Rule: Electronic Shareholder Forums

4450 Federal Register / Vol. 73, No.
17 / Friday, January 25, 2008 / Rules and Regulations
SUPPLEMENTARY INFORMATION: Eastern Service Center, 1701 Columbia SECURITIES AND EXCHANGE
Ave., College Park, GA 30337; telephone COMMISSION
Confirmation of Effective Date
(404) 305–5581; fax (404) 305–5572.
The FAA published this direct final 17 CFR Part 240
rule with a request for comments in the SUPPLEMENTARY INFORMATION:
[Release No. 34–57172; IC–28124; File No.
Federal Register on October 30, 2007 Confirmation of Effective Date S7–16–07]
(72 61294–61296). The FAA uses the
direct final rulemaking procedure for a The FAA published this direct final RIN 3235–AJ92
non controversial rule where the FAA rule with a request for comments in the
Federal Register on October 30 (72 FR Electronic Shareholder Forums
believes that there will be no adverse
public comment. This direct final rule 61291–61293). The FAA uses the direct AGENCY: Securities and Exchange
advised the public that no adverse final rulemaking procedure for a non Commission.
comments were anticipated, and that controversial rule where the FAA ACTION: Final rule.
unless a written adverse comment, or a believes that there will be no adverse
written notice of intent to submit such public comment. This direct final rule SUMMARY: We are adopting amendments
an adverse comment, were received advised the public that no adverse to the proxy rules under the Securities
within the comment period, the comments were anticipated, and that Exchange Act of 1934 to facilitate
regulation would become effective on unless a written adverse comment, or a electronic shareholder forums. The
December 20, 2007. No adverse written notice of interest to submit such amendments clarify that participation in
comments were received, and thus this an adverse comment, were received an electronic shareholder forum that
notice confirms the effective date. within the comment period, the could potentially constitute a
regulation would become effective on solicitation subject to the proxy rules is
Issued in College Park, GA on December
December 20, 2007. No adverse exempt from most of the proxy rules if
17, 2007.
comments were received, thus this all of the conditions to the exemption
Mark D. Ward,
notice confirms that effective date. are satisfied. In addition, the
Manager, System Support Group, Eastern amendments state that a shareholder,
Service Center. Correction to Final Rule company, or third party acting on behalf
[FR Doc. 08–207 Filed 1–24–08; 8:45 am] of a shareholder or company that
Additionally, a technical correction to
BILLING CODE 4910–13–M establishes, maintains or operates an
the wording of the original airspace
electronic shareholder forum will not be
description is accomplished for
liable under the federal securities laws
DEPARTMENT OF TRANSPORTATION clarification of the 700 foot Class E
for any statement or information
airspace. although the description and
Federal Aviation Administration provided by another person
amendment was incorporated under 14
participating in the forum. Therefore,
CFR 71.1 of the Federal Aviation
14 CFR Part 71 the amendments remove legal ambiguity
Administration Order 7400.9R, the
that might deter shareholders and
[Docket No. FAA 2007–0023, Airspace reference to paragraph 6005, which
companies from energetically pursuing
Docket No. 07–AEA–08] addresses Class E airspace ‘‘extending
this mode of communication.
upwards from 700 or more above the
surface of the Earth’’, was inadvertently DATES: Effective Date: February 25,
Establishment of Class E Airspace;
Muncy, PA omitted. Therefore, the publication in 2008.
the Federal Register Docket No. FAA FOR FURTHER INFORMATION CONTACT:
AGENCY: Federal Aviation 2007–0023, Airspace Docket No. 07– Lillian Brown, Tamara Brightwell, or
Administration (FAA), DOT. AEA–08, published October 10, 2007, John Fieldsend at (202) 551–3700, in the
ACTION: Direct final rule; correction, (72 FR 61291–61293) paragraph 6005 is Division of Corporation Finance, U.S.
confirmation of effective date. corrected to read as follows: Securities and Exchange Commission,
100 F Street, NE., Washington, DC
SUMMARY: The Federal Aviation Paragraph 6005 Class E Airspace Areas
Extending Upward from 700 feet or More
20549–3010.
Administration published in the
Above the Surface of the Earth. SUPPLEMENTARY INFORMATION: We are
Federal Register of October 30, 2007,
amending Rule 14a–2,1 and adopting
(72 FR 61291–61293), a document * * * * *
new Rule 14a–17,2 under the Securities
establishing Class E airspace, at Muncy, AEA PA E5 Muncy, PA [NEW] Exchange Act of 1934.3
PA. This action corrects the description
of the airspace and confirms the Muncy Valley Hospital, PA I. Background
effective date of the direct final rule that Point In Space Coordinates
(Lat. 41°13′05″ N., long. 76°45′46″ W.) On July 27, 2007, the Commission
establishes Class E airspace supporting published for comment a release
an Instrument Approach Procedure That airspace extending upward from 700
feet above the surface of the Earth within a
proposing, among other things,
serving the Muncy Valley Hospital. amendments to the proxy rules relating
6-mile radius of the point in space (lat.
DATES: Effective 0901 UTC, December to electronic shareholder forums.4 We
41°13′05″ N., long. 76°45′46″ W.) serving the
20, 2007. The Director of the Federal Muncy Valley Hospital.
Register approves this incorporation by 1 17 CFR 240.14a–2.
reference action under Title 1, Code of * * * * * 2 17 CFR 240.14a–17.
Federal Regulations, part 51, subject to Issued in College Park, GA on December 3 15 U.S.C. 78a et al.
4 Release No. 34–56160 (July 27, 2007) [72 FR
the annual revision of FAA Order 17, 2007.
43466] (‘‘Proposing Release’’). The instant release
7400.9 and publication of conforming Mark D. Ward,
pwalker on PROD1PC69 with RULES
addresses only the electronic shareholder forum

amendments. Manager, System Support Group, Eastern aspects of the Proposing Release. Comments
Service Center. received that addressed the comprehensive package
FOR FURTHER INFORMATION CONTACT:
of amendments to the proxy rules and related
Daryl Daniels, Airspace Specialist, [FR Doc. 08–217 Filed 1–24–08; 8:45 am] disclosure requirements are outside the scope of
System Support, AJO2–E2B.12, FAA BILLING CODE 4910–13–M this adopting release.
VerDate Aug<31>2005 17:51 Jan 24, 2008 Jkt 214001 PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 E:\FR\FM\25JAR1.SGM 25JAR1
Federal Register / Vol. 73, No. 17 / Friday, January 25, 2008 / Rules and Regulations 4451
are adopting new Rule 14a–175 and electronic shareholder forums, over liability for statements and
adding an exemption to Rule 14a–2 shareholder participation and information provided by those
substantially as proposed in that release. communication could be extended participating in the forum. In addition,
The purposes of new Rule 14a–17 and throughout the year, rather than only potential forum participants have
the Rule 14a–2 exemption are to during the period leading up to expressed concern regarding whether
facilitate experimentation, innovation, companies’ annual shareholder views and statements expressed through
and greater use of the Internet to further meetings. Shareholders might also use the forum would be considered proxy
shareholder communications. By such a forum as a polling mechanism to solicitations. Therefore, we proposed a
facilitating such communications on the elicit the sentiments of the company’s new exemption from the proxy rules
Internet among shareholders, and managers or other shareholders on (other than from the shareholder list
between shareholders and their various potential actions.11 provisions in Rule 14a–7 and the
companies, we hope to tap the potential Technology now makes it feasible to antifraud provisions in Rule 14a–9) for
of technology to better vindicate establish such electronic shareholder any solicitation in an electronic
shareholders’ state law rights, including forums to perform these functions. As shareholder forum that satisfies the
their right to elect directors, in ways one commenter indicated, technology is conditions of the exemption. We also
that are potentially both more effective available to establish ‘‘secure, proposed new Rule 14a–17 to provide
and less expensive for shareholders and shareowner-to-shareowner liability protection for a shareholder,
companies. communications, with access restricted company, or third party acting on behalf
In a series of proxy roundtables that to eligible shareowners, and using the of a shareholder or company that
we sponsored in May 2007, several Internet as a medium for efficient, establishes, maintains or operates an
participants observed that recent ongoing interaction between electronic shareholder forum regarding
technological developments hold shareowners and issuers.’’12 These statements or information provided by
promise in this regard.6 Those forums can be created so that operators another party participating in the forum.
participants noted that these and participants may exchange As we discuss further in Section III,
technological developments could information electronically. we are adopting new Rule 14a–17 and
provide a more effective and efficient Additionally, electronic shareholder the amendments to Rule 14a–2
means of communication than any that forums can be designed to identify a substantially as proposed. We are taking
are currently available to shareholders.7 participant’s share ownership, as of a these steps to remove both real and
For example, the participants particular date, without disclosing that perceived impediments to continued
suggested that an online forum that participant’s name, address, or other private sector experimentation with,
would be for the exclusive use of identifying information.13 Therefore, we and use of the Internet for,
shareholders of the company could think that participants’ privacy can be communication among shareholders,
protect the shareholders’ privacy protected while simultaneously and between shareholders and the
through encrypted unique identifiers,8 providing for accountability for anyone companies in which they invest. We
while still permitting participants to making false or misleading statements. intend for the amendments to facilitate
know what voting percentage of the If companies choose to participate in, communication and thereby encourage
company was represented in or sponsor, electronic forums, they the creation of, and participation in,
discussions.9 Participants in such a might find them of use in better gauging electronic shareholder forums.
forum could, in addition, discuss a shareholder interest with respect to a
variety of important subjects that today II. Comments on the Proposed
variety of topics. A company-sponsored
are considered, if at all, only Amendments To Facilitate Electronic
forum also could be used to provide a
periodically and indirectly through the Shareholder Forums
means for management to communicate
proxy process.10 With the use of with shareholders by posting press The majority of the public comment
releases, notifying shareholders of on the proposed amendments to
5 New Rule 14a–17 was proposed as Rule 14a–18. record dates, and expressing the views facilitate electronic shareholder forums
6 See Rich Daly, Broadridge Financial Solutions,
of the company’s management and was favorable.15 A substantial
Inc.; Amy Goodman, Gibson, Dunn & Crutcher LLP;
Stanley Keller, Edwards Angell Palmer & Dodge board of directors.14 percentage of commenters remarking on
LLP; Cary Klafter, Intel Corporation; and Paul Despite these potential benefits of the amendments, however, opposed
Neuhauser, The University of Iowa College of Law, electronic shareholder forums, substituting electronic shareholder
Transcript of Roundtable on the Federal Proxy forums for the current means of
Rules and State Corporation Law, May 7, 2007, at
shareholders and companies alike have
152 to 171. See also, Russell Read, CalPERS; Amy been reluctant to establish, maintain, or presenting non-binding shareholder
Goodman, Gibson, Dunn & Crutcher LLP; Nell operate them due, in part, to uncertainty proposals in the company’s proxy
Minow, The Corporate Library; Bill Mostyn, Bank statement pursuant to Rule 14a–8.16
of America Corporation; and Gary Brouse, Interfaith
Center on Corporate Responsibility, Transcript of
Federal Proxy Rules and State Corporation Law, Although we solicited comment on this
Roundtable on Proxy Voting Mechanics, May 24, May 7, 2007, at 156 and Stanley Keller, Edwards question, we did not propose any
Angell Palmer & Dodge LLP, Transcript of
2007, at 54 to 81.
Roundtable on the Federal Proxy Rules and State
revisions to Rule 14a–8 that would
7 Id.
Corporation Law, May 7, 2007, at 160. cause the electronic shareholder forum
8 See, e.g., Stanley Keller, Edwards Angell Palmer
11 See, e.g., Stanley Keller, Edwards Angell to be a substitute for the Rule 14a–8
& Dodge LLP, Transcript of Roundtable on the
Federal Proxy Rules and State Corporation Law, Palmer & Dodge LLP and Rich Daly, Transcript of process. In the rule amendments that we
May 7, 2007, at 152; Rich Daly, Broadridge Roundtable on the Federal Proxy Rules and State are adopting today, we are making the
Financial Solutions, Inc., Transcript of Roundtable Corporation Law, May 7, 2007, at 170 to 171 and
Nell Minow, The Corporate Library, Transcript of electronic shareholder forum option an
on the Federal Proxy Rules and State Corporation
Law, May 7, 2007, at 157; and Nell Minow, The Roundtable on Proxy Voting Mechanics, May 24, additional, rather than substitute, means
Corporate Library, Transcript of Roundtable on 2007, at 54 to 56.
12 Comment letter from Broadridge Financial 15 See, e.g., comment letters from The Allstate
Proxy Voting Mechanics, May 24, 2007, at 67.
9 See, e.g., Rich Daly, Broadridge Financial Solutions, Inc. Corporation (‘‘Allstate’’); Business Roundtable
13 Id. (‘‘BRT’’); Capital Research and Management
Solutions, Inc., Transcript of Roundtable on the
Federal Proxy Rules and State Corporation Law, 14 Of course, anyone posting information on an Company (‘‘Capital Research’’); GreenMachines.net
May 7, 2007, at 157. electronic shareholder forum should consider the (‘‘GreenMachines’’); and Investment Company
10 See, e.g., Rich Daly, Broadridge Financial requirements of Regulation FD. See 17 CFR 243.100 Institute (‘‘ICI’’).
Solutions, Inc., Transcript of Roundtable on the to 243.103. 16 17 CFR 240.14a–8.
4452 Federal Register / Vol. 73, No. 17 / Friday, January 25, 2008 / Rules and Regulations
of communication that could enhance solicited comment on whether we period prior to a proxy vote would
and expand opportunities for should require electronic shareholder provide sufficient protection against a
participation and interaction. forums to be closed down within 60 coordinated proxy campaign waged on
In our proposing release, we days of a scheduled shareholder an electronic shareholder forum.21
requested comment on five basic issues meeting, whether shareholders whose Most of the commenters expressing
related to electronic shareholder forums. communications remain posted inside concerns regarding non-binding
The first issue was whether the the 60-day period should be required to shareholder proposals stated that they
proposed amendments would have their file them with us, and how to best would oppose making the electronic
intended effect of providing sufficient monitor these forums. shareholder forum a substitute for the
flexibility under the federal securities Fourth, we solicited comment current process under Rule 14a–8.
laws to establish forums that permit regarding the use of electronic Several of these commenters made it
interaction among shareholders and shareholder forums as a substitute for clear that they support electronic
between shareholders and the company. advancing referenda that otherwise shareholder forums, provided that they
In this regard, we solicited comment on would be presented in the form of non- are only a supplement to the current
whether shareholders and companies binding shareholder proposals for Rule 14a–8 process.22
desire such flexibility, and if they do, inclusion in a company’s proxy Additionally, some commenters
whether the amended rules would materials. mentioned that keeping the identity of
provide it. We also solicited comment Finally, we solicited comment on the participants who post messages on these
on whether any additional measures are ways that an electronic shareholder electronic forums private would
necessary to ensure that the federal forum might be used in connection with threaten meaningful communications
securities laws do not hinder bylaw proposals regarding procedures among shareholders and with the
development of these forums. Finally, for nominating candidates to the board company.23 These commenters asserted
we asked whether the rules should of directors. In particular, we solicited that participants’ identities should be
provide more direction and guidance comment on whether shareholders disclosed and that the participants’
relating to the structure and purpose of should be able to use an electronic ownership interests in the company
the forums than we proposed. shareholder forum to solicit other should be made known as well.
The second issue on which we shareholders to join with them in
solicited comment concerned the III. Final Rules To Facilitate Electronic
submitting a bylaw proposal. Shareholder Forums
potential liability under the federal The vast majority of commenters
securities laws associated with As stated above, the amendments that
supported the new exemption for
electronic shareholder forums. A we are adopting in this release provide
electronic shareholder forums that we
primary purpose of the proposed an additional means for shareholders to
proposed to add to Rule 14a–2 and
amendments was to clarify that communicate, and do not in any manner
proposed new Rule 14a–17.17 The
establishing, maintaining, or operating restrict a shareholder’s ability under
commenters generally favored the
an electronic shareholder forum does Rule 14a–8 to submit a non-binding
continued development of electronic
not make one liable for statements or proposal to a company for inclusion in
shareholder forums as a means of
information provided by another the company’s proxy materials.
facilitating communication among
person. We also asked commenters to Furthermore, the amendments neither
shareholders and between shareholders
identify any additional liability issues mandate nor preclude private
and companies.18
under the federal securities laws that we communications in electronic
Despite the generally favorable
may not have addressed through the shareholder forums; instead, they allow
reaction, some commenters predicted
proposed amendments. for flexibility in different approaches
The third issue concerned the period that electronic shareholder forums
and to allow innovation and
of time during which electronic might develop into the same types of
experimentation.24
shareholder forums should be allowed shareholder chat rooms that exist
The amendments are designed to
to operate without being subject to most today.19 Other commenters suggested
facilitate greater online interaction
of the federal proxy rules. Under the that the issues related to electronic among shareholders by removing two
proposed amendments, any solicitation shareholder forums require more time to major obstacles to the use of electronic
in an electronic shareholder forum by or be fully analyzed and should be shareholder forums.25 The first major
on behalf of a person that does not seek, addressed only upon completion of a
obstacle to the use of electronic
directly or indirectly, the power to act comprehensive study reviewing the
shareholder forums is the concern that
as a proxy for a shareholder would be shareholder communications process.20
a statement made by a participant in an
exempt from most of the proxy rules. Finally, some commenters asserted that
We proposed that such a person could we did not adequately address whether 21 See comment letters from ABA and SunTrust
avail himself or herself of the exemption the proposed 60-day, non-solicitation Banks, Inc. (‘‘SunTrust’’).
provided that the solicitation was made 22 See, e.g., comment letters from Christus Health
17 See, e.g., comment letters from Allstate; BRT; (‘‘Christus’’); Domini Social Investments
more than 60 days before the date
Capital Research; GreenMachines; and ICI. (‘‘Domini’’); and Trillium Asset Management
announced by the company for its next 18 See, e.g., comment letters from Calvert Group, (‘‘Trillium’’).
annual or special meeting, or not more Ltd. (‘‘Calvert’’); Senator Carl Levin (‘‘Senator 23 See comment letters from ABA and Christian
than two days following the Levin’’); and Stephen R. Van Withrop (‘‘Van Brothers Investment Services, Inc. (‘‘Christian
announcement of such a meeting if the Winthrop’’). Brothers’’).
19 See, e.g., comment letters from Bricklayers and 24 Because the antifraud provisions of Rule 14a–
announcement occurred fewer than 60
Trowel Trades International Pension Fund 9 would apply to any postings, it could conceivably
days before the meeting date. We (‘‘Bricklayers’’); Green Century Capital Management be necessary for a participant to identify itself in an
solicited comment on whether an (‘‘Green Century’’); Social Investment Forum otherwise anonymous forum if failure to do so in
electronic shareholder forum could (‘‘SIF’’), and Walden Asset Management the circumstances would result in the omission of
function effectively with this timing (‘‘Walden’’). a ‘‘material fact necessary in order to make the
20 See comment letters from American Bar statements therein not false or misleading.’’ 17 CFR
limitation. We also asked whether better Association (‘‘ABA’’) and Society of Corporate 240.14a–9.
alternatives exist to encourage free and Secretaries and Governance Professionals 25 17 CFR 240.14a–2(b)(6) and 17 CFR 240.14a–
open communication. Additionally, we (‘‘SCSGP’’). 17.
electronic shareholder forum will be explicitly that Rules 14a–3 through 14a– or another’s behalf, the power to act as
construed as a solicitation under the 6 (other than Rule 14a–6(g)), Rule 14a– proxy for a security holder and does not
proxy rules. Section 14(a) of the 8, and Rules 14a–10 through 14a–15 do furnish or otherwise request, or act on
Exchange Act26 requires that the not apply to any solicitation in an behalf of a person who furnishes or
solicitation of proxy voting authority be electronic shareholder forum if all of the requests, a form of revocation,
conducted in a fair, honest, and conditions to the exemption are abstention, consent or authorization.’’
informed manner.27 Any solicitation of satisfied.34 Rule 14a–2(b)(6) exempts Therefore, statements on an electronic
proxies in connection with securities from most of the proxy rules any shareholder forum could be exempt
registered pursuant to Section 12 of the solicitation by or on behalf of any under Rule 14a–2(b)(1), even if these
Exchange Act28 is subject to the filing person who does not seek directly or amendments were not adopted. Once an
and disclosure requirements of the indirectly, either on its own or another’s exempt solicitation is made under Rule
Commission’s proxy rules.29 In this behalf, the power to act as proxy for a 14a–2(b)(1), however, the individual
regard, the Commission has broad shareholder and does not furnish or making the solicitation cannot later
authority to control the conditions otherwise request, or act on behalf of a request proxy authority. Consequently,
under which proxies may be solicited so person who furnishes or requests, a Rule 14a–2(b)(6) states that a person
that it promotes ‘‘fair corporate form of revocation, abstention, consent, who participates in an electronic
suffrage.’’ 30 A necessary element of this or authorization in an electronic shareholder forum and makes a
authority is to prevent solicitors from shareholder forum that is established, solicitation in reliance on this rule can
obtaining authorization for corporate maintained or operated by a company, later solicit proxies without threatening
action by means of ‘‘deceptive or shareholder, or a third party acting on the exemption’s validity.
inadequate disclosure in proxy a company’s or shareholder’s behalf.35 We believe that exempting
solicitations.’’ 31 A solicitation on an electronic participation in an electronic
As defined by the Commission, the shareholder forum will be exempt so shareholder forum only up until 60 days
term ‘‘solicitation’’ encompasses not long as it occurs more than 60 days before an annual or special meeting will
only a request that a shareholder prior to the date announced by the limit the potential for abuse, and
execute a proxy, but also the company for its annual or special therefore we are adopting the 60-day
‘‘furnishing of a form of proxy or other meeting of shareholders. If the company limitation.38 Communications within an
communication to security holders announces the meeting less than 60 electronic shareholder forum that occur
under circumstances reasonably days before the meeting date, the less than 60 days prior to the annual or
calculated to result in the procurement, solicitation may not occur more than special meeting, or more than two days
withholding or revocation of a two days following the company’s after the announcement of the meeting
proxy.’’ 32 As such, the proxy rules announcement.36 We are adopting the if the announcement is made less than
apply to any person seeking to influence limitations to the exemption because, 60 days prior to the meeting date, will
the voting of proxies, regardless of although an electronic shareholder continue to be treated as they were
whether the person is seeking forum should provide a medium for, under the proxy rules prior to these
authorization to act as a proxy. Both the among other things, open discussion, amendments. We recognize the concern
courts and the Commission have debate, and the conduct of referenda, that, as one commenter noted, 60 days
construed this necessarily fact-intensive the actual solicitation of proxy authority may not be ‘‘sufficient practical
test broadly to bring within the ambit of for an upcoming meeting should be protection against the ability of a
the proxy rules any communication conducted in full compliance with the coordinated campaign to so color
that, under the totality of relevant proxy rules. Any proxies obtained prior shareholder perceptions as to make the
circumstances, is considered ‘‘part of a to the application of our proxy rules vote a likely, if not foregone,
continuous plan ending in a solicitation will not benefit from the full and fair conclusion.’’ 39
and which prepare(s) the way for its disclosure required under the We believe that the 60 day cut-off
success.’’ 33 regulations. period will provide sufficient time for
Therefore, we are adding a new A person who participates in an shareholders to consider the
exemption to Rule 14a–2 to state electronic shareholder forum and makes information disclosed to them about a
solicitations in reliance on the Rule planned shareholder meeting. We also
26 15 U.S.C. 78n(a). 14a–2(b)(6) exemption will be eligible to believe that removing obstacles to
27 Release No. 34–31326 (October 16, 1992) [57 solicit proxies after the date that the shareholder participation in electronic
FR 48276 and 48277]. exemption is no longer available, or is
28 15 U.S.C. 78l.
forums outweighs the potential for such
29 See 15 U.S.C. 78n(a) and 17 CFR 240.14a–1 and
no longer being relied upon, provided communications to impact a
240.14a–2(b)(1). that any such solicitation complies with shareholder’s vote. Of course, persons
30 17 H.R. Rep. No. 1383, 73d Cong., 2d Sess. 13 Regulation 14A. In fact, it is for this relying on Rule 14a–2(b)(6) who later
(1934) at 14. The House Report indicated that the reason that Rule 14a–2(b)(6) is solicit proxy authority will need to
Commission was provided with this broad power necessary. Existing Rule 14a–2(b)(1)37 comply with other Commission rules as
‘‘with a view to preventing the recurrence of abuses
which...[had] frustrated the free exercise of the provides that most of the proxy rules do applicable.
voting rights of stockholders.’’ Id. not apply to ‘‘[a]ny solicitation by or on Additionally, although commenters
31 J.I. Case v. Borak, 377 U.S. 426, 431 (1964). behalf of any person who does not, at did not request specifically that we
32 17 CFR 240.14a–1(l). Pursuant to Rule 14a–
any time during such solicitation, seek provide guidance on the potential proxy
1(1)(2), the term ‘‘solicitation’’ does not include the directly or indirectly, either on its own rule implications of stored
furnishing of a form of proxy to a shareholder upon
the latter’s unsolicited request, the issuer’s communications available on a forum
34 Id.
performance of acts mandated by 17 CFR 240.14a–
35 See Exchange Act Rule 14a–2(b)(6).
7, the shareholder list requirement, or ministerial 38 Sixty days corresponds with the maximum
acts performed by any person on behalf of the 36 The proposal would not affect the application amount of time prior to a scheduled meeting that
soliciting party. of any other exemptions under Regulation 14A. For the company may fix the record date for
33 Release No. 34–29315 (June 17, 1991) [56 FR example, a person could rely on the other determining the stockholders entitled to notice of,
28987 and 28989]. See, e.g., Long Island Lighting applicable exemptions in Exchange Act Rule 14a– or to vote at, a meeting under the Delaware Code.
Company v. Barbash, et al., 779 F. 2d 793 (2d Cir. 2 (17 CFR 240.14a–2). See Del. Code title 8, § 213 (2007).
1985). 37 17 CFR 240.14a–2(b)(1). 39 See comment letter from ABA.
after the 60-day period, one commenter any other applicable federal or state law We also considered whether certain
referenced this subject.40 In this regard, will continue to apply to persons persons who rely on the new Rule 14a–
shareholders who post communications providing information or statements to 2(b)(6) exemption should be required to
on forums in reliance on Rule 14a– an electronic shareholder forum. file a notification with the Commission.
2(b)(6) and later solicit the power to act As adopted, new Rule 14a–17 We concluded that filing such a
as a proxy for a shareholder will need provides liability protection for all notification would be unnecessary
to determine whether the earlier shareholders, companies, and third because the postings made in reliance
postings must be filed as soliciting parties acting on behalf of a shareholder on new Rule 14a–2(b)(6) will be limited
materials. For instance, it is possible or company that establish, maintain, or to postings made in a shareholder forum
that earlier postings remaining available operate an electronic shareholder forum by persons who are not seeking, directly
to shareholders could be ‘‘reasonably under the federal securities laws, or indirectly, the power to act as a proxy
calculated to result in the procurement, provided that the forum is conducted in for a shareholder and to those made
withholding or revocation of a compliance with the federal securities more than 60 days before any meeting
proxy.’’ 41 Therefore, any laws, applicable state law and the of shareholders.
communications made, or that remain company’s charter and bylaws. The Further, one commenter highlighted
available, on the forum after the 60-day proposed rule would have applied only the need for persons who may rely on
period must comply with the proxy to companies and shareholders, but we the exemption in Rule 14a–2(b)(6) to
rules if they constitute a solicitation, believe it is appropriate to expand give consideration to the impact of the
unless they fall within an existing liability protections to other types of postings under other Commission rules
exemption. One way that a forum might forum sponsors or operators, such as and regulations. In particular, the
deal with this question is to give Internet service providers and commenter cited the potential
participants the opportunity to delete shareholder or corporate associations, implications of electronic shareholder
their postings as of the 60-day cut-off, or acting at the request, and on the behalf, forum postings on Regulation 13D
have the forum ‘‘go dark’’ during this of a shareholder or company. beneficial ownership reporting.47 Again,
period.42 As noted above, liability under the we agree that any person relying on
The second major obstacle to the use federal securities laws for statements Rule 14a–2(b)(6) would need to assess
of electronic shareholder forums is the made on an electronic shareholder whether compliance with other
concern that one who establishes, forum is one area of concern for Commission rules and regulations is
maintains, or operates the forum will be shareholders, companies, or third required. For instance, communications
liable under the federal securities laws parties acting on behalf of a shareholder among shareholders in an electronic
for statements made by forum or company when making the decision shareholder forum for the purpose of
participants. With respect to the about whether to establish such a forum. acquiring, holding, voting, or disposing
establishment of such forums, which The main purpose of Rule 14a–17 is to of the equity securities of a company
can be conducted and maintained in protect the person establishing, might result in the formation of a group
any number of ways, new Rule 14a–17 maintaining, or operating an electronic for purposes of Regulation 13D.48 Also,
clarifies that a shareholder or company shareholder forum from liability under soliciting activities may impact the
(or third party acting on behalf of a the federal securities laws in much the eligibility to file a Schedule 13G.49
shareholder or company) that In conclusion, we intend to remove
same way that the federal
establishes, maintains, or operates an legal ambiguity that might inhibit
telecommunications laws protect an
electronic shareholder forum is not shareholders, companies, or third
interactive computer service.44
liable for statements made by another parties acting on behalf of a shareholder
Commenters suggested certain other
person participating in the forum.43 or company from the energetic pursuit
changes to the proposed rules. For of this mode of communication. We also
The persons providing information to instance, one commenter questioned
or making statements on an electronic intend that the amendments will
whether statements made in reliance on encourage shareholders, companies, or
shareholder forum, however, will Rule 14a–2(b)(6) are in fact solicitations
remain liable for the content of those third parties acting on behalf of a
as defined in Rule 14a–1(l),45 and why shareholder or company to take
communications under traditional the antifraud provisions of Rule 14a–9
liability theories in the federal securities advantage of electronic shareholder
and the filing requirements of Rule 14a– forums to facilitate better
laws, such as those in Section 17(a) of 6 did not apply to such statements.46
the Securities Act and Section 10(b), communication among shareholders
We believe that statements posted on an and between shareholders and
Rule 10b–5, Rule 14a–9, and Section electronic shareholder forum may
20(e) of the Exchange Act. The companies.
constitute a solicitation as defined in
prohibitions in the antifraud provisions Rule 14a–1(l) and that is why we are IV. Paperwork Reduction Act
against primary or secondary adopting Rule 14a–2(b)(6) as an The proxy rules constitute a
participation in fraud, deception, or exemption from most of the proxy rules ‘‘collection of information’’ requirement
manipulation will continue to apply to for such postings and specifically within the meaning of the Paperwork
those supplying information to the site, designating which proxy rules would Reduction Act of 1995, the PRA.50 The
and claims will not face any additional apply to the postings. amendments described in this release
obstacles because of the new rule. Also, relate to a previously approved
44 See Section 230(c)(1) of the
40 See
collection of information, ‘‘Proxy
comment letter from SunTrust. Telecommunications Act of 1996 (47 U.S.C.
41 17 CFR 240.14a–1(l)(1)(iii). 230(c)(1)) (‘‘No provider or user of an interactive
Statements—Regulation 14A
42 Of course, if a person begins soliciting proxies computer service shall be treated as the publisher
47 See comment letter from ABA.
earlier than the 60-day cut-off period, that person or speaker of any information provided by another
would no longer have the benefits of the exemption information content provider.’’). The protection 48 17 CFR 240.13d–5.
and would therefore need to comply with the proxy against liability in Section 230(c)(1) would 49 See Release No. 34–39538 (January 12, 1998)
rules, including perhaps by filing any available presumably also apply to providers and users of [63 FR 2854], Section G (Shareholder
postings as soliciting materials or removing prior electronic shareholder forums. Communications and Beneficial Ownership
postings from the forum. 45 17 CFR 240.14a–1(l). Reporting).
43 17 CFR 240.14a–17(b). 46 See comment letter from SunTrust. 50 44 U.S.C. 3501 et seq.
(Commission Rules 14a–1 through 14a– by other shareholders. They could also adopted. Shareholders may be
16 and Schedule 14A (OMB Control No. help disparate shareholders form encouraged to run successful proxy
3235–0059).’’ Regulation 14A was stronger coalitions and coordinate their contests to pursue such changes, or
adopted pursuant to the Exchange Act voices.51 These forums can also better management may be more responsive to
and sets forth the disclosure educate or otherwise inform the concerns in other ways. Thus,
requirements for proxy statements filed shareholders with respect to the issues shareholders may benefit from a closer
by companies to help shareholders that will likely come up through proxy alignment between management and the
make informed voting decisions. We do solicitations during the 60 days prior to interests of shareholders.
not believe that the amendments to Rule an annual meeting. Another way that shareholders and
14a–2, or the creation of new Rule 14a– In this regard, the majority of the companies may benefit from the
17, require any revision to our current amendments’ benefits flow from the amendments is that they could have
burden estimates for Regulations 14A or potential reduction in costs of collective more information to use in evaluating
impose any new recordkeeping or action among shareholders and the initiatives submitted for their
information collection requirements potential reduction of costs in consideration by other shareholders or
under the PRA that require approval of communications between shareholders by management. This information could
the Office of Management and Budget, and companies if there is more be available at little or no incremental
the OMB. extensive use of electronic forums. For cost and could be readily accessible and
example, a shareholder who does not searchable because it is in electronic
V. Cost-Benefit Analysis agree with a corporate policy and form. Therefore, the amendments may
We are adopting amendments to the therefore is considering taking steps to reduce the cost of monitoring issues
proxy rules under the Exchange Act to have the company change that policy among shareholders.
facilitate electronic shareholder forums may not be able to easily and Finally, more extensive use of
by removing legal ambiguity under the inexpensively survey other shareholders
federal securities laws that might deter electronic shareholder forums may be a
and determine their sentiments
shareholders, companies, or third step towards improving the
regarding the policy. Therefore, that
parties acting on a shareholder’s or informational efficiency of the market
shareholder presently has to decide
company’s behalf from establishing or generally.
whether to take the costly steps of
contributing to such forums. These opposing the company’s action by B. Costs
amendments clarify that participation in submitting a non-binding proposal or
an electronic shareholder forum which There are several potential costs to
running a proxy contest without having
potentially could constitute a proxy shareholders of implementing the
the benefit of knowing whether the
solicitation subject to the proxy rules, is amendments to the proxy rules,
initiative is favored or will be supported
exempt from most of the proxy rules if although all such costs would be
by other shareholders.
the conditions to the exemption are Electronic shareholder forums may voluntarily undertaken. One immediate
satisfied. In addition, these amendments reduce communication and cost of an electronic shareholder forum
state that a shareholder, company, or coordination costs among shareholders is that of maintaining and operating it.
third party acting on a shareholder’s or and also reduce companies’ costs in Although empirical data are not
company’s behalf that establishes, replying if they choose to do so. A available for the exact costs of operating
maintains, or operates an electronic shareholder seeking to submit a non- electronic shareholder forums, based on
shareholder forum generally will not be binding proposal or conduct a proxy comparable costs of maintaining
liable under the federal securities laws contest may be encouraged or interactive Web sites, the costs of
for any statement or information discouraged from doing so in starting and maintaining a basic
provided by another person accordance with the better information shareholder forum are not expected to
participating in the forum. that he or she will have acquired, at be high. As more complicated features
little or no cost, about the preference of are included in a forum by its operators,
A. Benefits such as eligibility verification
other shareholders. And if a proposal is
The most important benefit of the enthusiastically supported by a procedures, anonymous accountability
amendments that we are adopting is that significant number of shares, the programs, and share ownership
they will eliminate a regulatory obstacle company might take notice and displays, costs could be expected to
to electronic shareholder forums which voluntarily adopt it; again, saving the increase accordingly. Again, however,
hold the potential to significantly shareholder considerable expense and the decision to establish, operate, or
improve communications among benefiting the company and its maintain an electronic shareholder
shareholders and between shareholders shareholders overall. forum, and to add more expensive
and the companies they own. As a result Even if the company does not features, is voluntary.
of the amendments, shareholders and voluntarily adopt an initiative that Additionally, to the extent that the
companies may be more willing to reflects strong shareholder sentiment, amendments to the proxy rules we are
create or sponsor these forums, because knowledge of this fact by other adopting result in an increase in the
the regulatory and liability regime will shareholders will make it more likely number of electronic forums, there
be more clearly defined. that the initiative will be submitted and could be increased costs related to the
Among the potential benefits to additional time that a shareholder or
shareholders and companies are 51 Of course, communications among company chooses to spend monitoring,
cheaper, more timely, and more relevant shareholders in an electronic shareholder forum for processing, and considering information
the purpose of acquiring, holding, voting, or
exchanges of information among disposing of the equity securities of a company
that is posted on the forums. These costs
shareholders and between shareholders might result in the formation of a group for will generally correspond to the number
and companies. Electronic shareholder purposes of Regulation 13D. 17 CFR 240.13d–5. of shareholders using the forums, the
forums could generate attention for Also, soliciting activities may impact the eligibility frequency with which those
to a file a Schedule 13G. See Release No. 34–39538
sound proposals that could increase the (January 12, 1998) [63 FR 2854], Section G
shareholders post information on the
value of share ownership, and they (Shareholder Communications and Beneficial forums, and the level of attention that
could filter out proposals not supported Ownership Reporting). shareholders or companies choose to
pay to the ideas and opinions of the possible motivations behind proposals appropriate in furtherance of the
shareholders. that they would not otherwise receive, purposes of the Exchange Act. Section
Should a company choose to sponsor shareholders currently benefit from the 3(f) of the Exchange Act 55 and Section
or use an electronic shareholder forum, proxy rules mandating such disclosure. 2(c) of the Investment Company Act of
the company, and derivatively its Under the current rulemaking, some 1940 56 requires us, whenever we engage
shareholders, would bear the associated solicitations that would ordinarily be in rulemaking and are required to
costs. If the company or its shareholders accompanied by these additional consider or determine if an action is
used the forum to conduct shareholder disclosures would proceed without necessary or appropriate in the public
polls or surveys, the costs of the forums them. The magnitude of this cost of lost interest, also to consider whether the
would be commensurately higher due to information, however, depends on the action will promote efficiency,
the time and effort necessary to extent to which shareholders have easy competition, and capital formation.
accurately determine the results. access to substitute sources of
Moreover, because electronic information and to the extent the By removing legal ambiguity, we
shareholder forums may generally information is material to the actions of anticipate the rules will promote
reduce the cost of communication shareholders and companies in the efficiency in shareholder
among shareholders and between proxy voting process. communications. Electronic shareholder
shareholders and companies, they may Finally, a shareholder that cannot, or forums may reduce communication
increase the frequency of that chooses not to, use the Internet may be costs and coordination costs among
communication and thus, incidentally, disadvantaged by not being able to fully shareholders and also reduce
the subset of that communication that participate in this form of dialogue companies’ costs in replying if they
constitutes misstatements, whether among shareholders and between choose to do so. Finally, more extensive
made intentionally or unintentionally. shareholders and the company. As a use of electronic shareholder forums
This could increase the costs of the result, these shareholders may incur may be a step towards improving the
forums to companies or shareholders. costs associated with adjusting to the informational efficiency of the market
Although shareholders are held liable use of electronic forums or in searching generally.
under the federal securities laws for for the information being conveyed on
fraudulent statements made on the the electronic forums in another To the extent shareholders express
forums, at least one commenter still medium. Alternatively, a shareholder interest in starting or participating in
expressed a concern that fraudulent who has never used the Internet but forums, competition among service
information may lead to problems for a feels compelled to do so because of an providers to host or operate the forums
company, such as changes in stock electronic shareholder forum would may increase. We do not anticipate any
prices,52 which could increase costs to incur the costs of obtaining Internet effect on capital formation.
shareholders. access. These costs, however, are similar VII. Final Regulatory Flexibility Act
It should be noted, however, that the to those that shareholders already must
opportunity for online fraudulent Analysis
incur in to participate in existing
misstatements is not new, as a number electronic forums. Nonetheless, it is This Final Regulatory Flexibility Act
of shareholder forums exist online possible that if electronic shareholder Analysis, the FRFA, has been prepared
already, and there is nothing in the forums are restricted to shareholders in accordance with the Regulatory
nature of electronic shareholder forums and companies, they will be considered Flexibility Act.57 This FRFA relates to
that should attract misstatements in more relevant and meaningful than new Rule 14a–17 and the new Rule 14a–
greater numbers than other more public existing forums that are available to any 2 exemption, which will facilitate
areas of the Internet. Regardless, it is person. The costs to shareholders not greater online interaction among
possible that misstatements on an willing or able to use electronic shareholders and their companies by
electronic shareholder forum could be shareholder forums could be offset to removing some obstacles to the use of
taken more seriously in cases where the some degree by the fact that other
forum is restricted, for example, to only electronic shareholder forums. These
shareholders with whom they share a
shareholders and the company. Even so, amendments to the proxy rules clarify
common financial interest may take
given the inevitability of occasional that a shareholder, company, or third
advantage of the forums to propose
miscommunication, an electronic forum party acting on a shareholder’s or
initiatives and make their sentiments
in which both the shareholders and the known to the company.53 company’s behalf that establishes,
company participate may provide a maintains, or operates an electronic
means to quickly dispel any misleading VI. Consideration of Burden on shareholder forum is not liable for
information. Competition and Promotion of statements made by another person or
Another potential cost is that Efficiency, Competition, and Capital entity participating in the forum. Also,
shareholders may have less complete Formation the amended rules exempt any
information with which to evaluate Section 23(a)(2) of the Exchange solicitation in an electronic shareholder
proposals than they would have Act 54 requires us, when adopting rules forum from the proxy rules, other than
otherwise because the amendment under the Exchange Act, to consider the from the shareholder list provisions in
facilitates solicitation, outside the 60- impact that any new rule would have on Rule 14a–7 and the antifraud provisions
day period prior to an annual or special competition. In addition, Section in Rule 14a–9, if all of the conditions to
meeting, without mandating extensive 23(a)(2) prohibits us from adopting any the exemption are satisfied. An Initial
disclosure about the identity and the rule that would impose a burden on Regulatory Flexibility Act Analysis was
ownership of the participants that competition not necessary or prepared in accordance with the
would occur otherwise. Because Regulatory Flexibility Act and included
53 Also, a forum operator, or a forum participant,

disclosures of this type may in some in the Proposing Release.
could choose to mail notice of important
instances provide other shareholders developments on the electronic shareholder forum
with valuable information regarding to shareholders who are not willing or able to use 55 15 U.S.C. 78c(f).
the technology. 56 15 U.S.C. 80a–2(c).
52 See, e.g., comment letter from Domini. 54 15 U.S.C. 78w(a)(2). 57 5 U.S.C. 601.
A. Need for the Amendments amendments to the proxy rules under encourage innovation and
These amendments to the proxy rules the Exchange Act concerning experimentation.
shareholder proposals generally. The Despite the generally favorable
are necessary to remove legal ambiguity
description of the proposed reaction, some commenters were
that might deter shareholders,
amendments regarding electronic concerned about possible negative
companies, and others from establishing
shareholder forums constituted only one consequences of the amendments. First,
or participating in electronic
section of the release.58 In this release, some commenters worried that the
shareholder forums. New Rule 14a–17
we are adopting only the proposed electronic shareholder forums could
and the new Rule 14a–2(b)(6) exemption
will clarify the responsibilities of those amendments to the proxy rules that develop into shareholder chat rooms,
relate to electronic shareholder forums which may not provide for meaningful
who establish, maintain, operate, and
and not the proposed amendments communication.63 Other commenters
contribute to electronic shareholder
dealing with other aspects of asserted that we did not adequately
forums, with the purpose of stimulating
shareholder proposals. address whether shareholders and
experimentation, innovation, and The majority of the public comment
greater use of the Internet to further others could wage a successful,
regarding electronic shareholder forums coordinated proxy campaign beyond the
shareholder communications. By was favorable.59 Generally, the
facilitating such communications on the 60-day period during which the regular
commenters favored the exemption and proxy rules would not apply.64 Finally,
Internet among shareholders, and new rule because they support the
between shareholders and their some commenters suggested that we
continued development of electronic analyze the issue further and address
companies, we hope to tap the potential shareholder forums as a means of
of technology to better vindicate electronic shareholder forums as part of
facilitating communication among a more comprehensive study reviewing
shareholders’ state law rights, including shareholders and between shareholders
their rights to elect directors, in ways the shareholder communications
and companies.60 A substantial process.65
that are potentially both more effective percentage of the commenters opposed In the Proposing Release, we
and less expensive. substituting electronic shareholder requested comment on many aspects of
Despite the potential benefits of forums for the current means of the proposed amendments to the proxy
electronic shareholder forums, presenting non-binding shareholder rules concerning shareholder proposals
shareholders and companies alike have proposals in the company’s proxy generally, including the number of
been reluctant to establish, maintain, or statement pursuant to Rule 14a–8. small entities that would be affected by
operate them due, in part, to uncertainty Although we solicited comment on the the proposed amendments, and the
over liability for statements and idea of using electronic shareholder quantitative and qualitative nature of
information provided by those forums as the sole means to present the impact. Commenters, including the
participating in the forum. In addition, non-binding shareholder proposals to Office of Advocacy of the Small
shareholders and companies have shareholders, several of the commenters Business Administration, addressed
expressed concern regarding whether made it clear that they supported several aspects of the proposed rule
views and statements expressed through electronic shareholder forums provided amendments that potentially could have
a forum would be considered proxy that the forums were a supplement to, affected small entities. However, none
solicitations. and not a replacement for, the current of the commenters specifically
Therefore, we are adopting Rule 14a– Rule 14a–8 process.61 Under the final discussed the effect of the proposed
17 to provide liability protection for a rules, electronic shareholder forums amendments regarding electronic
shareholder, company, or third party will be an additional, rather than shareholder forums on small businesses
acting on behalf of a shareholder or substitute, means of communication. or entities. In particular, because the
company that establishes or maintains Additionally, some commenters electronic shareholder forums
an electronic shareholder forum believed that keeping the identity of authorized by the amendments that we
regarding statements or information shareholders who post messages on are adopting are entirely voluntary, we
provided by others participating in the these electronic forums anonymous believe that they will beneficially affect
forum. Also, we are adopting the new would threaten meaningful small businesses and entities in the
Rule 14a–2(b)(6) exemption from the communications among shareholders same manner that they will beneficially
proxy rules to explicitly state that Rules and the company.62 These commenters affect larger businesses and entities.
14a–3 through 14a–6 (other than Rule asserted that shareholders’ identities This is because presumably, only those
14a–6(g)), Rule 14a–8, and Rules 14a–10 should be disclosed and that the businesses and entities that find them
through 14a–15 do not apply to any shareholders’ ownership interests in the beneficial will choose to use them.
solicitation in an electronic shareholder company should be made known as
forum. By taking these steps, we hope well. The rule amendments that we are C. Small Entities Subject to the Final
to remove both real and perceived adopting today neither mandate nor Amendments
impediments to continued private sector preclude anonymous communications The amendments that we are adopting
experimentation with, and use of, the because we want to allow forum in this release will affect only
Internet for communication among sponsors to have flexibility in creating shareholders and companies that
shareholders, and between shareholders electronic shareholder forums and to voluntarily establish, maintain, or
and the companies in which they invest. operate electronic shareholder forums or
We intend for the amendments to 58 Proposing Release, Section II.B (Electronic
that post information on, or provide
encourage the creation of, and Shareholder Forums). information to, such forums. Some of
participation in, electronic shareholder 59 See, e.g., comment letters from Allstate, BRT,
the companies or shareholders may be
forums. Capital Research, GreenMachines, and ICI.
small entities. Exchange Act Rule 0–
60 See, e.g., comment letter from Calvert, Senator
B. Significant Issues Raised by Public Levin, and Van Winthrop.

63 See, e.g., comment letters from Bricklayers,
Comments 61 See, e.g., comment letters from Christus,
Domini, and Trillium. Green Century, SIF, and Walden.

In the Proposing Release, we 62 See comment letters from ABA and Christian 64 See comment letters ABA and SunTrust.
published for comment a number of Brothers. 65 See comment letters from ABA and SCSGP.
10(a) defines an issuer, other than an materials.66 Regardless, if small entities ■ 2. Section 240.14a–2 is amended by
investment company, to be a ‘‘small choose to do nothing regarding adding paragraph (b)(6) to read as
business’’ or ‘‘small organization’’ if it electronic shareholder forums, the follows:
had total assets of $5 million or less on amended proxy rules have no additional
the last day of its most recent fiscal year. reporting, recordkeeping, or other § 240.14a–2 Solicitations to which
§ 240.14a–3 to § 240.14a–15 apply.
We estimate that there are compliance requirements that they must
approximately 1,110 issuers, other than follow. * * * * *
investment companies, that may be (b) * * *
E. Agency Action To Minimize Effect on (6) Any solicitation by or on behalf of
considered small entities.
We are adopting the amendments to Small Entities any person who does not seek directly
the proxy rules to facilitate electronic The Regulatory Flexibility Act directs or indirectly, either on its own or
shareholder forums by clarifying that us to consider alternatives that would another’s behalf, the power to act as
participation in a forum, which could accomplish our stated objectives, while proxy for a shareholder and does not
potentially constitute a proxy minimizing any significant adverse furnish or otherwise request, or act on
solicitation subject to the proxy rules, is impact on small entities. Our objective behalf of a person who furnishes or
exempt from most of the proxy rules if in adopting the amendments is to requests, a form of revocation,
the shareholder or company satisfies all facilitate electronic shareholder forums abstention, consent, or authorization in
of the conditions to the exemption. by clarifying that participation in a an electronic shareholder forum that is
Also, we are facilitating electronic forum is exempt from most of the proxy established, maintained or operated
shareholder forums by clarifying that solicitation rules if the participant pursuant to the provisions of § 240.14a–
any shareholder, company, or third satisfies all of the exemption’s 17, provided that the solicitation is
party acting on behalf of a shareholder conditions, and that forum operators are made more than 60 days prior to the
or company that establishes, maintains, not liable for third-party statements on date announced by a registrant for its
or operates an electronic shareholder their forums. The amendments impact next annual or special meeting of
forum will not solely because of small entities only if the entities choose shareholders. If the registrant announces
establishing, maintaining, or operating to involve themselves in the forums by the date of its next annual or special
the forum be liable under the federal establishing, maintaining, or operating meeting of shareholders less than 60
securities laws for any statement or them or by posting information on or days before the meeting date, then the
information provided by another person providing information to the forums. We solicitation may not be made more than
participating in the forum. The considered alternatives to accomplish two days following the date of the
amendments remove legal ambiguity our stated objective, but we could not registrant’s announcement of the
that might deter shareholders and think of one that would make electronic meeting date. Participation in an
companies from relying on this mode of shareholder forums more useful to small electronic shareholder forum does not
communication. entities because these amendments are eliminate a person’s eligibility to solicit
The amendments that we are adopting voluntary and affect small entities only proxies after the date that this
only apply to shareholders, companies, if they chose to participate in them. exemption is no longer available, or is
or third parties acting on their behalf if no longer being relied upon, provided
VIII. Statutory Basis and Text of the
they choose to establish, maintain, that any such solicitation is conducted
Rules and Amendments
operate, or participate in electronic in accordance with this regulation.
shareholder forums. We are not We are adopting amendments 3. Add § 240.14a–17 to read as
requiring a small entity to have any pursuant to Sections 14, 23(a), and 36 of follows:
involvement with electronic the Exchange Act, as amended, and
shareholder forums. We are only Sections 20(a) and 38 of the Investment § 240.14a–17 Electronic shareholder
clarifying the liability provisions for Company Act of 1940, as amended. forums.
establishing, maintaining, or operating (a) A shareholder, registrant, or third
List of Subjects 17 CFR Part 240
such a forum and providing an party acting on behalf of a shareholder
exemption for forum communications Reporting and recordkeeping or registrant may establish, maintain, or
that fall within the broad definition of requirements, Securities. operate an electronic shareholder forum
a solicitation. ■ In accordance with the foregoing, the to facilitate interaction among the
Securities and Exchange Commission registrant’s shareholders and between
D. Reporting, Recordkeeping, and Other the registrant and its shareholders as the
amends Title 17, chapter II of the Code
Compliance Requirements shareholder or registrant deems
of Federal Regulations as follows:
The amended rules do not impose any appropriate. Subject to paragraphs (b)
new reporting, recordkeeping, or PART 240—GENERAL RULES AND and (c) of this section, the forum must
compliance requirements on small REGULATION, SECURITIES comply with the federal securities laws,
entities. In fact, a small entity is not EXCHANGE ACT OF 1934 including Section 14(a) of the Act and
required to take any reporting or ■ 1. The authority citation for part 240 its associated regulations, other
recordkeeping action or to comply with continues to read, in part, as follows: applicable federal laws, applicable state
any other new requirements, unless it laws, and the registrant’s governing
chooses to rely on the new Rule 14a– Authority: 15 U.S.C. 77c, 77d, 77g, 77j, documents.
77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn,
2(b)(6) exemption. If a small entity or (b) No shareholder, registrant, or third
77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j,
shareholder posts information on a 78j–1, 78k, 78k–1, 78l, 78m, 78n, 78o, 78p, party acting on behalf of a shareholder
forum in reliance on Rule 14a–2(b)(6), 78q, 78s, 78u–5, 78w, 78x, 78ll, 78mm, 80a– or registrant, by reason of establishing,
and later solicits the power to act as a 20, 80a–23, 80a–29, 80a–37, 80b–3, 80b–4, maintaining, or operating an electronic
proxy for a shareholder, it will need to 80b–11, and 7201, et seq.; and 18 U.S.C. shareholder forum, will be liable under
determine whether any earlier postings 1350, unless otherwise noted. the federal securities laws for any
remaining on the forum after the Rule * * * * * statement or information provided by
14a–2(b)(6) exemption no longer is another person to the electronic
available must be filed as soliciting 66 See 17 CFR 240.14a–1(l)(1)(iii). shareholder forum. Nothing in this
section prevents or alters the p.m., Monday through Friday, except the Coast Guard, and indicates the
application of the federal securities Federal holidays. sponsor, as well as the date and location
laws, including the provisions for FOR FURTHER INFORMATION CONTACT: of the event. Because the dates and
liability for fraud, deception, or LTJG John Lisko, U.S. Coast Guard location of these events may change
manipulation, or other applicable District Seven Waterways Management slightly from year to year, the specific
federal and state laws to the person or Division, (305) 415–6730. information on each event, including
persons that provide a statement or SUPPLEMENTARY INFORMATION:
the exact dates, specific areas, and
information to an electronic shareholder description of the regulated area, will be
forum. Regulatory Information provided to the public through a Local
(c) Reliance on the exemption in On November 13, 2007, we published Notice to Mariners published before the
§ 240.14a–2(b)(6) to participate in an a notice of proposed rulemaking event, as well as through Broadcast
electronic shareholder forum does not (NPRM) entitled Special Local Notice to Mariners. This table will be
eliminate a person’s eligibility to solicit Regulations; Recurring Marine Events in updated by the Coast Guard periodically
proxies after the date that the exemption the Seventh Coast Guard District to add new recurring events, remove
in § 240.14a–2(b)(6) is no longer Federal Register (72 FR 63839) under events that no longer occur, and update
available, or is no longer being relied Docket No. CGD07–07–102. We received listed events to ensure accurate
upon, provided that any such no letters in the mail commenting on information is provided.
solicitation is conducted in accordance the proposed rule. No public meeting Discussion Comments and Change
with this regulation. was requested, and none was held.
No comments were received.
Dated: January 18, 2008.
Background and Purpose However, slight changes were made to
By the Commission. proposed events to clarify dates and
Nancy M. Morris, Marine events are frequently held on
the navigable waters within the sponsors. In the Captain of the Port
Secretary. Zone Key West the date for Marathon
boundary of the Seventh Coast Guard
[FR Doc. E8–1263 Filed 1–24–08; 8:45 am]
District. These include events such as Super Boat Grand Prix was updated to
BILLING CODE 8011–01–P
sailing regattas, holiday parades, and the 3rd Weekend of May (FRI–SUN).
fireworks displays. Currently, there are The date for the FKCC Swim around
over 250 annually recurring marine Key West was updated to the 3rd
DEPARTMENT OF HOMELAND events and many other non-recurring Saturday in June. These changes were
SECURITY events within the district. In the past, made to add information to the events
the Coast Guard regulated these events for increased public knowledge.
Coast Guard by creating individual special local Regulatory Evaluation
regulations on a case by case basis. Most This rule is not a ‘‘significant
33 CFR Part 100 of these events required only the regulatory action’’ under section 3(f) of
[Docket No. USCG–2007–0179]
establishment of a regulated area and Executive Order 12866, Regulatory
assignment of a patrol commander to Planning and Review, and does not
RIN 1625–AA08 ensure safety. Issuing individual, annual require an assessment of potential costs
special local regulations has created a and benefits under section 6(a)(3) of that
Special Local Regulations; Recurring significant administrative burden on the Order. The Office of Management and
Marine Events in the Seventh Coast Coast Guard. In 2005, the Coast Guard Budget has not reviewed it under that
Guard District created over 60 temporary regulations Order.
for recurring marine events in the We expect the economic impact of
AGENCY: Coast Guard, DHS.
Seventh District. That number rose to this rule to be so minimal that a full
ACTION: Final rule. over 110 in 2006 and over 160 in 2007. Regulatory Evaluation is unnecessary.
SUMMARY: The Coast Guard is creating
Additionally, for the majority of these
events, the Coast Guard does not receive Small Entities
special local regulations to regulate
recurring marine events in the Seventh notification of the event or important Under the Regulatory Flexibility Act
Coast Guard District. These regulations details of the event are not finalized by (5 U.S.C. 601–612), we have considered
will apply to all permitted events listed event organizers with sufficient time to whether this rule would have a
on the table attached to the regulation, publish a notice of proposed rulemaking significant economic impact on a
and include events such as regattas, and final rule before the event date. The substantial number of small entities.
parades, and fireworks displays. These Coast Guard must therefore create The term ‘‘small entities’’ comprises
regulations are being created to reduce temporary final rules that sometimes are small businesses, not-for-profit
the Coast Guard’s administrative not completed until a few days before organizations that are independently
workload and expedite public the event. This results in delayed owned and operated and are not
notification of events. notification to the public, potentially dominant in their fields, and
placing the public and event governmental jurisdictions with
DATES: This rule is effective 30 days
participants at risk. populations of less than 50,000.
after publication in the Federal This rule will significantly relieve the The Coast Guard certifies under 5
Register. administrative burden on the Coast U.S.C. 605(b) that this rule would not
ADDRESSES: Comments and material Guard, and at the same time allow the have a significant economic impact on
received from the public, as well as sponsor of the event and the Coast a substantial number of small entities.
documents indicated in this preamble as Guard to notify the public of these This rule would affect the following
being available in the docket, are part of events in a timely manner. The public entities, some of which might be small
docket [USCG–2007–0179] and are will be provided with notice of events entities: the owners or operators of
available for inspection or copying at through the table attached to this vessels intending to transit or anchor in
the Brickell Plaza Federal Building, regulation. This table lists each the areas where marine events are being
Miami, FL, between 8 a.m. and 3:30 recurring event that may be regulated by held. This proposed regulation will not

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4450 Federal Register / Vol. 73, No.

17 / Friday, January 25, 2008 / Rules and Regulations

addresses only the electronic shareholder forum

open communication. Additionally, we (‘‘SCSGP’’). 17.

53 Also, a forum operator, or a forum participant,

60 See, e.g., comment letter from Calvert, Senator

B. Significant Issues Raised by Public Levin, and Van Winthrop.

Domini, and Trillium. Green Century, SIF, and Walden.

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