[Federal Register Volume 64, Number 220 (Tuesday, November 16, 1999)]
[Proposed Rules]
[Pages 62548-62559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29532]



  Federal Register / Vol. 64, No. 220 / Tuesday, November 16, 1999 / 
Proposed Rules  

[[Page 62548]]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 230 and 240

[Release Nos. 33-7767, 34-42102, IC-24124; File No. S7-26-99]
RIN 3235-AH66


Delivery of Proxy and Information Statements to Households

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Commission is proposing for public comment amendments to 
the proxy rules under the Securities Exchange Act of 1934. The proposed 
amendments would permit companies and other persons to satisfy the 
proxy and information statement delivery requirements, with respect to 
two or more shareholders sharing the same address, by sending or 
forwarding a single proxy or information statement to these 
shareholders (``householding''). The proposed amendments are intended 
to reduce the amount of duplicative information that shareholders 
receive, and to lower printing and mailing costs to registrants that 
ultimately are borne by the shareholders. In a separate release, the 
Commission is adopting similar amendments to Commission rules that 
govern the delivery of annual and (in the case of investment companies) 
semiannual reports and new Rule 154 under the Securities Act of 1933 
that permits issuers and broker-dealers to household prospectuses. This 
release proposes changes to Rule 154 and to the annual report 
requirements.

DATES: Comments must be received on or before January 18, 2000.

ADDRESSES: Comments should be submitted in triplicate to Jonathan G. 
Katz, Secretary, Securities and Exchange Commission, 450 5th Street, 
NW, Washington, DC 20549-0609. Comments also may be submitted 
electronically at the following E-mail address: [email protected]. 
All comment letters should refer to File No. S7-26-99; this file number 
should be included on the subject line if E-mail is used. Comment 
letters will be available for public inspection and copying in the 
Commission's Public Reference Room, 450 5th Street, NW, Washington, DC 
20549. Electronically submitted comment letters also will be posted on 
the Commission's Internet web site (http://www.sec.gov).

FOR FURTHER INFORMATION CONTACT: Elizabeth M. Murphy, Special Counsel, 
at (202) 942-2900, Office of Chief Counsel, Division of Corporation 
Finance, Securities and Exchange Commission, 450 5th Street, NW, 
Washington, DC 20549.

SUPPLEMENTARY INFORMATION: The Commission today proposes amendments to 
Rule 154 \1\ under the Securities Act of 1933 (the ``Securities Act'') 
\2\ and Rules 14a-2,\3\ 14a-3,\4\ 14a-7,\5\ 14b-1,\6\ 14b-2,\7\ and 
14c-3 \8\ under the Securities Exchange Act of 1934 (the ``Exchange 
Act'').\9\
---------------------------------------------------------------------------

    \1\ 17 CFR 230.154.
    \2\ 15 U.S.C. 77.
    \3\ 17 CFR 240.14a-2.
    \4\ 17 CFR 240.14a-3.
    \5\ 17 CFR 240.14a-7.
    \6\ 17 CFR 240.14b-1.
    \7\ 17 CFR 240.14b-2.
    \8\ 17 CFR 240.14c-3.
    \9\ 15 U.S.C. 78a.
---------------------------------------------------------------------------

I. Introduction

    The Commission proposes amendments to the proxy rules to reduce the 
amount of duplicative information shareholders receive. The proposal 
was prompted by amendments the Commission is adopting today in a 
Companion Release.\10\ In the Companion Release, the Commission is 
adopting new Securities Act Rule 154 to enable issuers and broker-
dealers to satisfy prospectus delivery requirements for two or more 
investors sharing the same address by sending a single prospectus.\11\ 
The Commission also is adopting similar amendments to the proxy rules 
under the Exchange Act that govern the delivery of annual reports to 
shareholders, and to the rules under the Investment Company Act that 
govern the delivery of semiannual reports to investment company 
investors.\12\
---------------------------------------------------------------------------

    \10\ Release No. 33-7766 (Nov. 4, 1999).
    \11\ Rule 154 also applies to prospectus supplements.
    \12\ Revised Rules 30d-1 [17 CFR 270.30d-1], 30d-2 [17 CFR 
270.30d-2], 14a-3 and 14c-3.
---------------------------------------------------------------------------

    The purpose of the amendments to the proxy rules adopted today is 
to conform the provisions regarding the householding of annual reports 
by companies to the amendments that permit the householding of 
prospectuses and investment company semiannual reports. Companies are 
required to send an annual report to security holders in connection 
with the delivery of a proxy or information statement when directors 
are being elected.\13\ For many years, the proxy rules have included 
provisions stating that companies do not have to send an annual report 
to a shareholder of record having the same address as another 
shareholder of record to whom a report is sent if the shareholder 
provides written consent.
---------------------------------------------------------------------------

    \13\ Rule 14a-3(a) [17 CFR 240.14a-3(a)].
---------------------------------------------------------------------------

    With respect to prospectuses and annual reports, the Commission 
originally proposed to limit householding without written consent to 
situations in which shareholders had opened their accounts before the 
effective date of the new rules.\14\ Several commenters asserted that 
the proposed distinction between shareholders who must give written 
consent to householding and those who need not would be costly and 
burdensome to administer. They also stated that the distinction could 
confuse shareholders.
---------------------------------------------------------------------------

    \14\ Release No. 33-7475 (``Proposing Release'') (Nov. 13, 1997) 
[62 FR 61933]. The Commission proposed to allow householding to 
existing shareholders as of the effective date of the new rules 
without written consent, due to a concern that many shareholders, 
while not objecting to householding, would fail to respond to 
requests for consent.
---------------------------------------------------------------------------

    Under the amendments the Commission is adopting today, the rules no 
longer require companies to get written consent from shareholders to 
householding of prospectuses, annual reports and semiannual reports if: 
(1) The document is delivered to members of the same family with the 
same last name sharing a common home address or post office box; (2) 
shareholders are given advance notice of householding; and (3) 
shareholders do not object to householding.
    The Commission did not propose to permit householding of proxy and 
information statements when it proposed the householding provisions 
adopted today. Several commenters on the proposed amendments suggested 
that the Commission consider further revisions to permit the 
householding of proxy materials. Many of these commenters noted that 
householding would facilitate companies' common practice of mailing the 
annual report together with the proxy or information statement. A few 
commenters further suggested that the Commission extend the proposed 
householding provisions expressly to permit broker-dealers and banks 
\15\ (``intermediaries'') to household delivery of annual reports and 
proxy and information statements to beneficial owners of equity 
securities registered pursuant to Section 12 of the Exchange Act.\16\ 
The proxy rules currently do not include provisions that

[[Page 62549]]

permit intermediaries to household documents.
---------------------------------------------------------------------------

    \15\ Rule 14b-2(a)(1) [17 CFR 240.14b-2(a)(1)] defines the term 
``bank'' as a bank, association, or other entity that exercises 
fiduciary powers.
    \16\ The proxy rules apply only to companies with equity 
securities registered under Section 12 of the Exchange Act and to 
investment companies registered under the Investment Company Act of 
1940 (``Investment Company Act'') [15 U.S.C. 80a] [17 CFR 270.20a-
1].
---------------------------------------------------------------------------

    In light of the commentary on the Proposing Release, the Commission 
proposes in this release to amend the proxy rules further to permit the 
householding of proxy and information statements by companies.\17\ The 
Commission also proposes, for the first time, to add provisions to the 
proxy rules to permit intermediaries to household proxy and information 
statements, as well as annual reports, to beneficial shareholders. 
However, multiple proxy cards or voting instruction forms--one for each 
shareholder residing at a shared address--would have to be delivered 
with proxy statements that are householded. Rule 154, as adopted, does 
not permit the householding of combination proxy statement-prospectuses 
delivered for business combinations, exchange offers, or 
reclassifications of securities registered on Forms N-14, S-4 and F-
4.\18\ Accordingly, the Commission now is proposing to amend Rule 154 
to permit the householding of proxy statements combined with 
prospectuses, as discussed more fully below.
---------------------------------------------------------------------------

    \17\ References to ``companies'' throughout this release include 
investment companies. Funds are not required to comply with the Rule 
14a-3(b) annual report requirement because they file shareholder 
reports under Section 30(d) of the Investment Company Act. Item 22 
of Exchange Act Schedule 14A [17 CFR 240.14a-101] consolidates fund-
specific proxy disclosure requirements, and requires that, unless 
the proxy statement is accompanied by a copy of the fund's most 
recent annual report, the proxy statement must state prominently 
that the fund will furnish without charge a copy of the annual 
report and the most recent semi-annual report succeeding the annual 
report, if any, to a shareholder upon request.
    \18\ See 17 CFR 239.23, .25, .34.
---------------------------------------------------------------------------

II. Discussion--Delivery of Proxy and Information Statements to a 
Household

A. Purpose of the Proposed Amendments

    The Commission is proposing amendments to Exchange Act Rules 14a-3, 
14b-1, 14b-2 and 14c-3 to permit companies and intermediaries to 
satisfy their respective proxy and information statement delivery 
requirements by sending a single copy of the proxy or information 
statement to two or more shareholders \19\ residing at the same 
address. Companies, intermediaries and shareholders have complained to 
the Commission in the past that the distribution of multiple copies of 
the same document to shareholders who share the same address often 
inundates shareholders with unwanted mail and causes companies to incur 
higher printing and mailing costs. The purpose of the proposed 
amendments is to allow companies and intermediaries to household proxy 
and information statements to both record and beneficial shareholders 
in the same manner that, upon effectiveness of the Companion Release, 
will be permissible for prospectuses and annual reports to security 
holders.
---------------------------------------------------------------------------

    \19\ Companies are permitted to household annual reports and 
proxy or information statements to a single shareholder holding the 
same securities in two or more accounts with the same address 
without having to comply with the householding provisions that have 
been adopted (with respect to annual reports) or that are being 
proposed (with respect to proxy and information statements). This 
also is true when a shareholder is acting as custodian for 
securities: (1) In an account created under a state Uniform Gilfts 
to Minors Act (``UGMA'') or Uniform Transfers to Minors Act 
(``UTMA'') and the shareholder also holds the same security in his 
or her own account, with the same address; or (2) in two or more 
accounts created under a state UGMA or UTMA. The Companion Release 
states similarly that the delivery of a single prospectus or 
shareholder report under these circumstances meets the prospectus 
delivery requirements of the Securities Act. See Companion Release, 
supra note 10, at n.6.
---------------------------------------------------------------------------

B. Proposed Householding of Proxy and Information Statements by 
Companies to Record Holders

    Exchange Act Rule 14a-3 requires companies to furnish their 
shareholders with a proxy statement before soliciting proxy voting 
authority from the shareholders with respect to a matter submitted to a 
shareholder vote.\20\ If the solicitation relates to an annual meeting 
(or special meeting in lieu of the annual meeting) where directors are 
being elected, a company's proxy statement must be preceded or 
accompanied by an annual report to security holders that includes 
specified financial information about the company.\21\ Companies are 
able to deliver the proxy statement directly only to their shareholders 
of record; they must deliver the proxy statement to their beneficial 
shareholders indirectly through the intermediaries.\22\
---------------------------------------------------------------------------

    \20\ Rule 14a-3(a).
    \21\ Rule 14a-3(b) [17 CFR 240.14a-3(b)].
    \22\ In Release 33-7607 (Nov. 11, 1998) [67 FR 67331)], the 
Commission solicited comment on whether it should revise the proxy 
rules to permit the optional direct delivery of proxy materials to 
non-objecting beneficial owners by companies.
---------------------------------------------------------------------------

    Pursuant to amendments adopted today in the Companion Release, Rule 
14a-3 will permit companies to household the annual report to security 
holders under certain conditions. Because the current proxy rules 
require the annual report to accompany or precede delivery of the proxy 
statement, companies generally mail the annual report with the proxy 
statement in the same envelope.\23\ As a result, the ability of 
companies to reduce costs by householding the annual report would be 
limited by their inability also to household the proxy statement.
---------------------------------------------------------------------------

    \23\ Some companies have chosen to deliver proxy statements and 
annual reports in electronic rather than paper format pursuant to 
procedures set out in Release Nos. 33-7233 (Oct. 6, 1995) [60 FR 
53548] and 33-7288 (May 9, 1996) [61 FR 24644]. Section II.B.2 of 
this release discusses householding of electronic documents.
---------------------------------------------------------------------------

    The proposed revisions to Rule 14a-3 would permit companies to 
household the proxy statement to record shareholders under the same 
conditions for householding prospectuses and annual reports.\24\ 
Specifically, as described in more detail below, the amendments would 
require the company to:

    \24\ Companies also would be able to household other proxy 
soliciting material, such as additional or revised proxy materials 
mailed after the proxy statement was sent to shareholders.
---------------------------------------------------------------------------

     Get written or implied consent from record shareholders to 
householding of the proxy statement;
     Include a separate proxy card for each shareholder to whom 
the householded proxy statement is sent;
     Expressly undertake in the proxy or information statement 
to deliver upon written or oral request a separate copy of the annual 
report and proxy or information statement to a record shareholder 
residing at a shared address to which the company delivers a 
householded copy of each document; and
     Resume delivery of individual copies of the proxy 
statement within 30 days after a shareholder request (i.e., revocation 
of any written or implied consent).
    The Commission proposes similar amendments to Rule 14c-3, which 
requires companies to deliver information statements to shareholders 
when they are taking certain corporate actions, but not soliciting 
proxy voting authority. Comment is solicited generally as to whether 
companies should be permitted to household proxy and information 
statements.
1. Consent
    a. Implied Consent. Under the proposed changes to the proxy 
rules,\25\ companies would be able to deliver a single proxy or 
information statement to multiple shareholders who share an address 
without having affirmatively to obtain written consent to householding 
from the shareholders, if the following conditions are met:
---------------------------------------------------------------------------

    \25\ Proposed Rule 14a-3(e)(1)(ii).
---------------------------------------------------------------------------

     Each shareholder at the shared address has the same last 
name as the other shareholders (or the company

[[Page 62550]]

reasonably believes that they all are members of the same family); \26\
---------------------------------------------------------------------------

    \26\ Proposed Rule 14a-3(e)(1)(ii)(A). Some commenters on the 
householding proposals adopted in the Companion Release expressed 
concern about the ability to discern whether certain shareholders 
residing at the same address are members of the same family (e.g., a 
husband and wife with different surnames). The Commission believes 
that companies relying on the rule may, in many cases, be able to 
base their reasonable belief on information already provided by the 
shareholder (e.g., in an account agreement).
---------------------------------------------------------------------------

     At least 90 days before beginning delivery by 
householding, the company sends each record shareholder at the shared 
address a separate written notice in plain English \27\ of its 
intention to household proxy and information statements; \28\
---------------------------------------------------------------------------

    \27\ Proposed Rule 14a-3(e)(1)(ii)(B) includes a note stating 
that the notice should be written in plain English. The proposed 
rule refers to Securities Act Rule 421(d)(2) [17 CFR 230.421(d)(2)]. 
Rule 421(d)(2) states that language must ``substantially comply'' 
with the following 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 terms; and (vi) no 
multiple negatives.
    \28\ The proposed notice could not be sent in the same envelope 
with other written material, such as an account statement, dividend 
check or shareholder report; under proposed Rule 14a-
3(e)(1)(ii)(B)(l), it would have to be delivered separately from 
other communications and could not be incorporated into other 
material. In most cases, it is expected that companies would mail a 
single notice regarding its intention to household annual reports as 
well as proxy and information statements.
---------------------------------------------------------------------------

     The notice (or envelope containing the notice) includes 
the following prominent statement, or similar clear and understandable 
statement, in bold-face type: ``Important Notice Regarding Delivery of 
Shareholder Documents''; \30\
---------------------------------------------------------------------------

    \30\ Proposed Rule 14a-3(e)(1)(ii)(B)(7). This statement may be 
more effective in alerting shareholders if it appears on the 
envelope.
---------------------------------------------------------------------------

     The written notice provides record shareholders who object 
to householding with a reply form or toll-free telephone number to 
express their objection;\31\
---------------------------------------------------------------------------

    \31\ Proposed Rule 14a-3(e)(1)(ii)(B)(3). In addition to 
providing a reply form or toll-free telephone number, the notice 
also may provide supplemental methods of opting out of householding, 
such as sending the reply form to a facsimile telephone number or 
responding by e-mail. Reply forms to be returned by mail must be 
pre-addressed and returnable by business reply mail or by another 
method in which the person relying on the rule pays the postage.
---------------------------------------------------------------------------

     The written notice states the duration of the consent and 
explains how a shareholder can revoke consent to householding; \32\
---------------------------------------------------------------------------

    \32\ Proposed Rule 14a-3(e)(1)(ii)(B)(4) and (5).
---------------------------------------------------------------------------

     The company does not receive notice that the shareholders 
object to householding within the 90-day notice period; \33\ and
---------------------------------------------------------------------------

    \33\ Proposed Rule 14a-3(e)(1)(ii)(C). If the company receives 
notice that one or more shareholders objects to householding within 
the 90-day notice period, but there are two or more shareholders in 
the household who do not object, the company would be able to 
household to the non-objecting shareholders.
---------------------------------------------------------------------------

     The company delivers householded proxy or information 
statements only to a residential street address or post office box.\34\
---------------------------------------------------------------------------

    \34\ Proposed Rule 14a-3(e)(1)(ii)(D).
---------------------------------------------------------------------------

    The rules being adopted today in the Companion Release that permit 
householding of prospectuses and annual reports by implied consent 
state that shareholders must receive written notice of the company's 
plan to household these documents at least 60 days before householding 
begins. The Commission is proposing to change the 60-day notice 
requirement to 90 days with respect to annual reports, and proposes a 
90-day period for proxy and information statements. The additional time 
may be necessary to avoid interfering with the company's proxy 
statement mailing schedule--because many companies mail the proxy 
statement 45 days or more before the annual meeting date, a 60-day 
period may not provide sufficient time for the mailing of the notice 
and receipt of any shareholder objections before the planned mailing 
date.\35\
---------------------------------------------------------------------------

    \35\ A 60-day notice period also could interfere with the time 
frames set forth in the shareholder communications rules regarding 
the delivery of proxy materials to beneficial owners. Rule 14a-13 
[17 CFR 240.14a-13] requires companies to request the number of sets 
of materials needed by intermediaries for delivery to beneficial 
owners 20 business days before the company's record date. The number 
of sets of material needed by the intermediary will be affected by 
the number of shareholders receiving householded documents. The 
record date frequently is set at a date 60 days before the meeting 
date pursuant to state law requirements.
---------------------------------------------------------------------------

    The Commission requests comment on whether the proposed conditions 
for relying on implied consent are necessary or appropriate. Should the 
rules require companies to get written consent to householding of proxy 
and information statements from members of the same family with the 
same last name, even though the Commission today is adopting amendments 
that allow householding of prospectuses and annual reports by implied 
consent? Should proxy statements be treated differently than 
information statements? Conversely, should companies be able to 
household proxy and information statements by implied consent to 
unrelated shareholders residing at a shared address? Do companies have 
the means reasonably to determine whether shareholders who do not share 
the same last name (for example, spouses with different surnames) are 
related to one another? Is joint account and beneficiary information 
useful in this regard? \36\
---------------------------------------------------------------------------

    \36\ See Companion Release, supra note 10, at n.17 and 
accompanying text.
---------------------------------------------------------------------------

    The Commission also solicits comment on whether, as proposed, 
companies should have to send record shareholders a separate written 
notice of their intention to household proxy and information statements 
by implied consent. Should companies be able to incorporate the notice 
into an unrelated shareholder communication such as an interim report 
or dividend check statement \37\ Should the rules require that the 
separate notice also be mailed separately, or should the rules permit 
delivery with other investor materials, as the Commission's rules will 
now permit for prospectuses and investment company semiannual reports 
\38\ Is 90 days an appropriate notice period, or should it be shorter 
or longer? Furthermore, are the proposed means by which a shareholder 
can object to householding appropriate? Should the rules include 
alternative methods by which shareholders could object?
---------------------------------------------------------------------------

    \37\ Id. at n.18.
    \38\ Id. at n.28.
---------------------------------------------------------------------------

    Commenters should note that, under the proposed rules, companies 
would have to specify in the required written notice the types of 
documents they intend to household (i.e., proxy and information 
statements). New Securities Act Rule 154 and revised Rule 14a-3(e) 
adopted today in the Companion Release similarly require the written 
notice to specify a company's intention to household prospectuses and 
annual reports, respectively. Therefore, companies choosing to 
household all of these documents (prospectuses, annual reports and 
proxy and information statements) may wish to consider mailing the 
householding notice after the Commission has considered the revisions 
proposed in this release. Otherwise, companies would need to mail two 
separate notices--one regarding an intention to household prospectuses 
and/or annual reports upon effectiveness of the amendments in the 
Companion Release and a second regarding an intention to household 
proxy and information statements. The second notice could not be 
delivered until the effective date of the proposed changes described in 
this release.
    b. Affirmative Written Consent. A company also would be permitted 
to household the proxy or information statement to related or unrelated 
record shareholders residing at a shared address if each of the 
shareholders consents in writing to the company's

[[Page 62551]]

delivery of one proxy or information statement to the shared 
address.\39\
---------------------------------------------------------------------------

    \39\ In order to satisfy the written consent requirement, a 
shareholder would need to consent specifically to householding of 
proxy and information statements.
---------------------------------------------------------------------------

    If a company solicits written consent from related or unrelated 
record shareholders residing at a shared address, it should specify in 
the request for consent the types of documents it intends to household 
(e.g., annual reports and/or proxy statements and/or information 
statements), the duration of the consent, the procedure to revoke 
consent, and the anticipated date that householding will begin. The 
company could begin householding immediately upon receipt of the 
written consent. If a shareholder, on his or her own initiative, 
requests the company to household the proxy or information statement, a 
company that is agreeable to the request should send a confirmation to 
the shareholder including the information described above.
    Comment is solicited as to whether unrelated shareholders residing 
at a single address should have to provide written consent to 
householding. If so, should they be allowed to consent orally as well 
as in writing? If oral consent is permitted, what kind of documentation 
should the Commission require companies to retain as evidence of 
consent?
    c. Duration of Consent. Companies could solicit from record 
shareholders a consent to householding of perpetual duration that is 
valid until revoked, or a consent of limited duration such as one year 
or a specified number of years. If companies rely on implied consent to 
householding, the required 90-day notice to shareholders should make it 
clear whether the company intends to household indefinitely or for a 
fixed period.\40\ The Commission requests comment on whether companies 
should have to re-solicit implied and/or written consent to 
householding periodically, and if so, whether they should have to do so 
annually or at a different interval.\41\
---------------------------------------------------------------------------

    \40\ Proposed Rule 14a-3(e)(1)(ii)(B)(4).
    \41\ Even if a company solicits ``perpetual'' consent to 
householding, if the company chooses to household its materials to 
all of its shareholders, it will have to solicit consent from new 
shareholders as they open their accounts or on an annual basis.
---------------------------------------------------------------------------

    Under the proposed rules, shareholders could revoke their consent 
to householding at any time, by instructing the company orally or in 
writing.\42\ A company could not continue to household the proxy or 
information statement more than 30 days after receiving such 
instructions. Comment is solicited as to whether 30 days is an 
appropriate revocation period from the perspective of both companies 
and shareholders, or should be shorter or longer.
---------------------------------------------------------------------------

    \42\ Proposed Rule 14a-3(e)(1)(iii).
---------------------------------------------------------------------------

2. Addressing
    Under the revised rules, companies would have the flexibility to 
address the householded copy of the proxy or information statement 
either to shareholders as a group, (e.g., ``ABC Corporation 
Shareholders,'' ``Jane Doe and Household'' or ``Household of Jane 
Doe''), or to each of the shareholders residing at the shared address 
(e.g., ``Jane Doe and Mary Doe''). In order to prevent householding of 
the proxy or information statement to shareholders with the same last 
name who share a business address but are not related, the proposed 
rules would require companies relying on implied consent to deliver the 
proxy or information statement to a residential street address, or to a 
post office box. The rules would state that a company can assume that a 
street address is a residence unless the company has information 
indicating that the address is not a residence.
    For purposes of the revised rules, the term ``address'' would mean 
a street address, post office box number, an electronic mail address, 
facsimile telephone number, or similar destination to which paper or 
electronic documents are delivered. If a company has reason to believe 
that an address is a street address of a multi-unit building, the 
address also would have to include the unit number.
    Because the potential benefits of householding electronic documents 
appear to be minimal,\43\ the Commission is not proposing to allow 
electronic delivery of householded proxy and information statements in 
connection with implied consent to householding. The proposed rules 
would permit electronic delivery of householded proxy and information 
statements only if delivery is made to a shared electronic address (for 
example, a shared electronic mail account) and all shareholders in the 
household give written consent to householding.\45\ Comment is 
requested on whether the Commission should permit the electronic 
delivery of a householded proxy or information statement if all of the 
shareholders in the household have consented to householding but not 
all have consented to electronic delivery pursuant to procedures 
outlined in Commission releases.\46\
---------------------------------------------------------------------------

    \43\ None of the commenters on the Proposing Release stated that 
householding electronically delivered documents would save money, or 
that investors had been requesting this form of delivery. Several 
commenters noted the difficulty of permitting electronic delivery of 
householded documents. One individual shareholder emphasized the 
risks involved in using electronic delivery, especially the ease 
with which electronic messages might be deleted by accident and the 
difficulty of forwarding messages from a discontinued e-mail account 
with an Internet provider. Furthermore, the cost of sending an 
electronic document or e-mail generally is very low, and therefore, 
sending one e-mail to a household rather than multiple e-mails would 
not result in significant cost savings.
    \45\ See Rule 14(a)(3)(e)(1)(ii)(D). One of the provisions 
pertaining to householding by implied consent requires delivery to a 
street address. All of the shareholders in the household would have 
to provide written consent to both electronic delivery and 
householding.
    \46\ See note 23.
---------------------------------------------------------------------------

    Comment is solicited on the proposed address requirements. Should 
companies have the proposed flexibility to address householded proxy 
and information statements to a group of shareholders? Should 
shareholders have the right to specify how the householded proxy or 
information statement is addressed? Should companies be able to address 
householded annual reports, proxy statements and information statements 
to only one of the shareholders residing at a shared address?
    Is the requirement that companies deliver the householded proxy or 
information statement only to addresses reasonably believed to be 
residences workable? Is the proposed definition of ``address'' 
appropriate? Would householding to a shared electronic address result 
in significant cost savings?
3. Inclusion of Multiple Proxy Cards With Single Proxy Statement
    Unlike prospectuses, annual reports and information statements, the 
proxy statement is accompanied by a form of proxy (``proxy card''). 
Rule 14a-4(f) \47\ states that no person conducting a proxy 
solicitation shall deliver a proxy card to a shareholder unless it is 
preceded or accompanied by a definitive proxy statement that has been 
filed with, or mailed for filing to, the Commission. Therefore, 
shareholders generally receive the proxy card in the same envelope that 
contains the company's proxy statement and annual report. Proxy cards 
are addressed based on the shareholder account titles appearing on a 
company's list of registered holders.
---------------------------------------------------------------------------

    \47\ 17 CFR 240.14a-4(f).
---------------------------------------------------------------------------

    Under the proposed rules, companies would need to continue sending 
a separate proxy card with the householded proxy statement for each 
separate shareholder account with respect to which proxy authority is

[[Page 62552]]

being solicited. For example, if a husband and wife each holds the same 
company's securities in two individual accounts, a company could 
deliver a single proxy statement and annual report to them but would 
have to include two separate proxy cards in the envelope, and designate 
the proxy cards individually based on the two account titles. Comment 
is solicited on whether the Commission should permit householding of 
proxy statements in view of the need to include multiple proxy cards. 
Are there concerns that householding may interfere with shareholders' 
exercise of voting rights through the proxy card's execution?
4. Undertaking to Provide Additional Copies of Householded Documents
    The proposed rules \48\ would require companies to undertake in the 
proxy or information statement to deliver, upon written or oral 
request, a separate copy of the annual report, proxy statement or 
information statement to a shareholder residing at a shared address to 
which a householded copy of the documents was delivered. The company 
would have to deliver the separate copy promptly after a shareholder 
request.
---------------------------------------------------------------------------

    \48\ Proposed Rule 14a-3(e)(1)(i)(E) and proposed Item 22 of 
Schedule 14A.
---------------------------------------------------------------------------

    The purpose of this proposed requirement is to ensure that a 
shareholder who has given implied or written consent to householding, 
but then experiences a change in circumstances that makes sharing a 
householded document impractical, still has access to the annual 
report, proxy statement or information statement. The householding 
rules applicable to annual reports adopted today in the Companion 
Release do not include this undertaking requirement. The proposed 
amendments would modify those rules.
    Comment is solicited as to whether the proposed undertaking is 
appropriate, and if so, whether the rules should mandate delivery of a 
separate copy of the annual report, proxy statement or information 
statement within a specific time period rather than promptly. Should 
companies have to set forth the proposed undertaking in the proxy or 
information statement, or should there be other alternatives? Comment 
also is requested on whether Securities Act Rule 154 adopted today in 
the Companion Release should be revised to include a similar 
undertaking. The proposed rules also would require companies choosing 
to household the annual report,\49\ proxy statement and/or information 
statement to include the following information in the proxy or 
information statement: \50\
---------------------------------------------------------------------------

    \49\ The proposed proxy disclosure requirement is not included 
in the provisions permitting householding of the annual report 
adopted today in the Companion Release.
    \50\ Proposed Item 23 of Schedule 14A and proposed Item 5 of 
Schedule 14C.
---------------------------------------------------------------------------

     State that only one annual report and/or proxy statement 
or information statement is being delivered to multiple shareholders 
residing at a shared address unless the registrant has received 
contrary instructions from one or more of the shareholders;
     Undertake to deliver promptly, upon written or oral 
request, a separate copy of the annual report and/or proxy statement or 
information statement to a shareholder residing at a shared address to 
which a single copy of the documents was delivered;
     Provide instructions as to how a shareholder can notify 
the registrant that the shareholder wishes to receive a separate annual 
report and/or proxy statement or information statement in the future; 
and
     Provide instructions as to how shareholders can request 
householding if they are receiving multiple copies of the annual report 
and/or proxy or information statement.
    Comment is solicited on whether registrants should be required to 
provide annual disclosure about householding, as proposed. If so, 
should this disclosure have to appear in the proxy or information 
statement or could it be provided in other shareholder communications?
5. State Law Requirements Concerning Notice of Meeting
    Many state corporate codes contain provisions requiring companies 
to provide shareholders of record with written notices of meetings and 
adjourned meetings. The provisions generally state that written notice 
of a meeting at which shareholders are required or permitted to take 
action must be sent to each shareholder of record a specified number of 
days before the meeting date. For example, the Delaware General 
Corporate Code states that written notice of any meeting shall be given 
not less than 10 nor more than 60 days before the date of the meeting 
to each shareholder entitled to vote at the meeting.\51\ This notice 
typically is transmitted with the proxy statement.
---------------------------------------------------------------------------

    \51\ 8 Del. C. Section 222 (1998).
---------------------------------------------------------------------------

    It is unclear whether a householded proxy statement that includes 
the meeting notice would satisfy state law requirements that companies 
deliver a notice to each record shareholder. Companies choosing to 
household the proxy statement therefore would have to consider the 
possible need to deliver separately the notice of meeting to each 
shareholder in the household to satisfy state law requirements.
    Comment is solicited on whether state law meeting notice 
requirements present legal and/or practical obstacles to householding 
of the proxy statement. Would a meeting notice incorporated in a 
single, householded proxy statement sent to all record holders residing 
at a shared address be deemed to be delivered to each such shareholder 
in the household in compliance with applicable state law? Would the 
householded proxy statement have to be addressed to each shareholder 
rather than generically to the group of shareholders residing at a 
shared address in order to satisfy state law? Would the attachment of 
multiple meeting notices to the householded proxy statement, each 
notice addressed to each shareholder sharing the address, fulfill the 
states' individual meeting notice requirements, or must a notice be 
sent separately to each record shareholder?
6. Business Combination Proxy Statement-Prospectuses
    As discussed in the Companion Release, new Securities Act Rule 154 
does not permit the householding of prospectuses required to be 
delivered in connection with business combination transactions, 
exchange offers and reclassifications of securities.\52\ The Proposing 
Release requested comment on whether companies should be permitted to 
household those types of prospectuses, given that they generally are 
accompanied by proxy cards or tender offer material that must be 
executed by each shareholder. Some commenters on the Proposing Release 
suggested that the Commission consider broadening Rule 154 to permit 
householding of those types of prospectuses.
---------------------------------------------------------------------------

    \52\ Rule 154 does not apply to the delivery of a prospectus 
filed as part of a registration statement on Form N-14, S-4 or F-4, 
or to the delivery of any other prospectus in connection with a 
business combination transaction, exchange offer or reclassification 
of securities. See Rule 154(e) (17 CFR 230.154(e)).
---------------------------------------------------------------------------

    Upon consideration of these comments, and because the proposals 
described in this release would permit the householding of proxy 
statements, the Commission is proposing to expand the coverage of Rule 
154 to include combined proxy statement-prospectuses delivered in 
connection with business combinations, exchange offers or 
reclassifications of securities.
    Companies householding the combined proxy statement-prospectuses 
would continue to have to include

[[Page 62553]]

separate proxy cards that need to be executed by each individual 
shareholder in the household. Comment is solicited as to whether the 
Commission should permit companies to household combined proxy 
statement-prospectuses. Do shareholders perceive these prospectuses 
about extraordinary transactions as being more significant than proxy 
statements relating to routine proposals? If so, are they more likely 
to want to receive separate copies of the combined proxy statement-
prospectus? If the revised rules do not permit companies to household 
combined proxy statement-prospectuses, do companies have the means to 
suppress householding when delivering this type of document to 
shareholders?
    The revised rule would not affect any other applicable requirement 
of state or federal law concerning the delivery of any document that 
requires individual execution, such as a shareholder response to a 
tender offer. Comment is solicited on whether the Commission should 
permit householding of these documents.

C. Householding of Proxy and Information Statements by Intermediaries 
to Beneficial Owners

    Exchange Act Rule 14b-1 sets forth the obligations of registered 
brokers and dealers in connection with the prompt forwarding of certain 
registrant communications to beneficial owners. Rule 14b-2 sets forth 
similar obligations of banks, associations and other entities that 
exercise fiduciary powers. The proposed amendments would revise these 
rules to state that broker and bank intermediaries may, on their own 
initiative, or at the request of a company, household the annual 
report, proxy statement or information statement to beneficial owners 
residing at a shared address if the requirements set forth in proposed 
Rule 14a-3(e)(1) (with respect to annual reports and proxy statements) 
and Rule 14c-3(c) (with respect to information statements) are met. 
Pursuant to the proposed change discussed above, intermediaries also 
would be able to household combined proxy statement-prospectuses to 
beneficial owners.
    Under the proposed amendments, the intermediaries rather than the 
registrant would follow the procedures described in proposed Rule 14a-
3(e)(1) and obtain implied or written consent to householding from 
beneficial owners.\53\ Intermediaries using voting instruction forms to 
elicit information from beneficial owners as to how their shares should 
be voted would have to include a separate form for each beneficial 
owner residing at a shared address.\54\ This would be similar to the 
requirement that registrants must include a separate proxy card for 
each individual record holder residing at a shared address.
---------------------------------------------------------------------------

    \53\ A signature on a new bank or broker-dealer account 
agreement would not satisfy the written consent requirement if the 
agreement merely refers to or incorporates by reference another 
document, such as the proxy or information statement, and does not 
describe the householding procedures.
    \54\ Intermediaries generally use voting instruction forms 
rather than the proxy card to facilitate automated processing of the 
beneficial owners' voting instructions regarding non-routine 
matters. The voting instruction forms contain the same information 
as the proxy card with respect to the items presented for 
shareholder vote. Once the intermediary tabulates the results from 
the voting instruction forms, it executes the proxy card in its own 
name and returns it to the company or the company's designated 
agent.
---------------------------------------------------------------------------

    Under the current proxy rules,\55\ intermediaries are not required 
to promptly forward information to beneficial shareholders if a company 
does not provide assurance of reasonable reimbursement of the 
intermediaries' reasonable expenses, both direct and indirect, incurred 
in performing those obligations. The proxy rules do not include a 
schedule of ``reasonable fees,'' but the NYSE rules and rules of other 
self-regulatory organizations do include a fee schedule. NYSE Rule 451 
sets forth the maximum fees that NYSE member firms (brokers) may charge 
NYSE listed companies for forwarding proxy materials to beneficial 
owners.
---------------------------------------------------------------------------

    \55\ Rules 14b-1(c)(2) and 14b-2(c)(2) [17 CFR 240.14b-1(c)(2) 
and 240.14b-2(c)(2)].
---------------------------------------------------------------------------

    In December 1996, the NYSE proposed a new reimbursement fee 
structure for the forwarding of proxy materials and other shareholder 
communications.\56\ Public comment was solicited on the proposals. The 
Commission approved the fees on a pilot basis (``pilot fees'').\57\ The 
pilot fees have been revised several times and currently are set to 
expire on January 3, 2000.\58\
---------------------------------------------------------------------------

    \56\ Release 34-38058 (Dec. 18, 1996) [61 FR 68082].
    \57\ Release 34-38406 (Mar. 14, 1997)[62 FR 13922].
    \58\ Release 34-42086 (Nov. 1, 1999).
---------------------------------------------------------------------------

    In addition to per piece processing fees for the forwarding of 
proxy materials and other shareholder communications, the pilot fees 
include a ``paper and postage elimination fee'' \59\ which may be 
charged by intermediaries for the elimination of a paper mailing to a 
beneficial owner as a result of householding or electronic delivery. 
Nearly all large broker and many bank intermediaries currently 
outsource the proxy material distribution function for beneficial 
shareholders to ADP Investor Communications Services (``ADP''). ADP, as 
agent for intermediaries, is able to charge companies for the proxy 
distribution services in accordance with the pilot fees, including the 
paper and postage elimination fee.
---------------------------------------------------------------------------

    \59\ The intermediary is entitled to collect $.50 for each set 
of proxy materials eliminated.
---------------------------------------------------------------------------

    Under the proposed rules, intermediaries or their agents could 
offer shareholders the option of consenting--on an implied or written 
consent basis--to householding of proxy and information statements 
relating only to a particular company, or consenting to householding of 
any proxy or information statement the intermediary is required to 
forward to the shareholder. The proposed rules, however, would not 
require that shareholders be given this option of limiting their 
consent to a particular company. Comment is solicited on whether 
shareholders should have the option to limit their consent to a 
particular company.
    The revised rules would state that intermediaries must exclude 
annual reports, proxy statements, and information statements that will 
be eliminated pursuant to householding procedures in responding to 
company requests concerning the number of the intermediaries' customers 
that are beneficial owners of the companies' securities.\60\
---------------------------------------------------------------------------

    \60\ Proposed Rules 14b-1(c)(3) and 14b-2(c)(4).
---------------------------------------------------------------------------

    Comment is requested on whether intermediaries should be allowed to 
household annual reports, proxy statements, and information statements 
to beneficial owners. If so, should they or their agents be allowed to 
household regardless of whether the company chooses to household to its 
record holders? Should companies be required to reimburse 
intermediaries or their agents for their reasonable expenses incurred 
in obtaining implied or written consents to householding even if the 
company has not directed or approved the intermediary's decision to 
household? Should the intermediaries be required to obtain express 
authorization from companies before they begin householding? 
Conversely, should the rules require intermediaries to household to 
beneficial owners at the direction of companies? If so, should the 
companies be required to compensate the intermediaries for their 
reasonable expenses incurred in connection with the solicitation of 
implied or written consents? Is it reasonable for intermediaries (or 
their agent) to collect the $.50 paper and postage elimination

[[Page 62554]]

fee currently included in the pilot fees for each paper copy of a set 
of proxy materials suppressed as a result of householding at the 
intermediary level? Should the $.50 postage elimination fee be a one-
time charge (assessed only the first time a paper copy is suppressed) 
or a recurrent fee? Is there any reason why the rules permitting 
householding by intermediaries to beneficial shareholders should differ 
from the rules permitting householding by companies to record 
shareholders?
    Commenters also are asked to consider whether the rules should 
permit householding to record shareholders and beneficial shareholders 
sharing the same address. How would information about record 
shareholders (possessed by companies or their agents) and information 
about beneficial shareholders (possessed by intermediaries or their 
agents) be shared to facilitate householding?
    The proposed rules also would amend Rule 14a-2(a)(1),\61\ which 
excepts solicitations by intermediaries from Rules 14a-3 through 14a-15 
if they satisfy certain conditions.\62\ The amendments would revise the 
rule to indicate that the exception permits intermediaries' delivery of 
materials to each person separately or to a person's household.
---------------------------------------------------------------------------

    \61\ 17 CFR 240.14a-2(a)(1).
    \62\ Proposed Rule 14a-2(a)(1)(ii).
---------------------------------------------------------------------------

D. Householding of Proxy Statements by Shareholders

    Under the proposed rules,\63\ shareholders who deliver a proxy 
statement to other shareholders also would be able to household the 
proxy statement to record holders if the company previously has 
obtained shareholder consent to householding in accordance with the 
procedures in proposed Rule 14a-3(e)(1).
---------------------------------------------------------------------------

    \63\ See the Note to proposed Rule 14a-3(e)(1).
---------------------------------------------------------------------------

    Rule 14a-7 sets forth the obligations of companies either to 
provide a shareholder list to a requesting shareholder or to mail the 
shareholder's proxy materials. The rule provides that the company has 
the option to provide the list or mail the shareholder's materials, 
except when the company is soliciting proxies in connection with going 
private or roll-up transactions. In those cases, the shareholder has 
the option to request the list or have the company mail its materials. 
In addition to requiring that the company supply householding 
information that it previously has obtained when providing the 
shareholder list, the proposed amendments would require companies to 
share the benefit of written or implied consents to householding that 
they have obtained when mailing materials on a shareholder's 
behalf.\64\ Comment is solicited on whether shareholders should be able 
to household the proxy statement under the specified conditions.
---------------------------------------------------------------------------

    \64\ Proposed Rules 14a-7(a)(2)(i) and (ii).
---------------------------------------------------------------------------

    The Commission is aware that intermediaries generally deliver proxy 
materials on behalf of soliciting parties other than the registrant 
under the conditions set forth in Exchange Act Rules 14b-1 and 14b-2 
(for example, the soliciting party agrees to reimburse the intermediary 
for reasonable expenses incurred by the intermediary to forward the 
proxy statement to beneficial owners even though these rules are silent 
with respect to any such obligations). Should Rules 14b-1 and 14b-2 be 
revised explicitly to require intermediaries to deliver proxy or other 
soliciting materials on behalf of soliciting persons (or their agents) 
other than the registrant? Are such revisions necessary or appropriate 
even if the householding proposals are not adopted?

III. Delivery of Proxy Materials to Registered Investment Advisers 
and Investment Managers

    Many of the Self-Regulatory Organizations (``SROs'') have adopted 
rules to allow beneficial owners to:
     Designate a registered investment adviser to vote proxies 
and receive proxy material on behalf of the beneficial owner; and
     Allow SRO member organizations who serve as investment 
managers of ERISA plans to vote proxies.\65\
---------------------------------------------------------------------------

    \65\ See Release No. 34-34596 (Aug. 25, 1994) [59 FR 45050], 
Order Approving Proposed Rule Changes by the New York Stock 
Exchange; Release No. 34-34294 (July 1, 1994) [59 FR 35152], Order 
Approving Proposed Rule Changes by the American Stock Exchange; and 
Release No. 34-35681 (May 5, 1995) [60 FR 25749], Order Approving 
Proposed Rule Changes by the NASD. The SRO rules require the 
beneficial owner to notify the member organization in writing of the 
name of the investment adviser and specify that the investment 
adviser has been designated to receive the proxy and related 
materials and vote the proxy. In an Information Memo to its member 
organizations, the NYSE stated that the member organizations may 
wish to provide consolidated proxies and related materials to 
investment advisers designated by beneficial owners to exercise 
voting discretion.
---------------------------------------------------------------------------

    The proposed householding rules do not include any specific 
provisions regarding householding of proxy materials to registered 
investment advisers and investment managers of ERISA plans who have 
been designated to vote proxies and receive proxy materials on behalf 
of multiple shareholder accounts. The general provisions of the rules, 
however, would permit companies to solicit written consent to 
householding from these investment advisers and investment managers. 
The proposed rules also would allow companies to accommodate requests 
in writing from the investment advisers and investment managers that 
companies and/or intermediaries send them only one copy of a company's 
annual report and proxy statement or information statement, rather than 
a separate copy on behalf of each shareholder for whom they are 
authorized to make proxy voting decisions.
    Comment is requested on whether companies and intermediaries should 
be able to household proxy materials to such investment advisers and 
investment managers without having to rely on the proposed householding 
rules since it is unlikely that a single person or entity making the 
proxy voting decision would need more than one copy of the proxy 
materials. Commenters who believe that the proposed householding rules 
should apply are asked to consider if it would be appropriate to permit 
householding to investment advisers and investment managers by implied 
consent. Additional comment is sought on whether companies and 
intermediaries should be allowed to household proxy material without 
consent or by implied consent to trustees, executors, administrators, 
guardians or persons who act in similar capacities and who have been 
vested with proxy voting authority. Finally, are there other situations 
not addressed by the proposed rules where it may be appropriate to 
allow householding without any advance consent or by implied consent?

IV. General Request for Comment

    Any interested persons wishing to submit written comments on the 
proposed rule amendments that are the subject of this Release, to 
suggest additional provisions or changes to the rules, or to submit 
comments on other matters that might affect proposals contained in this 
Release, are requested to do so. The Commission also requests comment 
on whether the proposals, if adopted, would have an adverse effect on 
competition that is neither necessary nor appropriate in furthering the 
purposes of the Exchange Act.
    The Commission requests comment on whether the proposals, if 
adopted, would promote efficiency, competition and capital formation. 
Comments will be considered by the Commission in compliance with its 
responsibilities under Section 2(b) of the Securities

[[Page 62555]]

Act,\67\ and Sections 3(f) and 23(a) of the Exchange Act.\68\ The 
Commission encourages commenters to provide empirical data or other 
facts to support their views.
---------------------------------------------------------------------------

    \67\ 15 U.S.C. 77b(b).
    \68\ 15 U.S.C. 78c(f), 78w(a).
---------------------------------------------------------------------------

V. Cost/Benefit Analysis

    The Commission is sensitive to the costs and benefits imposed by 
its rules on affected persons and entities. The proposed rules would 
permit companies and intermediaries to send fewer copies of proxy and 
information statements to shareholders than they currently must send, 
and therefore, as discussed below, should result in substantial cost 
savings to companies. The proposed rules would be voluntary on the part 
of companies and intermediaries; therefore, to the extent that the 
proposed rules would require the printing and delivery of notices 
concerning householding, use of software to track householding 
consents, or would result in other costs of changing procedures, and 
the costs outweigh the benefits of householding, companies and 
intermediaries may decide not to rely on the rules.
    Many of the commenters on the proposals adopted in the Companion 
Release urged the Commission to consider proposing revised rules that 
would permit companies and intermediaries to household proxy and 
information statements. Corporate commenters stated that since they 
generally mail the proxy statement and annual report together in the 
same envelope, they are unable to achieve any cost savings under the 
current rules that permit them to household only the annual report.
    Several of the commenters stated that the elimination of duplicate 
proxy materials would result in significant cost savings. One 
commenter, a newsletter publisher and shareholder service consultant, 
estimated that companies could eliminate 10-30% of their annual report 
and proxy statement mailings by householding. Assuming a company's 
relatively low-cost proxy material package (including the annual 
report, proxy statement, notice of meeting, proxy card and return 
envelope) costs $4.70, and a population of 100,000 individual 
investors, the commenter estimates that householding would produce 
savings of approximately $47,000 to $141,000 annually for that company. 
The American Society of Corporate Secretaries and New York Stock 
Exchange noted in their comment letters that companies' ability to 
household proxy material would provide greater efficiency in the 
shareholder communication process without having any adverse effect on 
investor protection.
    Shareholders also have complained to the Commission, companies and 
intermediaries about receipt of multiple copies of the same disclosure 
document. They object not only due to their own burdens associated with 
receipt of unnecessary extra mail, but also to the associated corporate 
waste and cost of delivering duplicative information.
    Companies and intermediaries who rely on the proposed rules would 
incur costs in obtaining consents and sending notices to shareholders. 
It is expected that the cost savings to companies would far exceed the 
costs of obtaining the consents and mailing the notices. Intermediaries 
would be entitled to reimbursement from companies for the reasonable 
expenses they incur in obtaining consents to householding from the 
companies' beneficial shareholders. The proposed rules would require 
that the notice be a separate written statement and be accompanied by a 
reply form. The costs associated with sending the notice should be 
limited to the costs of printing a single page and the postage costs of 
delivering the notice to shareholders. The cost should be non-recurring 
because the notice generally will only have to be sent once to each 
shareholder in a household. Costs of the proposed annual disclosure 
about householding should be low because the disclosure will be 
included in the proxy or information statement.
    The Commission requests comment on the costs and benefits of the 
proposed rules, including the cost savings estimate described above and 
estimates of the costs of obtaining consents and mailing the notice. 
For purposes of the Small Business Regulatory Enforcement Fairness Act 
of 1996,\69\ the Commission also requests information regarding the 
potential impact of the proposed rules on the economy on an annual 
basis. Commenters are requested to include empirical data to support 
their views.
---------------------------------------------------------------------------

    \69\ Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------

VI. Paperwork Reduction Act

    Certain provisions of the proposed rule amendments contain 
``collection of information'' requirements within the meaning of the 
Paperwork Reduction Act of 1995,\70\ and the Commission has submitted 
them to the Office of Management and Budget (``OMB'') for review in 
accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. The titles for the 
collections of information are: ``Regulation 14A, Commission Rules 14a-
1 through 14a-15 and Schedule 14A''; and ``Regulation 14C, Commission 
Rules 14c-1 through 14c-7 and Schedule 14C.'' Regulations 14A and C 
contain currently approved collections of information under OMB control 
numbers 3235-0059 and 3235-0057, respectively. An agency may not 
sponsor or conduct, and a person is not required to respond to, an 
information collection unless a currently valid OMB control number is 
displayed.
---------------------------------------------------------------------------

    \70\ 44 U.S.C. 3501-3520.
---------------------------------------------------------------------------

    Regulations 14A and 14C set forth proxy and information disclosure 
requirements. Companies that have a class of securities registered 
under Section 12 of the Exchange Act are subject to these requirements. 
When the Commission proposed rules to permit householding of the annual 
report,\71\ it submitted a request for approval of revisions to 
Regulations 14A and 14C to OMB. OMB has approved the revisions and they 
are adopted as described in the Companion Release, with some 
modification.
---------------------------------------------------------------------------

    \71\ Release 33-7475 (Nov. 13, 1997) [62 FR 61933].
---------------------------------------------------------------------------

    In its submission, the Commission estimated that the time required 
to prepare and arrange delivery of the notice (required to be mailed by 
companies choosing to solicit implied consent to householding of the 
annual report from shareholders) would be approximately 20 hours per 
respondent per year. Since the annual report and proxy or information 
statement generally are mailed to shareholders together in the same 
package, it is likely that companies and intermediaries would have to 
mail only one notice to obtain consent to householding of both the 
annual report and the proxy or information statement. Therefore, the 
Commission is not changing the 20 hour estimated increase in connection 
with the notice delivery requirement.
    Aside from the notice requirement, the Commission also is proposing 
a new proxy and information statement disclosure requirement.\72\ The 
proposed new disclosure would require companies choosing to household 
proxy materials to advise shareholders how they can revoke consent to 
householding and how to request separate copies of a householded 
document. The disclosure also would tell shareholders how to request 
householding. It is estimated that the time to respond to this 
disclosure would

[[Page 62556]]

be approximately one hour per respondent per year.
---------------------------------------------------------------------------

    \72\ Proposed Item 23 of Schedule 14A and proposed Item 5 of 
Schedule 14C.
---------------------------------------------------------------------------

    The Commission estimates that 9,892 respondents are subject to 
Regulation 14A and that approximately 989 of these would prepare the 
proposed Schedule 14A householding disclosure. The Commission estimates 
that the burden associated with Regulation 14A as revised per 
respondent would be approximately 55 hours for those subject to the 
proposed disclosure, and 54 hours per respondent for those not subject 
to the disclosure requirement, for a total annual burden of 535,157 
hours. Of this total, it is estimated that 25%, or 133,789 hours of the 
disclosure burden, would be prepared by in-house counsel and 75%, or 
401,368 hours, would be prepared by outside counsel. The estimated cost 
to the respondent of the disclosure prepared by outside counsel would 
be $70,239,400 at an estimated hourly rate of $175.
    An estimated 253 respondents are subject to Regulation 14C and it 
is estimated that 25 of these would prepare the proposed Schedule 14C 
householding disclosure. The Commission estimates that the burden 
associated with Regulation 14C as revised per respondent would be 
approximately 55 hours for those subject to the proposed disclosure, 
and 54 hours per respondent for those not subject to the disclosure 
requirement, for a total annual burden of 13,687 hours. Of this total, 
it is estimated that 25%, or 3,422 hours of the disclosure burden, 
would be prepared by in-house counsel and 75%, or 10,265 hours, would 
be prepared by outside counsel. The estimated cost to the respondent of 
the disclosure prepared by outside counsel would be $1,796,375 at an 
estimated hourly rate of $175.

------------------------------------------------------------------------
                                              Burden hours
                                                  after      Cost after
        Information collection title            proposed      revisions
                                                revisions
------------------------------------------------------------------------
Reg. 14A....................................       133,789   $70,239,400
Reg. 14C....................................         3,422     1,796,375
------------------------------------------------------------------------

    Companies and intermediaries are the primary respondents. Responses 
to the collection of information are voluntary and will not be kept 
confidential. Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission 
solicits comment to: (i) Evaluate whether the proposed collections of 
information are necessary for the proper performance of the functions 
of the agency, including whether the information will have practical 
utility; (ii) evaluate the accuracy of the agency's estimate of the 
burden of the proposed collections of information; (iii) enhance the 
quality, utility, and clarity of the information to be collected; and 
(iv) minimize the burden of the collections of information on 
respondents, including through the use of automated collection 
techniques or other forms of information technology.
    Persons wishing to submit comments on the collection of information 
requirements should direct them to the following persons: (i) Desk 
Officer for the Securities and Exchange Commission, Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
Room 3208, New Executive Office Building, Washington, DC 20503; and 
(ii) Jonathan G. Katz, Secretary, Securities and Exchange Commission, 
450 5th Street, NW, Washington, DC 20549-0609, with reference to File 
No. S7-26-99. OMB is required to make a decision concerning the 
collections of information between 30 and 60 days after publication; 
therefore, a comment to OMB is best assured of having its full effect 
if OMB receives it within 30 days of publication.

VII. Initial Regulatory Flexibility Analysis

    This Initial Regulatory Flexibility Analysis has been prepared in 
accordance with 5 U.S.C. 603. It relates to proposed amendments to 
Securities Act Rule 154 and Exchange Act Rules 14a-2, 14a-3, 14a-7, 
14b-1, 14b-2, 14c-3 and 14c-7. The proposed amendments to the Exchange 
Act rules would permit companies, banks, brokers and other persons to 
satisfy the proxy and information statement delivery requirements, with 
respect to two or more shareholders sharing the same address, by 
sending a single proxy or information statement to the shareholders 
(``householding''). The proposed changes to Rule 154 would permit 
issuers and other persons to household proxy-prospectuses required to 
be delivered in connection with business combination transactions, 
exchange offers and reclassifications of securities.

A. Reasons for the Proposed Action

    The purpose of the proposed amendments is to allow companies, 
banks, brokers and other persons to send a single proxy or information 
statement or combined proxy-prospectus to multiple shareholders 
residing at a shared address. Pursuant to amendments adopted today in 
the Companion Release, issuers are able to household prospectuses, 
annual reports and semiannual reports to security holders. Because the 
proxy rules require the annual report to accompany or precede delivery 
of the proxy or information statement, companies generally mail the 
annual report in the same package with the proxy or information 
statement. The proposed amendments would permit companies to household 
proxy and information statements under the same conditions for 
householding prospectuses and annual reports. If the amendments are 
adopted, companies will be able to household the entire annual meeting 
package to consenting shareholders. The proposed amendments are 
intended to reduce the amount of duplicative information that 
shareholders receive and lower printing and mailing costs to companies 
that ultimately are borne by the shareholders.

B. Objectives

    The proposed amendments are designed to save costs for companies, 
brokers, banks and other persons, while maintaining protections for 
investors. The proposed rules would permit companies and others to 
household proxy and information statements and combined proxy-
prospectuses by obtaining implied or written consent from shareholders. 
Companies and others may household by implied consent to shareholders 
residing at a shared address who are members of the same family if the 
shareholders are given advance written notice and the opportunity to 
object. Otherwise, the company must obtain written consent to 
householding from the shareholders. A commenter on the Proposing 
Release estimated that companies and others could reduce their proxy 
and information statement mailings by 10-30% if the proposed amendments 
are adopted. Reliance on the proposed householding rules would be 
optional; the Commission believes companies and others generally will 
rely on the proposed rules only to the extent that cost savings can be 
achieved.

C. Legal Basis

    The Commission is proposing to amend Rule 154 pursuant to the 
authority set forth in Section 19(a) of the Securities Act.\73\ It is 
proposing to amend the proxy rules under the authority set forth in 
Sections 12, 14 and 23(a) of the Exchange Act.\74\
---------------------------------------------------------------------------

    \73\ 15 U.S.C. 77s(a).
    \74\ 15 U.S.C. 78l, 78n and 78w(a).
---------------------------------------------------------------------------

D. Small Entities Subject to the Rules

    Rule 0-10 under the Exchange Act defines the term ``small 
business'' as a company whose total assets on the last day of its most 
recent fiscal year were

[[Page 62557]]

$5 million or less.\75\ Only small businesses that have securities 
registered under Section 12 of the Exchange Act are subject to the 
proxy rules. There are approximately 815 reporting companies that have 
assets of $5 million or less. As stated above, the proposed 
householding rules would be optional.
---------------------------------------------------------------------------

    \75\ 17 CFR 240.0-10.
---------------------------------------------------------------------------

E. Reporting, Recordkeeping, and Other Compliance Issues

    The primary goal of the proposed revisions is to remove unnecessary 
regulatory requirements. The proposed rules, however, would require 
companies and other parties choosing to solicit implied consent to 
householding from shareholders to mail a separate written notice of the 
companies' intention to household proxy and information statements. The 
proposed rules also would require companies and other parties to 
undertake in the proxy or information statement to provide, upon 
written or oral request, a separate copy of the annual report, proxy 
statement or information statement to a shareholder residing at an 
address to which they delivered a householded copy. Additionally, 
companies choosing to household the annual report and proxy or 
information statement would have to provide instructions in the proxy 
or information statement as to how: (1) A shareholder can revoke 
consent to householding; and (2) shareholders sharing an address can 
request householding. It is likely that the notice generally would not 
exceed one page, and the proxy or information statement disclosure 
would be only a paragraph or two in length.

F. Duplicative, Overlapping or Conflicting Federal Rules

    The Commission believes that there are no federal rules that 
duplicate, overlap, or conflict with, the proposed rules.

G. Significant Alternatives

    The Regulatory Flexibility Act directs the Commission to consider 
significant alternatives that would accomplish the stated objective, 
while minimizing any significant adverse impact on small issuers. In 
connection with the proposed rules, the Commission considered the 
following alternatives: (a) The establishment of differing compliance 
or reporting requirements or timetables that take into account the 
resources available to small entities; (b) the clarification, 
consolidation or simplification of compliance and reporting 
requirements under the rule for small entities; (c) the use of 
performance rather than design standards; and (d) an exemption from the 
coverage of the rule, or any part thereof, for small entities.
    The proposed rules are intended to remove regulatory requirements 
for all companies, including those that are small entities. The costs 
of the proposed notice and undertaking requirements are not expected to 
be significant and should be more than offset by the cost savings 
realized as a result of householding proxy and information statements. 
The Commission considered exempting small entities that are reporting 
companies from the notice and undertaking requirements, but believes 
that investors in companies of all sizes should be notified that a 
company intends to household the proxy and information statement and 
have the opportunity to object. Since the proposed rules would be 
optional and should benefit small entities, it was unnecessary to 
consider exempting them from coverage of the proposed rules.

H. Solicitation of Comments

    The Commission encourages the submission of comments with respect 
to any aspect of this Initial Regulatory Flexibility Analysis. Comment 
specifically is requested on the number of small entities that would be 
affected by the proposed rules. Comment also is requested on the impact 
of the proposed rules on broker and banks that are small entities. 
Commenters are asked to describe the nature of any impact and provide 
empirical data supporting the extent of their impact. These comments 
will be considered in preparation of the Final Regulatory Flexibility 
Analysis, if the rules are adopted, and will be placed in the same 
public comment file as comments on the proposed rules themselves.

VIII. Statutory Authority

    The Commission is proposing to amend Rule 154 pursuant to the 
authority set forth in Section 19(a) of the Securities Act. The 
Commission is proposing to amend Rules 14a-3, 14c-3, 14b-1 and 14b-2 
under the authority set forth in sections 12, 14 and 23(a) of the 
Exchange Act.

List of Subjects

17 CFR Part 230

    Investment companies, Reporting and recordkeeping requirements, 
Securities.

17 CFR Part 240

    Reporting and recordkeeping requirements, Securities.

Text of Proposed Rules

    For the reasons set out in the preamble, Title 17, Chapter II of 
the Code of Federal Regulations is proposed to be amended as follows:

PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933

    1. The authority citation for Part 230 continues to read, in part, 
as follows:

    Authority: 15 U.S.C. 77b, 77f, 77g, 77h, 77j, 77r, 77s, 77sss, 
78c, 78d, 78l, 78m, 78n, 78o, 78w, 78ll(d), 79t, 80a-8, 80a-24, 80a-
28, 80a-29, 80a-30, and 80a-37, unless otherwise noted.
* * * * *


Sec. 230.154  [Amended]

    2. Section 230.154 is amended by removing paragraph (e).

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 
1934

    3. The authority citation for Part 240 continues to read, in part, 
as follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77eee, 
77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 78j-1, 78k, 
78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78ll(d), 
78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4 and 
80b-11, unless otherwise noted.
* * * * *
    4. Section 240.14a-2 is amended by revising paragraph (a)(1)(ii) to 
read as follows:


Sec. 240.14a-2  Solicitations to which Sec. 240.14a-3 to Sec. (240.14a-
15 apply.

* * * * *
    (a) * * *
    (1) * * *
    (ii) Furnishes promptly to the person solicited (or person's 
household in accordance with Sec. 240.14a-3(e)(1)) a copy of all 
soliciting material with respect to the same subject matter or meeting 
received from all persons who shall furnish such copies thereof for 
such purpose and who shall, if requested, defray the reasonable 
expenses to be incurred in forwarding such material, and
* * * * *
    5. Section 240.14a-3 is amended by revising paragraph (e)(1) to 
read as follows:


Sec. 240.14a-3  Information to be furnished to security holders.

* * * * *
    (e)(1)(i) A registrant will be considered to have delivered an 
annual report and/or proxy statement, as applicable, to all security 
holders of record who share an address if:

[[Page 62558]]

    (A) The registrant delivers one annual report and/or proxy 
statement to the shared address;
    (B) The registrant addresses the annual report and/or proxy 
statement to the security holders as a group (for example, ``ABC Fund 
[or Corporation] Shareholders,'' ``Jane Doe and Household,'' ``The 
Smith Family'') or to each of the security holders individually (for 
example, ``John Doe and Richard Jones'');
    (C) The security holders consent in writing to delivery of one 
annual report and/or proxy statement;
    (D) With respect to delivery of the proxy statement, the registrant 
includes a separate proxy card for each security holder residing 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 and/or proxy statement to a security holder residing at a 
shared address to which a single copy of the documents was delivered.
    (ii) Implied consent. The registrant need not obtain written 
consent from a security holder if all of the following conditions are 
met:
    (A) The security holder has the same last name as the other 
security holders, or the registrant reasonably believes that the 
security holders are members of the same family;
    (B) The registrant has sent the security holder a notice at least 
90 days before the registrant begins to rely on this section concerning 
delivery of annual reports and/or proxy statements to that security 
holder. The notice must:
    (1) Be a separate written statement that is delivered separately 
from any other communications;
    (2) State that only one annual report and/or proxy statement will 
be delivered to the shared address unless the registrant receives 
contrary instructions;
    (3) 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 and/or proxy 
statement;
    (4) State the duration of the consent;
    (5) Explain how a security holder can revoke consent;
    (6) State that the registrant will begin sending individual copies 
to a security holder within 30 days after the security holder revokes 
consent; and
    (7) Contain the following prominent statement, or similar clear and 
understandable statement, in bold-face type: ``Important Notice 
Regarding Delivery of Shareholder Documents.'' Alternatively, this 
statement may appear on the envelope containing the notice;

    Note to paragraph (e)(1)(ii)(B). The notice should be written in 
plain English. See Sec. 230.421(d)(2) of this chapter for a 
discussion of plain English principles.

    (C) 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 and/or proxy statement, 
within 90 days after the registrant sent the notice; and
    (D) The registrant delivers the report to a post office box or to a 
residential street address. The registrant can assume that a street 
address is a residence unless it has information that indicates it is a 
business.
    (iii) Revocation of consent. If a security holder, orally or in 
writing, revokes consent to delivery of one annual report and/or proxy 
statement, 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.
    (iv) Definition of address. For purposes of this section, address 
means a street address, a post office box number, an electronic mail 
address, a facsimile telephone number, or other similar destination to 
which paper or electronic documents are delivered, unless otherwise 
provided in this section. If the registrant has reason to believe that 
the address is a street address of a multi-unit building, the address 
must include the unit number.

    Note to paragraph (e)(1). A person other than the registrant 
making a proxy solicitation may deliver a single proxy statement to 
security holders of record who have separate accounts and share an 
address if: (a) The registrant has followed the procedures in this 
section; and (b) the registrant makes available the shared address 
information to the person in accordance with Sec. 240.14a-7(a)(2)(i) 
and (ii).
* * * * *
    6. Section 240.14a-7 is amended by revising paragraphs (a)(2)(i) 
and (ii) and designating the existing note to Sec. 240.14a-7 as Note 1, 
revising the heading to the notes, and adding Note 2 to read as 
follows:


Sec. 240.14a-7 Obligations of registrants to provide a list of, or mail 
soliciting materials to, security holders.

* * * * *
    (a) * * *
    (2) * * *
    (i) Mail copies of any proxy statement, form of proxy or other 
soliciting material 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 mailed to 
the banks, brokers, and similar entities for distribution to all 
beneficial owners designated by the security holder. If the registrant, 
banks, brokers or similar entities have received implied or written 
consent to deliver a single proxy statement to security holders 
residing at a shared address in accordance with the procedures in 
Sec. 240.14a-3(e)(1), Sec. 240.14b-1(b)(2), or Sec. 240.14b-2(b)(3), a 
single copy of the proxy statement furnished by the security holder 
shall be mailed to that address. The registrant shall mail the security 
holder material with reasonable promptness after tender of the material 
to be mailed, envelopes or other containers therefor, postage or 
payment for postage and other reasonable expenses of effecting such 
mailing. 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 
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; the most recent list of names, addresses and 
security positions of beneficial owners as specified in Sec. 240.14a-
13(b), in the possession, or which subsequently comes in the 
possession, of the registrant; and the names of security holders 
residing 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 implied or written consent in accordance with 
Sec. 240.14a-3(e)(1). 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.
* * * * *

[[Page 62559]]

    Notes to Sec. 240.14a-7. 
    1. * * *
    2. When providing the information required by Sec. 240.14a-
7(a)(1)(ii), if the registrant has received implied or written 
consent to householding in accordance with Sec. 240.14a-3(e)(1), it 
shall exclude from the number of record holders those to whom it 
does not have to deliver a separate proxy statement.

    7. Section 240.14a-101 is amended by adding Item 23 to read as 
follows:


Sec. 240.14a-101  Schedule 14A Information required in proxy statement.

* * * * *
    Item 23. Delivery of documents to security holders residing at a 
shared address. If one annual report and/or proxy statement is being 
delivered (``householded'') to two or more security holders who 
share an address in accordance with Sec. 240.14a-3(e)(1), furnish 
the following information:
    (a) State that only one annual report and/or proxy statement is 
being delivered to multiple security holders residing at a shared 
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 and/or proxy statement to a 
security holder residing at a shared address to which a single copy 
of the documents was delivered;
    (c) Provide instructions as to how a security holder can notify 
the registrant that the security holder wishes to receive a separate 
annual report and/or proxy statement in the future; and
    (d) Provide instructions how security holders sharing an address 
can request householding if they are receiving multiple copies of 
the annual report and/or proxy statement.

    8. Section 240.14b-1 is amended by adding a note following 
paragraph (b)(2) and by adding paragraph (c)(3) to read as follows:


Sec. 240.14b-1  Obligation of registered brokers and dealers in 
connection with the prompt forwarding of certain communications to 
beneficial owners.

* * * * *
    (b)(2) * * *

    Note to paragraph (b)(2): The broker or dealer may, on its own 
initiative, or at the request of a registrant, deliver one annual 
report, proxy statement, or information statement to more than one 
beneficial owner residing at a shared address if the requirements 
set forth in Sec. 240.14a-3(e)(1)(with respect to annual reports and 
proxy statements), and Sec. 240.14c-3(c)(with respect to annual 
reports and information statements) applicable to registrants are 
satisfied instead by the broker or dealer.

* * * * *
    (c) * * *
    (3) In its response pursuant to paragraph (b)(1) of this section, a 
broker or dealer shall not include information about proxy statements, 
information statements or annual reports that will not be delivered to 
security holders residing at a shared address because of the broker or 
dealer's reliance on the householding procedures referred to in the 
Note to paragraph (b)(2) of this section.
    9. Section 240.14b-2 is amended by adding a note to paragraph 
(b)(3) and by adding paragraph (c)(4) to read as follows:


Sec. 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) * * *

    Note to paragraph (b)(3): The bank may, on its own initiative, 
or at the request of a registrant, deliver one annual report, proxy 
statement, or information statement to more than one beneficial 
owner residing at a shared address if the requirements set forth in 
Sec. 240.14a-3(e)(1) (with respect to annual reports and proxy 
statements), and Sec. 240.14c-3(c) (with respect to annual reports 
and information statements) applicable to registrants are satisfied 
instead by the bank.

* * * * *
    (c) * * *
    (4) A bank shall not include information in its response pursuant 
to paragraphs (b)(1)(ii)(A) of this section proxy statements, 
information statements or annual reports that will not be delivered to 
security holders residing at a shared address because of the bank's 
reliance on the householding procedures referred to in the Note to 
paragraph (b)(3) of this section.
    10. Section 240.14c-3 is amended by adding paragraph (c) to read as 
follows:


Sec. 240.14c-3  Annual report to be furnished security holders.

* * * * *
    (c) A registrant will be considered to have delivered an annual 
report or information statement to security holders of record who share 
an address if the requirements set forth in Sec. 240.14a-3(e)(1) are 
satisfied.
    11. Section 240.14c-101 is amended by adding Item 5 to read as 
follows:


Sec. 240.14c-101  Schedule 14C Information required in information 
statement

    Item 5. Delivery of documents to security holders residing at a 
shared address. If one annual report and/or information statement is 
being delivered (``householded'') to two or more security holders 
who share an address in accordance with Sec. 240.14a-3(e)(1), 
furnish the following information:
    (a) State that only one annual report and/or proxy statement is 
being delivered to multiple security holders residing at a shared 
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 and/or information statement to a 
security holder residing at a shared address to which a single copy 
of the documents was delivered;
    (c) Provide instructions as to how a security holder can notify 
the registrant that the security holder wishes to receive a separate 
annual report and/or information statement in the future; and
    (d) Provide instructions how security holders sharing an address 
can request householding if they are receiving multiple copies of 
the annual report and/or information statement.

    Dated: November 4, 1999.

    By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-29532 Filed 11-15-99; 8:45 am]
BILLING CODE 8010-01-P