    \2\15 U.S.C. 78a et seq.
    \3\Rule 14a-13(a)(1) and (2) [17 CFR 240.14a-13(a)(1) and (2)]. 
The inquiry required by Rule 14a-13(a)(1) must be made at least 20 
business days prior to the record date absent certain circumstances. 
See rule 14a-13(a)(3) [17 CFR 240.14a-13(a)(3)]. As the inquiry 
represents the initial step of the proxy voting process, it must be 
made within the specified time period.
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    (2) to supply, in a timely manner, copies of the proxy, other proxy 
soliciting material (and the annual report to shareholders, if 
required) in such quantities as reasonably requested by the bank or 
broker in order to send such material to each beneficial owner of 
securities.\4\
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    \4\This notice also applies to the obligation of registrants to 
distribute information statements (and, if directors are to be 
elected, annual reports to shareholders) to banks and brokers. See 
Rule 14c-7(a)(4) of the Exchange Act [17 CFR 240.14c-7(a)(4)].
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    Although the rules do not specify the number of days before the 
meeting by which registrants must make their proxy materials available 
for distribution to their beneficial owners, in order to comply with 
the timeliness requirement, the materials must be mailed sufficiently 
in advance of the meeting date to allow five business days for 
processing by the banks and brokers\5\ and an additional period to 
provide ample time for delivery of the material, consideration of the 
material by the beneficial owners, return of their voting instructions, 
and transmittal of the vote from the bank or broker to the 
tabulator.\6\
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    \5\See Rules 14b-2(b)(2) [17 CFR 240.14b-2(b)(2)] and 14b-
1(b)(2) [17 CFR 240.14b-1(b)(2)], which set forth the obligations of 
banks and brokers to forward materials to beneficial owners within 
five business days.
    \6\For example, Sec. 402.05 of the New York Stock Exchange 
Listed Company Manual recommends that proxy materials be sent 30 
calendar days before the meeting date, while section 703 of the 
American Stock Exchange Company Guide recommends that the material 
be received by shareholders as many days as possible (preferably at 
least 20 calendar days) in advance of the meeting date. In many 
cases, a longer period may be required, particularly where non-
routine issues are being voted upon or third-class bulk rate mail is 
used.
    In addition, see Improving Communications Between Issuers and 
Beneficial Owners of Nominee Held Securities, Report of the Advisory 
Committee on Shareholder Communications, U.S. Securities and 
Exchange Commission (June 1982) at Chapter II.D.3. which recommends 
that registrants distribute proxy materials at least thirty days 
prior to the meeting date.
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    A few practices by registrants that seem to have contributed to the 
late receipt of proxy materials by beneficial owners are the mailing of 
materials by third class bulk mailing, providing fewer sets of 
materials than requested by a bank or broker, or refusing to provide 
additional sets of materials necessary to cover changes in ownership 
through the record date. Registrants choosing to mail materials by 
third class bulk mailing must factor in the additional length of time 
that it will take their materials to reach beneficial owners and adjust 
their distribution schedule accordingly to ensure their timely receipt.

    Dated: March 16, 1994.

    By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-6601 Filed 3-21-94; 8:45 am]
BILLING CODE 8010-01-M