[Federal Register Volume 75, Number 38 (Friday, February 26, 2010)]
[Rules and Regulations]
[Pages 9074-9081]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-3891]



[[Page 9073]]

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

Part III





Securities and Exchange Commission





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



17 CFR Parts 230 and 240



Amendments to Rules Requiring Internet Availability of Proxy Materials; 
Final Rule

  Federal Register / Vol. 75 , No. 38 / Friday, February 26, 2010 / 
Rules and Regulations  

[[Page 9074]]


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

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 230 and 240

[Release Nos. 33-9108; 34-61560; IC-29131; File No. S7-22-09]
RIN 3235-AK25


Amendments to Rules Requiring Internet Availability of Proxy 
Materials

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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

SUMMARY: We are amending rules under the Securities Exchange Act of 
1934 and the Securities Act of 1933 to clarify and provide additional 
flexibility regarding the format of the Notice of Internet Availability 
of Proxy Materials that is sent to shareholders and to permit issuers 
and other soliciting persons to better communicate with shareholders by 
including explanatory materials regarding the reasons for the use of 
the notice and access proxy rules and the process of receiving and 
reviewing proxy materials and voting pursuant to the notice and access 
proxy rules. The amendments also revise the timeframe for delivering a 
Notice to shareholders when a soliciting person other than the issuer 
relies on the notice and access proxy rules and permit mutual funds to 
accompany the Notice with a summary prospectus.

DATES: Effective Date: March 29, 2010.

FOR FURTHER INFORMATION CONTACT: Steven G. Hearne, Special Counsel in 
the Office of Rulemaking, Division of Corporation Finance, at (202) 
551-3430, or with respect to registered investment companies, Sanjay 
Lamba, Senior Counsel, in the Office of Disclosure Regulation, Division 
of Investment Management, at (202) 551-6784, 100 F Street, NE., 
Washington, DC 20549.

SUPPLEMENTARY INFORMATION: The Commission is amending Rule 14a-16 \1\ 
under the Securities Exchange Act of 1934 \2\ and Rule 498 \3\ under 
the Securities Act of 1933.\4\
---------------------------------------------------------------------------

    \1\ 17 CFR 240.14a-16.
    \2\ 15 U.S.C. 78a et seq.
    \3\ 17 CFR 230.498.
    \4\ 15 U.S.C. 77a et seq.
---------------------------------------------------------------------------

Table of Contents

I. Background and Overview of the Amendments
II. Discussion of the Amendments
    A. Revisions to the Notice Requirements and Inclusion of 
Explanatory Materials
    1. Proposed Amendments
    2. Comments on the Proposed Amendments
    3. Final Rule
    B. Amendment to Notice Deadlines for Soliciting Persons Other 
Than the Issuer
    1. Proposed Amendment
    2. Comments on the Proposed Amendment
    3. Final Rule
    C. Additional Comments on the Proposed Amendments and Actions 
Taken by the Commission
    D. Technical Amendments Relating to Registered Investment 
Companies
III. Paperwork Reduction Act
IV. Cost-Benefit Analysis
V. Consideration of Burden on Competition and Promotion of 
Efficiency, Competition and Capital Formation
VI. Final Regulatory Flexibility Analysis
VII. Statutory Authority and Text of the Amendments

I. Background and Overview of the Amendments

    On October 14, 2009, we proposed amendments to the notice and 
access proxy rules to remove regulatory impediments that may be 
reducing shareholder response rates to proxy solicitations by 
permitting issuers and other soliciting persons to more effectively use 
the notice and access model.\5\ These amendments were proposed based on 
our continuing review of the disclosures shareholders receive when they 
are asked to make a voting decision and the process followed when those 
votes are solicited.\6\ As discussed in detail below, we are adopting 
the proposed amendments with certain modifications based on the 
comments received on the proposal.
---------------------------------------------------------------------------

    \5\ Amendments to Rules Requiring Internet Availability of Proxy 
Materials, Release No. 33-9073 (Oct. 14, 2009) [74 FR 53954] (the 
``Proposing Release'').
    \6\ See, e.g., Facilitating Shareholder Director Nominations, 
Release No. 33-9046 (June 10, 2009) [74 FR 29024], Proxy Disclosure 
Enhancements, Release No. 33-9089 (Dec. 16, 2009) [74 FR 68443], and 
Order Approving Proposed Rule Change, as modified by Amendment No. 
4, to Amend NYSE Rule 452 and Corresponding Listed Company Manual 
Section 402.08 to Eliminate Broker Discretionary Voting for the 
Election of Directors, Except for Companies Registered under the 
Investment Company Act of 1940, and to Codify Two Previously 
Published Interpretations that Do Not Permit Broker Discretionary 
Voting for Material Amendments to Investment Advisory Contracts with 
an Investment Company, Release No. 34-60215 (July 1, 2009) [74 FR 
33293].
---------------------------------------------------------------------------

    We received 25 comment letters in response to the proposed 
amendments.\7\ These letters came from corporations, professional 
associations, institutional investors, law firms, transfer agents, 
proxy service providers and other interested parties. We have reviewed 
and considered all of the comments that we received on the proposed 
amendments. Most commenters supported the use of the notice and access 
model and the Commission's proposed modifications to improve its 
implementation.\8\ The adopted rules reflect changes made in response 
to some of these comments. We explain our revisions with respect to 
each proposed rule amendment in more detail throughout this release.
---------------------------------------------------------------------------

    \7\ See letters from American Bar Association (``ABA''), 
American Business Conference (``ABC''), Ameriprise Financial, Inc. 
(``Ameriprise''), Association of Corporate Counsel (``ACC''), The 
Altman Group (``Altman''), BNY Mellon Shareowner Services (``BNY''), 
Broadridge Financial Solutions, Inc. (``Broadridge''), Independent 
Steering Committee of Broadridge Investor Communications Solutions 
(``Broadridge Steering Committee''), California State Teachers 
Retirement System (``CalSTRS''), Calvert Group Limited 
(``Calvert''), U.S. Chamber of Commerce (``Chamber''), Computershare 
Limited (``Computershare''), Corporate Governance, Diversified 
Global Graphics Group (``DG3''), Edison International (``Edison''), 
Investment Company Institute (``ICI''), Intel Corporation 
(``Intel''), IRWebReport.com, Moxy Vote (``Moxy''), National 
Investor Relations Institute (``NIRI''), Otter Tail Corporation 
(``Otter Tail''), Registrar and Transfer Company (``R&T''), Sullivan 
& Cromwell (``S&C''), Society of Corporate Secretaries and 
Governance Professionals (``SCSGP''), and Securities Transfer 
Association, Inc. (``STA'').
    \8\ See, e.g., letters from ABA, ABC, ACC, Altman, BNY, 
Broadridge, Broadridge Steering Committee, CalSTRS, Calvert, 
Chamber, Computershare, Edison, ICI, Intel, NIRI, Otter Tail, R&T, 
S&C, SCSGP, and STA.
---------------------------------------------------------------------------

    In 2007, the Commission established procedures that promote the use 
of the Internet as a reliable and cost-efficient means of making proxy 
materials available to shareholders.\9\ The notice and access proxy 
rules require all issuers and other soliciting persons to post their 
proxy materials on an Internet Web site and provide a Notice of 
Internet Availability of Proxy Materials (``Notice'') to shareholders. 
These rules also provide issuers and other soliciting persons an option 
as to whether to send a full set of proxy materials to all shareholders 
or to send shareholders only the Notice. According to Broadridge 
Financial Solutions, Inc. (``Broadridge''), over 1,300 corporate 
issuers used the notice-only option for distribution of the Notice to 
some portion of their beneficial owners under the notice and access 
model in the 2009 proxy season.\10\ Commenters, including

[[Page 9075]]

Broadridge and transfer agents who conduct the distribution to 
registered owners, indicated that issuers have experienced significant 
cost savings in printing, postage and processing fees.\11\
---------------------------------------------------------------------------

    \9\ See Internet Availability of Proxy Material, Release No. 34-
55146 (Jan. 22, 2007) [72 FR 4148] (``Internet Availability of Proxy 
Material Adopting Release'') and Shareholder Choice Regarding Proxy 
Materials, Release No. 34-56135 (July 26, 2007) [72 FR 42221].
    \10\ See Broadridge Notice & Access, Statistical Overview of Use 
with Beneficial Shareholders (as of June 30, 2009) attached to the 
letter from Broadridge (``Broadridge Statistical Overview''). 
Broadridge is the largest provider of brokerage processing services 
with respect to beneficial owners holding through a broker or 
similar intermediary and has provided detailed statistical 
information on the use of the notice and access model. The 
Broadridge Statistical Overview is generally limited to comparisons 
between issuers that have used the notice-only option for 
distribution to some portion of their beneficial owners and issuers 
that exclusively used the full set delivery option and comparisons 
between the first and second years of use of the notice-only option. 
The data does not provide a comparison to an issuer's experience in 
the year prior to using the notice-only option for distribution.
    \11\ See, e.g., letters from Broadridge, BNY, and R&T. Some 
commenters noted that processing fees were reduced on distributions 
to registered owners, but expressed concern about the processing 
fees charged by service providers for distributions to beneficial 
owners. See, e.g., letters from Altman, BNY, ICI, NIRI, Otter Tail, 
R&T, and STA.
---------------------------------------------------------------------------

    As we noted in the Proposing Release, while many issuers have 
experienced significant cost savings using the notice-only option, 
statistics indicate lower shareholder response rates to proxy 
solicitations when the notice-only option is used.\12\ We are concerned 
that some investors may be confused when issuers and other soliciting 
persons distribute proxy materials using the notice-only option and we 
believe our rules should be amended to provide additional flexibility 
for issuers and other soliciting persons to better communicate with 
shareholders to reduce that confusion.
---------------------------------------------------------------------------

    \12\ See notes 18-20 of the Proposing Release.
---------------------------------------------------------------------------

    We are adopting amendments today to provide issuers and other 
soliciting persons with additional flexibility to provide to 
shareholders a more effective explanation of the importance and effect 
of the Notice and the reasons for its use, which should better 
facilitate use of our rules and improve investor understanding. 
Specifically, the amendments provide additional flexibility regarding 
the format and content of the Notice, permit issuers and other 
soliciting persons to better communicate with shareholders by including 
explanatory materials regarding the reasons for the use of the notice 
and access rules and the process of receiving and reviewing proxy 
materials and voting, and revise the timeframe for delivering a Notice 
to shareholders when a soliciting person other than the issuer relies 
on the notice-only option.

II. Discussion of the Amendments

A. Revisions to the Notice Requirements and Inclusion of Explanatory 
Materials

    We proposed amendments to Exchange Act Rule 14a-16 to provide 
issuers and other soliciting persons with additional flexibility to 
develop a more effective Notice and to provide shareholders with 
guidance as to how to access the proxy materials online, request a 
paper copy of the proxy materials, and vote their shares. We are 
adopting the amendments generally as proposed with some changes as 
recommended by commenters.
1. Proposed Amendments
    Under the amendments we proposed, issuers and other soliciting 
persons would have additional flexibility in formatting and selecting 
the language to be used in the Notice. Rather than requiring the 
soliciting person to include a detailed legend that may seem like 
boilerplate language to shareholders, we proposed to require that the 
information appearing on the Notice address certain topics, without 
specifying the exact language to be used.\13\ Further, in order to 
mitigate confusion about the Notice and to allow issuers and other 
soliciting persons to better engage shareholders, we proposed to revise 
Exchange Act Rule 14a-16(f)(2)\14\ to permit issuers and other 
soliciting persons to accompany the Notice with an explanation of the 
notice and access model, which would be limited to an explanation of 
the process of receiving and reviewing the proxy materials and voting. 
Materials designed to persuade shareholders to vote in a particular 
manner, change the method of delivery of proxy materials, or explain 
why the person was sending only a Notice to shareholders would not be 
permitted under the proposed amendments.
---------------------------------------------------------------------------

    \13\ As proposed, Exchange Act Rule 14a-16(d) would limit the 
required legend to the line ``Important Notice Regarding the 
Availability of Proxy Materials for the Shareholder Meeting To Be 
Held on [insert meeting date]'' and would require the other 
information currently required in the legend to be included in the 
Notice, but not as part of a specified legend.
    \14\ 17 CFR 240.14a-16(f)(2).
---------------------------------------------------------------------------

2. Comments on the Proposed Amendments
    Most commenters supported the additional flexibility provided by 
the proposed amendments to design and prepare the Notice and provide 
explanatory materials, and many of these commenters offered additional 
suggestions for improving the proposals.\15\ Several commenters 
recommended that the design and wording of the Notice should be 
required to clearly indicate that the Notice is not a proxy card and 
may not be voted.\16\ Other commenters supported a uniform and easily 
recognizable design for the Notice,\17\ requiring intermediaries to 
forward the Notice in issuer provided envelopes,\18\ or requiring that 
the Notice identify proxy items by topic rather than specific 
proposals.\19\
---------------------------------------------------------------------------

    \15\ See, e.g., letters from ABA, ACC, BNY, Broadridge, 
Broadridge Steering Committee, Calvert, Chamber, Computershare, 
Edison, ICI, Intel, Otter Tail, R&T, S&C, SCSGP, and STA.
    \16\ See, e.g., letters from ABA, Altman, Otter Tail, and Intel. 
Letters from ABA, Altman and Intel suggested the inclusion of a 
mandatory legend indicating that a separate proxy card should be 
used for voting.
    \17\ See letter from Otter Tail.
    \18\ See letter from Edison.
    \19\ See letter from Intel suggesting that the mandated format 
of the Notice be changed so that matters to be addressed at the 
annual meeting be identified by topic rather than identifying the 
specific proposals in order to avoid confusion between the Notice 
and the proxy card.
---------------------------------------------------------------------------

    Several commenters supported more flexibility than we had proposed 
for the explanatory materials, such as permitting an issuer to explain 
the reasons for its use of the notice-only option.\20\ Commenters 
suggested that an issuer's rationale for using the notice-only option 
would enhance shareholders' understanding of the reasons for receiving 
the Notice, inform investors of the benefits of using the notice-only 
option and help to distinguish the Notice from the proxy card, without 
influencing a shareholder's voting decision.\21\ One commenter 
supported additionally requiring that intermediaries be required to 
pass explanatory materials on to beneficial owners.\22\
---------------------------------------------------------------------------

    \20\ See, e.g., letters from ABA, ACC, S&C, and STA.
    \21\ See, e.g., letters from ABA and ACC.
    \22\ See letter from ABA.
---------------------------------------------------------------------------

    Finally, one commenter noted that if the Commission approved the 
proposed amendments to the Notice requirements, a technical change is 
necessary to Exchange Act Rule 14a-16(n).\23\ Rule 14a-16(n) addresses 
the notice and access requirements when an issuer or other soliciting 
person sends a full set of proxy materials to security holders. The 
suggested technical change related to references in Rule 14a-16(n)(4) 
to the disclosure requirements of the Notice in Exchange Act Rule 14a-
16(d). Since the proposed amendments revise the disclosure requirements 
of Rule 14a-16(d), conforming changes should also be made to 14a-
16(n)(4).
---------------------------------------------------------------------------

    \23\ See letter from S&C.
---------------------------------------------------------------------------

3. Final Rule
    After considering the comments, we are adopting the amendments to 
our requirements regarding the Notice and the rules about what 
materials may accompany the initial distribution of the Notice as 
proposed with some changes as recommended by commenters. The final rule 
provides issuers and other soliciting persons with additional 
flexibility in formatting and selecting the language to be used in the 
Notice, as proposed. The information appearing on the Notice is 
required to address

[[Page 9076]]

certain topics, without specifying the exact language to be used. In 
response to comments requesting that the rules specifically state that 
the Notice is not a form of proxy and may not be voted, we are adopting 
final rules that require an issuer or other soliciting person to 
indicate that the Notice is not a form for voting. We are not, however, 
adopting suggested changes to the Notice requirements that would 
require a prescribed legend that the Notice is not a proxy card. We are 
also not adopting changes to the Notice that would require a uniform 
design for the Notice or would require that the Notice identify proxy 
items by topic rather than specific identification. We believe that the 
requirement that the Notice indicate that it is not a form for voting 
and the additional flexibility provided by the revised rules, as well 
as the guidance regarding the requirements of redesignated Exchange Act 
Rule 14a-16(d)(6),\24\ address the concerns raised by commenters. These 
changes also provide issuers and other soliciting persons the 
flexibility to draft the Notice more effectively. We believe that the 
flexibility should discourage the development of boilerplate 
disclosure, which is one of the problems our amendments are designed to 
address.
---------------------------------------------------------------------------

    \24\ We are redesignating 17 CFR 240.14a-16(d)(2) through 17 CFR 
240.14a-16(d)(8) as 17 CFR 240.14a-16(d)(5) through 17 CFR 240.14a-
16(d)(11). Prior to this redesignation, the referenced paragraph was 
17 CFR 240.14a-16(d)(3) as indicated in the Proposing Release. After 
adoption, as noted here, the referenced paragraph is 17 CFR 240.14a-
16(d)(6).
---------------------------------------------------------------------------

    As noted above, several commenters supported additional flexibility 
to allow the materials to address the reasons for the use of the 
notice-only option.\25\ Consistent with the proposal, the final rule 
permits issuers and other soliciting persons to accompany the Notice 
with an explanation of the notice and access model.\26\ As proposed, 
new Exchange Act Rule 14a-16(f)(2)(iv) \27\ allows issuers and other 
soliciting persons to provide an explanation of the process of 
receiving and reviewing the proxy materials and voting under the notice 
and access proxy rules. In a change from the proposal, new Exchange Act 
Rule 14a-16(f)(2)(iv) also permits an explanation of the reasons for 
the use of the notice and access rules, as some commenters suggested.
---------------------------------------------------------------------------

    \25\ See note 20 above.
    \26\ We emphasize that under revised Rule 14a-16(f)(2) only 
registrants and other soliciting persons, and not other parties, may 
accompany a Notice with explanatory materials.
    \27\ This new provision is an additional exception to the 
general rule in Exchange Act Rule 14a-16(f) that the Notice be sent 
separately from other types of security holder communications.
---------------------------------------------------------------------------

    We concur that additional flexibility to explain the reasons for 
the use of the notice and access rules and the notice-only option may 
enhance shareholders' understanding of the notice and access model and, 
therefore, we have expanded the exception to include those topics. 
Materials designed to persuade shareholders to vote in a particular 
manner or change the method of the delivery of proxy materials are 
still not permitted under the revised exception.\28\ As also noted 
above, one commenter suggested that we specifically require that 
intermediaries and their agents be required to distribute explanatory 
materials prepared in reliance on the amended rules. Since issuers and 
other soliciting persons are generally required to reimburse 
intermediaries for the reasonable expenses incurred in connection with 
forwarding materials to shareholders, we are not at this time 
specifically requiring intermediaries and their agents to forward 
explanatory materials. Of course, to the extent that materials that 
accompany the Notice are ``other soliciting materials'' then our 
current rules \29\ would specifically require distribution of the 
materials.
---------------------------------------------------------------------------

    \28\ While the Notice continues to permit the soliciting person 
to include their recommendations as provided in redesignated 
Exchange Act Rule 14a-16(d)(6), as we explained in the Internet 
Availability of Proxy Material Adopting Release, ``The Notice is 
intended merely to make shareholders aware that these proxy 
materials are available on an Internet Web site; it is not intended 
to serve as a stand-alone basis for making a voting decision.''
    \29\ See 17 CFR 240.14b-1(b)(2) and 17 CFR 240.14b-2(b)(3).
---------------------------------------------------------------------------

    In response to comments, we are also making a technical change to 
Exchange Act Rule 14a-16(n). Rule 14a-16(n)(4) details the notice and 
access disclosures that registrants and other soliciting persons are 
not required to include in proxy materials when they choose to send a 
full set of proxy materials to security holders. Since we are amending 
the notice and access disclosure requirements in Rule 14a-16(d), we are 
making conforming changes to Rule 14a-16(n)(4). Specifically, we are 
revising Rule 14a-16(n)(4)(i) to delete the reference to legend 
requirements that are no longer part of Rule 14a-16(d)(1) and to make 
reference to new paragraph 14a-16(d)(2) and changing the reference to 
``(d)(7)'' in Rule 14a-16(n)(4)(iii) to ``(d)(10)'' to track the new 
numbering in Rule 14a-16(d).
    Finally, we are confirming the guidance provided in the Proposing 
Release that it is not necessary that the Notice directly mirror the 
proxy card. Rather, Exchange Act Rule 14a-16(d)(6) provides that the 
Notice must clearly and impartially identify each separate matter 
intended to be acted on that will be considered at the meeting. We do 
not believe the Notice has to conform to the specific Exchange Act Rule 
14a-4 \30\ formatting and content requirements for disclosure of 
matters on the proxy card.
---------------------------------------------------------------------------

    \30\ 17 CFR 240.14a-4.
---------------------------------------------------------------------------

B. Amendment to Notice Deadlines for Soliciting Persons Other Than the 
Issuer

    We proposed to amend Exchange Act Rule 14a-16(l)(2)(ii) \31\ to 
improve the workability of the notice and access rules that apply to 
soliciting persons, other than the issuer, that choose to use the 
notice-only option.
---------------------------------------------------------------------------

    \31\ 17 CFR 240.14a-16(l)(2)(ii).
---------------------------------------------------------------------------

1. Proposed Amendment
    As we noted in the Proposing Release, the current requirement in 
Exchange Act Rule 14a-16(l)(2) that requires soliciting persons to send 
the Notice to shareholders 10 calendar days after the date that the 
issuer first sends its proxy materials to shareholders can create 
potential compliance issues for soliciting persons. The staff review of 
filings may result in outstanding comments on a soliciting person's 
preliminary proxy statement more than 10 calendar days after the 
soliciting person has initially filed. The practical effect of this 
requirement was to limit that soliciting person's ability to use the 
notice-only option if the soliciting person was unable to file its 
definitive proxy statement with the Commission by that time. To improve 
implementation of the notice and access model, we proposed to amend 
Exchange Act Rule 14a-16(l)(2)(ii) to require soliciting persons 
relying on this alternative \32\ to file a preliminary proxy statement 
within 10 calendar days after the issuer files its definitive proxy 
statement and to send its Notice to shareholders no later than the date 
on which it files its definitive proxy statement with the Commission.
---------------------------------------------------------------------------

    \32\ Alternatively, a soliciting person may also send the Notice 
40 calendar days before the shareholder meeting to which the proxy 
materials relate. 17 CFR 14a-16(l)(2)(i).
---------------------------------------------------------------------------

2. Comments on the Proposed Amendment
    Comments on the proposal were limited and mixed. One commenter 
supported the Commission's proposal for a soliciting person to file a 
preliminary proxy statement within 10 calendar days after the issuer 
files its definitive proxy statement and send its Notice no later than 
the date on which it files its definitive proxy statement.\33\ Other 
commenters expressed concern

[[Page 9077]]

that without a specific time requirement for sending the Notice prior 
to the shareholder meeting, shareholders may not have sufficient time 
to access and consider the materials provided or obtain paper copies 
prior to casting their vote.\34\
---------------------------------------------------------------------------

    \33\ See letter from ABA.
    \34\ See, e.g., letters from Ameriprise, SCSGP, and S&C.
---------------------------------------------------------------------------

3. Final Rule
    After considering the comments, we are adopting the revisions as 
proposed to amend Exchange Act Rule 14a-16(l)(2)(ii) to require 
soliciting persons other than the issuer to file a preliminary proxy 
statement within 10 calendar days after the issuer files its definitive 
proxy statement and to send its Notice to shareholders no later than 
the date on which it files its definitive proxy statement with the 
Commission. We continue to believe that the time period provides 
sufficient time for a soliciting person to prepare its proxy statement 
and respond to any staff comments, while still permitting the 
soliciting person to use the notice and access model. While the rule 
does not provide for a specific period of time before the meeting by 
which a soliciting person is required to mail the Notice, the 
soliciting person should, and generally it would be in their best 
interest to, make the Notice and proxy materials available to 
shareholders with sufficient time for shareholders to review the 
materials and make an informed voting decision.

C. Additional Comments on the Proposed Amendments and Actions Taken by 
the Commission

    Some commenters indicated their belief that the proposed amendments 
would result in only modest improvements.\35\ A number of commenters 
recommended revising the notice and access model to permit issuers to 
send a proxy card and business reply envelope, either with or without a 
short summary proxy statement accompanying the Notice in order to 
increase voting rates and facilitate shareholder participation.\36\ 
Other commenters expressed support for reducing the amount of time 
required for sending the Notice prior to the meeting from 40 days to 30 
days.\37\ Still other commenters expressed concern regarding the notice 
and access processing fee structure, the lack of competition for proxy 
service providers and issuers' inability to negotiate the fees which 
results in limitations on the amount of the cost savings from switching 
to the notice and access model.\38\ We are not addressing these issues 
at this time, as the Commission is still considering these and other 
ways to further encourage informed shareholder participation.
---------------------------------------------------------------------------

    \35\ See, e.g., letters from ABC and R&T.
    \36\ See, e.g., letters from Altman, Chamber, Computershare, 
Edison, ICI, Intel, R&T, SCSGP, and STA.
    \37\ See, e.g., letters from ABA, ACC, Altman, Broadridge 
Steering Committee, Calvert, Chamber, Computershare, ICI, Intel, 
NIRI, Otter Tail, R&T, and SCSGP.
    \38\ See, e.g., letters from Altman, DG3, Otter Tail, NIRI, R&T, 
SCSGP, and STA.
---------------------------------------------------------------------------

    Many commenters suggested that the Commission should do more to 
improve not only the notice and access model, but also the proxy 
process generally.\39\ While supporting the proposal, a number of 
commenters suggested that the Notice and lack of explanatory materials 
accompanying the Notice were not the primary reasons for reduced retail 
voting and advocated for more sweeping changes.\40\ A few commenters 
did not directly address the proposed amendments, but made broader 
appeals regarding the proxy process or provided alternative 
insights,\41\ and one commenter suggested that use of the notice and 
access model undermines investor protection and should be repealed.\42\
---------------------------------------------------------------------------

    \39\ See, e.g., letters from ABA, ABC, Altman, BNY, Broadridge, 
Broadridge Steering Committee, Chamber, Computershare, Edison, ICI, 
Intel, NIRI, Otter Tail, R&T, S&C, and SCSGP.
    \40\ See, e.g., letters from ABC, Altman, ICI, NIRI, R&T, and 
STA.
    \41\ See, e.g., letters from Corporate Governance, DG3, and 
Moxy.
    \42\ See letter from IRWebReport.com.
---------------------------------------------------------------------------

    While we are not in this release addressing the broader concerns 
with the proxy system or the notice and access model raised by 
commenters that went beyond the scope of the proposals, we are 
continuing to consider these and other concerns relating to the proxy 
process that have been raised. At the direction of the Chairman, the 
Commission's staff is conducting a comprehensive review of the 
mechanics by which proxies are voted and the way in which information 
is conveyed to shareholders and is preparing a concept release to seek 
public comment on these issues.\43\ In that review, the Commission's 
staff will continue to monitor shareholder activity under, and the 
effects of, the notice and access model. In addition, the Commission's 
staff is undertaking educational efforts to increase understanding of 
proxy mechanics generally and the notice and access model of delivery 
of proxy materials.\44\
---------------------------------------------------------------------------

    \43\ See Speech by Chairman Mary Schapiro to the Practising Law 
Institute's 41st Annual Institute on Securities Regulation (Nov. 4, 
2009) at http://sec.gov/news/speech/2009/spch110409mls.htm.
    \44\ Information about the Commission's educational efforts can 
be found at: http://www.sec.gov/spotlight/proxymatters.shtml.
---------------------------------------------------------------------------

D. Technical Amendments Relating to Registered Investment Companies

    We are also adopting, as proposed, technical amendments to our 
rules for registered investment companies. Exchange Act Rule 14a-
16(f)(2)(iii) currently permits a registered investment company to 
accompany the Notice with a prospectus or report to shareholders.\45\ 
The Commission recently adopted rule amendments that permit mutual 
funds \46\ to satisfy their prospectus delivery obligations by sending 
or giving investors key information in the form of a summary 
prospectus.\47\ Consistent with permitting mutual funds to use a 
summary prospectus to satisfy their delivery obligations, we are 
revising our rules to permit mutual funds to accompany the Notice with 
a summary prospectus.\48\ Commenters that addressed this issue 
supported the technical amendments.\49\
---------------------------------------------------------------------------

    \45\ 17 CFR 240.14a-16(f)(2)(iii). Unless otherwise specified or 
the context otherwise requires, the term ``prospectus'' means a 
prospectus meeting the requirements of Section 10(a) of the 
Securities Act [15 U.S.C. 77j(a)]. See 17 CFR 240.0-1(d).
    \46\ We use the term ``mutual fund'' to mean a registered 
investment company that is an open-end management company as defined 
in Section 5(a)(1) of the Investment Company Act of 1940 [15 U.S.C. 
80a-5(a)(1)].
    \47\ See Enhanced Disclosure and New Prospectus Delivery Option 
for Registered Open-End Management Investment Companies, Release No. 
33-8998 (Jan. 13, 2009) [74 FR 4546]. Although the summary 
prospectus is not a Section 10(a) prospectus, it may be used to 
satisfy any prospectus delivery obligations under Section 5(b)(2) of 
the Securities Act [15 U.S.C. 77e(b)(2)]. 17 CFR 230.498(c).
    \48\ See amendment to Exchange Act Rule 14a-16(f)(2)(iii). We 
are also adopting a conforming amendment to Rule 498 under the 
Securities Act [17 CFR 230.498], which permits mutual funds to use a 
summary prospectus to satisfy their prospectus delivery obligations. 
Rule 498(f)(2) provides that a mutual fund's summary prospectus 
shall be given greater prominence than any accompanying materials. 
We are amending Rule 498(f)(2) to provide that a summary prospectus 
need not be given greater prominence than an accompanying Notice.
    \49\ See, e.g., letters from ABA, Calvert, and ICI.
---------------------------------------------------------------------------

III. Paperwork Reduction Act

A. Background

    Certain provisions of the amendments contain a ``collection of 
information'' within the meaning of the Paperwork Reduction Act of 
1995.\50\ The Commission published a notice requesting comment on the 
collection of information requirements in the Proposing Release for the 
amendments,

[[Page 9078]]

and we are submitting these requirements to the Office of Management 
and Budget for review in accordance with the PRA.\51\ An agency may not 
conduct or sponsor, and a person is not required to comply with, a 
collection of information unless it displays a currently valid control 
number. Compliance with the rules as they are amended is mandatory; 
however, certain information collections under these rules are required 
and some are voluntary. Responses to the information collections will 
not be kept confidential and there is no mandatory retention period for 
the information disclosed.
---------------------------------------------------------------------------

    \50\ 44 U.S.C. 3501 et seq.; 5 CFR 1320.11.
    \51\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
---------------------------------------------------------------------------

B. Summary of the Final Rules

    As discussed in more detail below, the amendments that we are 
adopting provide additional flexibility regarding the format of the 
Notice that is sent to shareholders, permit issuers and other 
soliciting persons to better communicate with shareholders by including 
explanatory materials regarding the reasons for the use of the notice 
and access rules and the process of receiving and reviewing proxy 
materials and voting, and revise the timeframe for delivering a Notice 
to shareholders when a soliciting person other than the issuer relies 
on the notice-only option.
    In the Proposing Release, we requested comment on the PRA analysis. 
We received no comments that addressed our burden estimates for the 
proposed amendments.
1. Regulation 14A and 14C
    The titles for the collections of information for operating 
companies are:
     Regulation 14A (OMB Control No. 3235-0059); and
     Regulation 14C (OMB Control No. 3235-0057).
    We previously revised these collections of information in the 
release that proposed the notice and access model as a voluntary model 
for disseminating proxy materials \52\ and the release in which we 
adopted amendments requiring issuers and other soliciting persons to 
follow the model.\53\ We submitted the revisions in those releases and 
are submitting the amendments to OMB for review in accordance with the 
PRA.
---------------------------------------------------------------------------

    \52\ See Internet Availability of Proxy Materials, Release No. 
34-52926 (Dec. 8, 2005) [70 FR 74597].
    \53\ See the Internet Availability of Proxy Material Adopting 
Release at note 9 above.
---------------------------------------------------------------------------

    We have made some additional changes to the amendments, but we do 
not expect those changes to affect our estimates.\54\ The following 
table summarizes for purposes of the PRA the burden estimates for 
Schedules 14A and 14C reflecting amendments that permit, but do not 
require, an issuer or other soliciting person to include explanatory 
materials with the Notice, which are the only amendments in the release 
affecting our burden estimates:
---------------------------------------------------------------------------

    \54\ While the revised amendments additionally permit an 
explanation of the reasons for an issuer's use of the notice and 
access rules, we expect the additional explanation to be part of the 
same drafting process and to be limited to a few lines of text. 
Likewise, the required clarification that the Notice is not a form 
for voting should not add materially to the time to prepare the 
disclosure. We therefore believe the changes do not affect our 
burden estimates.

                    Table 1--Calculation of Incremental Paperwork Reduction Act Burden Estimates for Proxy and Information Statements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                               $400
                         Form                               Annual        Incremental     Incremental      75% Issuer          25%         Professional
                                                           responses      hours/form        burden                         Professional        cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   (A)             (B)     (C)=(A)*(B)      (D)=(C)*0.75     (E)=(C)*0.25   (F)=(E)*$400
                                                       -------------------------------------------------------------------------------------------------
Schedule 14A..........................................            7300             0.5            3650           2737.5            912.5        $365,000
Schedule 14C..........................................             680             0.5             340            255               85            34,000
                                                       -------------------------------------------------------------------------------------------------
    Total.............................................            7980  ..............            3990           2992.5            997.5         399,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. Rule 20a-1
    Certain provisions of the current notice and access model contain 
``collection of information'' requirements within the meaning of the 
PRA, including preparation of Notices, maintaining Web sites, 
maintaining records of shareholder preferences, and responding to 
requests for copies. Those provisions increase the current burden for 
the existing collection of information entitled ``Rule 20a-1 under the 
Investment Company Act of 1940,\55\ Solicitation of Proxies, Consents 
and Authorizations'' (OMB Control No. 3235-0158). Rule 20a-1 under the 
Investment Company Act \56\ requires that the solicitation of a proxy, 
consent, or authorization with respect to a security issued by an 
investment company be in compliance with Regulation 14A,\57\ Schedule 
14A,\58\ and all other rules and regulations adopted under Section 
14(a) of the Exchange Act.\59\ It also requires a fund's investment 
adviser, or a prospective adviser, to transmit to the person making a 
proxy solicitation the information necessary to enable that person to 
comply with the rules and regulations applicable to the solicitation. 
The notice and access model requires all registered investment 
companies to post their proxy materials on an Internet Web site and 
furnish Notice of the materials' availability to shareholders.\60\ The 
Notices, the proxy materials posted on the Web site, and copies of the 
proxy materials sent in response to shareholder requests are not kept 
confidential.
---------------------------------------------------------------------------

    \55\ 15 U.S.C. 80a-1 et seq.
    \56\ 17 CFR 270.20a-1.
    \57\ 17 CFR 240.14a-1 et seq.
    \58\ 17 CFR 240.14a-101.
    \59\ 15 U.S.C. 78n(a).
    \60\ See the Internet Availability of Proxy Material Adopting 
Release at note 9 above.
---------------------------------------------------------------------------

    The following discussion summarizes the burden estimates for Rule 
20a-1 that we provided in the Proposing Release. For purposes of the 
PRA, we estimate that the total annual reporting burden for Rule 20a-1 
increased by approximately 1,378 hours and that the annual cost 
increased by approximately $735,000 for the services of outside 
professionals to comply with the disclosure provisions of the existing 
notice and access model. In addition, for purposes of the PRA, we 
estimate that a typical investment company issuer spends an additional 
five hours per year, or a total of 6,125 hours, to maintain these 
records as to which of its shareholders have made an election to 
receive proxy materials in paper or by e-mail. Further, we estimate 
that the additional burden to prepare an intermediary's Notice is 
approximately one hour, or a total annual burden of 1,225 hours for all 
investment company

[[Page 9079]]

proxy solicitations. Finally, like investment company issuers, we 
estimate that the requirement to maintain records to keep track of 
which beneficial owners have made a permanent election to receive proxy 
materials in paper or by e-mail results in an additional annual burden 
of five hours, or a total of 6,125 hours, for intermediaries. We 
received no comments on the estimates and are making no adjustments. In 
total, we estimate that the annual PRA reporting burden for current 
Rule 20a-1 increased by 14,853 hours and $735,000 in professional costs 
to reflect compliance with the existing notice and access model.
    With respect to the amendments in this release, we have made some 
additional clarifying changes, but we do not expect those changes to 
affect our estimates. We estimate that the amendments that permit, but 
do not require, an issuer or other soliciting person to include 
explanatory materials with the Notice, increase the PRA burden 
estimates under Rule 20a-1 by approximately 459 hours and $61,250 in 
professional costs.\61\
---------------------------------------------------------------------------

    \61\ See the Proposing Release for calculations underlying the 
burden estimates.
---------------------------------------------------------------------------

IV. Cost-Benefit Analysis

A. Introduction

    We are adopting amendments designed to improve implementation of 
the notice and access model by revising the legend requirements in the 
rule to make them more flexible, permitting the Notice to be 
accompanied by explanatory materials regarding the reasons for the use 
of the notice and access rules and the process of receiving and 
reviewing the proxy materials and voting, and revising the timeframe 
for delivering a Notice to shareholders when a soliciting person other 
than the issuer relies on the notice-only option.\62\ We received no 
comments on the costs and benefits of the amendments.
---------------------------------------------------------------------------

    \62\ We do not expect our proposed conforming amendment, which 
would permit mutual funds to accompany the Notice with a summary 
prospectus, to have a substantive impact on a mutual fund's decision 
otherwise permitted under Rule 498 of the Securities Act to provide 
a summary prospectus instead of a statutory prospectus to its 
shareholders. No commenters suggested it would have a substantial 
impact.
---------------------------------------------------------------------------

    We expect the amendments to:
     Facilitate participation by shareholders who may be 
confused by the operation of the notice and access model;
     Provide additional flexibility in describing the notice 
and access model; and
     Facilitate participation by some soliciting persons who 
may currently be effectively precluded from using the notice-only 
option.

B. Benefits

    As discussed above, by permitting some additional flexibility in 
designing the Notice and permitting explanatory materials regarding the 
reasons for the use of the notice and access rules and the process of 
receiving and reviewing the proxy materials and voting to accompany the 
Notice, the amendments are intended to reduce regulatory impediments 
and improve understanding of the notice and access model for 
participating shareholders. Improved understanding of the model through 
an explanation of the reasons for the use of the Notice and the process 
of receiving and reviewing proxy materials and voting should reduce 
confusion and may thereby improve the efficiency and effectiveness of 
the proxy voting system. The benefits may be limited if issuers send 
notices to shareholders that are less likely to respond. Some 
commenters noted lower shareholder response rates under the notice and 
access model.\63\
---------------------------------------------------------------------------

    \63\ See, e.g., Broadridge, BNY, Computershare, and R&T.
---------------------------------------------------------------------------

    Revising one of the two alternative Notice deadlines applicable to 
soliciting persons other than issuers is intended to facilitate use of 
the notice-only option by soliciting persons who may otherwise be 
precluded from using the notice-only option because of their inability 
to meet the deadline for sending the Notice. This would help lower 
costs for those persons by reducing impediments for certain soliciting 
persons to participate in the proxy process through use of the notice-
only option.

C. Costs

    Eliminating the specific limitations of the legend requirement may 
result in some soliciting persons providing a more confusing Notice. 
This may increase the cost of shareholder participation in the proxy 
process, and to the extent that it affects participation, could distort 
votes and outcomes. In addition, an issuer or other soliciting person 
that chooses to include explanatory materials in the same mailing with 
the Notice will incur the cost of preparing that information.\64\ For 
purposes of the PRA, we estimate that the amendments will cause an 
aggregate annual increase in the compliance burden for operating and 
investment company issuers and other soliciting persons preparing 
explanatory materials of approximately 3,450 hours of in-house 
personnel time and approximately $460,000 for the services of outside 
professionals.
---------------------------------------------------------------------------

    \64\ Since intermediaries and their agents already have systems 
to prepare and deliver proxy materials and the nature of the 
proposed changes are relatively small, we do not expect the 
intermediaries' role in sending explanatory material to beneficial 
owners to affect their costs associated with the rule. In any event, 
since soliciting persons reimburse intermediaries for their 
reasonable expenses of forwarding proxy materials, we do not expect 
intermediaries to incur costs associated with the rule.
---------------------------------------------------------------------------

V. Consideration of Burden on Competition and Promotion of Efficiency, 
Competition and Capital Formation

    Section 23(a) of the Exchange Act \65\ requires the Commission, 
when making rules and regulations under the Exchange Act, to consider 
the impact a new rule would have on competition. Section 23(a)(2) 
prohibits the Commission from adopting any rule that would impose a 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Exchange Act. Section 2(b) of the Securities 
Act,\66\ Section 3(f) of the Exchange Act \67\ and Section 2(c) of the 
Investment Company Act \68\ require the Commission, when engaging in 
rulemaking that requires it to consider whether an action is necessary 
or appropriate in the public interest, to also consider whether the 
action would promote efficiency, competition, and capital formation.
---------------------------------------------------------------------------

    \65\ 15 U.S.C. 78w(a).
    \66\ 15 U.S.C. 77b(b).
    \67\ 15 U.S.C. 78c(f).
    \68\ 15 U.S.C. 80a-2(c).
---------------------------------------------------------------------------

    The amendments that we are adopting permit additional flexibility 
in designing the Notice, permit issuers and other soliciting persons to 
better communicate with shareholders by accompanying the Notice with 
explanatory materials regarding the reasons for the use of the notice 
and access rules and the process of receiving and reviewing the proxy 
materials and voting, and revise the timeframe for delivering a Notice 
to shareholders when a soliciting person other than the issuer relies 
on the notice-only option. The amendments are designed to reduce 
regulatory impediments and thereby increase shareholder participation, 
improve implementation of the notice and access model, and enhance 
investor understanding of the operation of the notice and access model. 
These changes are intended to improve the efficiency and effectiveness 
of the proxy process.
    No commenters suggested, and we do not anticipate, any effect on 
competition

[[Page 9080]]

or capital formation as a result of these revisions.

VI. Final Regulatory Flexibility Analysis

    This Final Regulatory Flexibility Analysis has been prepared in 
accordance with 5 U.S.C. 603. It relates to revisions to Exchange Act 
Rule 14a-16 and related changes that would permit some additional 
flexibility in designing the Notice, permit issuers and other 
soliciting persons to better communicate with shareholders by 
accompanying the Notice with explanatory materials regarding the 
reasons for the use of the notice and access rules and the process of 
receiving and reviewing the proxy materials and voting, and revise the 
timeframe for delivering a Notice to shareholders when a soliciting 
person other than the issuer relies on the notice-only option. An 
Initial Regulatory Flexibility Analysis (IRFA) was prepared in 
accordance with the Regulatory Flexibility Act in conjunction with the 
Proposing Release. The Proposing Release included, and solicited 
comment on, the IRFA.

A. Reasons for, and Objectives of, the Amendments

    The amendments are designed to improve implementation of the notice 
and access model. Based on our monitoring of the effects of the notice 
and access model on the proxy solicitation process and the experiences 
that issuers and shareholders have had with the notice and access model 
to date, we believe that these revisions will improve the operation of 
the model without adversely affecting soliciting persons' or 
shareholders' abilities to participate effectively in the proxy 
process.
    Improved notice design and shareholder education should help to 
mitigate the difference in shareholder participation in the proxy 
voting process observed in the use of the notice and access model to 
the extent the difference was caused by the restrictions in our 
regulations. The amendment to the timing requirements for soliciting 
persons other than the issuer to file their preliminary proxy 
statements is designed to better enable soliciting persons other than 
the issuer to use the notice-only option.

B. Significant Issues Raised by Commenters

    We did not receive comments specifically addressing the impact of 
the proposed amendments on small entities.

C. Small Entities Subject to the Amendments

    The amendments affect issuers that are small entities. Exchange Act 
Rule 0-10(a) \69\ defines an issuer to be a ``small business'' or 
``small organization'' for purposes of the Regulatory Flexibility Act 
if it had total assets of $5 million or less on the last day of its 
most recent fiscal year. We estimate that there are approximately 1,100 
public companies, other than investment companies, that may be 
considered small entities.
---------------------------------------------------------------------------

    \69\ 17 CFR 240.0-10(a).
---------------------------------------------------------------------------

    For purposes of the Regulatory Flexibility Act, an investment 
company is a small entity if it, together with other investment 
companies in the same group of related investment companies, has net 
assets of $50 million or less as of the end of its most recent fiscal 
year.\70\ Approximately 168 registered investment companies meet this 
definition. Moreover, approximately 33 business development companies 
may be considered small entities.
---------------------------------------------------------------------------

    \70\ 17 CFR 270.0-10.
---------------------------------------------------------------------------

    Paragraph (c)(1) of Rule 0-10 under the Exchange Act \71\ states 
that the term ``small business'' or ``small organization,'' when 
referring to a broker-dealer, means a broker or dealer that had total 
capital (net worth plus subordinated liabilities) of less than $500,000 
on the date in the prior fiscal year as of which its audited financial 
statements were prepared pursuant to Exchange Act Rule 17a-5(d); \72\ 
and is not affiliated with any person (other than a natural person) 
that is not a small business or small organization. The Commission has 
estimated that there were approximately 910 broker-dealers that 
qualified as small entities as defined above.\73\ Small Business 
Administration regulations define ``small entities'' to include banks 
and savings associations with total assets of $165 million or less.\74\ 
The Commission estimates that the amendments might apply to 
approximately 9,475 banks, approximately 5,816 of which could be 
considered small banks with assets of $165 million or less.\75\
---------------------------------------------------------------------------

    \71\ 17 CFR 240.0-10(c)(1).
    \72\ 17 CFR 240.17a-5(d).
    \73\ These numbers are based on a review by the Commission's 
Office of Economic Analysis of 2005 FOCUS Report filings reflecting 
registered broker-dealers. This number does not include broker-
dealers that are delinquent in FOCUS Report filings.
    \74\ 13 CFR 121.201.
    \75\ We note that while not subject to the amendments, the 
amendments may affect these entities because they are intermediaries 
that are required under the Commission's proxy rules to forward 
proxy materials, including the Notice or any explanatory materials, 
on to shareholders who beneficially own their shares through the 
intermediaries. An intermediary is not required to forward proxy 
materials to beneficial owners unless the issuer or other soliciting 
person provides assurance of reimbursement of the intermediary's 
reasonable expenses incurred in connection with forwarding those 
materials. 17 CFR 240.14b-2(c)(2)(i). Therefore, any costs imposed 
on intermediaries by the rules will be borne by the issuer or other 
soliciting person.
---------------------------------------------------------------------------

D. Reporting, Recordkeeping and Other Compliance Requirements

    The amendments revise the timeframe for delivering a Notice to 
shareholders when a soliciting person other than the issuer relies on 
the notice-only option, require clarification that the Notice is not a 
form for voting and permit, but do not require, issuers or other 
soliciting persons to include additional, explanatory material in their 
Notice.

E. Agency Action To Minimize Effect on Small Entities

    The purpose of the amendments is to improve the implementation of 
the notice and access model based on our experience with the model to 
date. The amendments are intended to improve the operation of the 
notice and access model by providing additional flexibility in 
designing the Notice, permitting issuers and other soliciting persons 
to better communicate with shareholders by accompanying the Notice with 
explanatory materials regarding the reasons for the use of the notice 
and access rules and the process of receiving and reviewing the proxy 
materials and voting, and revising the timeframe for delivering a 
Notice to shareholders when a soliciting person other than the issuer 
relies on the notice-only option.
    We considered the use of performance standards rather than design 
standards in the amendments. The amendments contain both performance 
standards and design standards. We are revising existing design 
standards, such as the deadline applicable to soliciting persons other 
than the issuer. However, we are imposing performance standards to 
provide issuers, other soliciting persons and intermediaries with the 
flexibility to devise the means through which they can comply with such 
standards. For example, the amendments regarding explanatory materials 
do not dictate wording of such information, but allow flexibility in 
how to communicate the information.
    We considered different compliance standards for the small entities 
that will be affected by the amendments. In the Proposing Release, we 
solicited comment regarding the possibility of different standards for 
small entities. We did not receive comment on this particular issue. We 
are not aware of

[[Page 9081]]

any different standards that would be consistent with the purposes of 
the amendments.

VII. Statutory Authority and Text of the Amendments

    The amendments described in this release are being adopted under 
the authority set forth in Sections 6, 7, 10, and 19 of the Securities 
Act of 1933, as amended, Sections 3(b), 13, 14, 15, and 23(a) of the 
Securities Exchange Act of 1934, as amended, and Sections 8, 20(a), 
24(a), 24(g), 30, and 38 of the Investment Company Act of 1940, as 
amended.

List of Subjects in 17 CFR Parts 230 and 240

    Reporting and recordkeeping requirements, Securities.


0
For the reasons set out in the preamble, the Commission amends Title 
17, Chapter II of the Code of Federal Regulation as follows.

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

0
1. The authority citation for Part 230 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77b, 77c, 77d, 77f, 77g, 77h, 77j, 77r, 
77s, 77z-3, 77sss, 78c, 78d, 78j, 78l, 78m, 78n, 78o, 78t, 78w, 
78ll(d), 78mm, 80a-8, 80a-24, 80a-28, 80a-29, 80a-30, and 80a-37, 
unless otherwise noted.
* * * * *

0
2. Amend Sec.  230.498 by revising paragraph (f)(2) to read as follows:


Sec.  230.498  Summary Prospectuses for open-end management investment 
companies.

* * * * *
    (f) * * *
    (2) Greater prominence. If paragraph (c) or (d) of this section is 
relied on with respect to a Fund, the Fund's Summary Prospectus shall 
be given greater prominence than any materials that accompany the 
Fund's Summary Prospectus, with the exception of other Summary 
Prospectuses, Statutory Prospectuses, or a Notice of Internet 
Availability of Proxy Materials under Sec.  240.14a-16 of this chapter.
* * * * *

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

0
3. The general authority citation for Part 240 is revised to read as 
follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 
78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 
80b-11, and 7201 et seq.; and 18 U.S.C. 1350 and 12 U.S.C. 
5221(e)(3), unless otherwise noted.
* * * * *
0
4. Amend Sec.  240.14a-16 by:
0
a. Revising paragraph (d)(1).
0
b. Redesignating paragraphs (d)(2) through (d)(8) as paragraphs (d)(5) 
through (d)(11);
0
c. Adding new paragraphs (d)(2) through (d)(4);
0
d. Removing the word ``and'' at the end of paragraph (f)(2)(ii);
0
e. Revising paragraph (f)(2)(iii);
0
f. Adding paragraph (f)(2)(iv);
0
g. Revising paragraph (l)(2)(ii);
0
h. Revising paragraph (n)(4)(i); and
0
i. In paragraph (n)(4)(iii) removing the reference to ``(d)(7)'' and 
adding in its place ``(d)(10)''.
    The revisions and additions read as follows:


Sec.  240.14a-16  Internet availability of proxy materials.

* * * * *
    (d) * * *
    (1) A prominent legend in bold-face type that states ``Important 
Notice Regarding the Availability of Proxy Materials for the 
Shareholder Meeting To Be Held on [insert meeting date]'';
    (2) An indication that the communication is not a form for voting 
and presents only an overview of the more complete proxy materials, 
which contain important information and are available on the Internet 
or by mail, and encouraging a security holder to access and review the 
proxy materials before voting;
    (3) The Internet Web site address where the proxy materials are 
available;
    (4) Instructions regarding how a security holder may request a 
paper or e-mail copy of the proxy materials at no charge, including the 
date by which they should make the request to facilitate timely 
delivery, and an indication that they will not otherwise receive a 
paper or e-mail copy;
* * * * *
    (f) * * *
    (2) * * *
    (iii) In the case of an investment company registered under the 
Investment Company Act of 1940, the company's prospectus, a summary 
prospectus that satisfies the requirements of Sec.  230.498(b) of this 
chapter, or a report that is required to be transmitted to stockholders 
by section 30(e) of the Investment Company Act (15 U.S.C. 80a-29(e)) 
and the rules thereunder; and
    (iv) An explanation of the reasons for a registrant's use of the 
rules detailed in this section and the process of receiving and 
reviewing the proxy materials and voting as detailed in this section.
* * * * *
    (l) * * *
    (2) * * *
    (ii) The date on which it files its definitive proxy statement with 
the Commission, provided its preliminary proxy statement is filed no 
later than 10 calendar days after the date that the registrant files 
its definitive proxy statement.
* * * * *
    (n) * * *
    (4) * * *
    (i) Instructions regarding the nature of the communication pursuant 
to paragraph (d)(2) of this section;
* * * * *

    By the Commission.

    Dated: February 22, 2010.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-3891 Filed 2-25-10; 8:45 am]
BILLING CODE 8011-01-P