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Release No. 33-6676 Release No. 34-23789 Release No. 35-24236 Release No. IC-15403 November 10, 1986 51 Fed. Reg. 42059 - Nov. 20, 1986
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 Table of Contents
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I. Executive Summary
In July 1985, the Commission proposed amendments to its proxy rules as part of its Proxy Review Program. 13 The proposed revisions were intended to simplify the proxy rules and to update the rules to accord with current practice, staff interpretations, new laws and other changes in Commission rules. 14 The Commission is now adopting certain of the proposals and is publishing for comment related proposals in a companion release, Securities Exchange Act Release No. 33-6675.
Among other things, the amendments adopted today apply the principles of the integrated disclosure system to proxy disclosure, streamline compensation plan disclosure and require disclosure by new registrants of changes in and disagreements with accountants. Consistent with the integrated disclosure system, the amendments as adopted allow certain company-specific (including financial) information required in connection with mergers, consolidations, acquisitions and similar matters to be incorporated by reference by eligible registrants pursuant to a system which is substantially the same as that contained in Form S-4. With respect to the authorization, issuance, modification or exchange of securities, the Commission has determined to retain the existing financial and related requirements applicable to these transactions and has adapted the principles of integrated disclosure in order to bring the proposed benefits to these transactions without an unintended increase in the information required. This has necessitated a modification S-3 companies may incorporate by reference the required information from previously-filed documents and do not have to incorporate the entire annual report on Form 10-K and subsequent reports. The new rules also permit any registrant to incorporate by reference to documents delivered with the proxy statement.
Information with regard to compensation plans previously contained in three items is now condensed in a single item 15 and the disparities in disclosure requirements among different types of plans have been eliminated. The information required with respect to plans previously in effect is required only for plans in effect within the last three years, rather than five years. Registrants will no longer be required to disclose information concerning sales of securities subsequent to the exercise of options.
The Commission also is adopting proposals to require disclosure concerning changes in accountants and any related disagreements if a registrant was not subject to Exchange Act reporting requirements at the time a change in accountants occurred. 16 This would principally affect initial public offering registration statements and proxy statements of issuers newly registered under the Exchange Act.
The Commission has deferred consideration of the proposed requirement that a registrant disclose whether its independent auditor is a member of a voluntary self-regulatory organization which has both a peer review program and an independent oversight function. The Commission will reconsider this proposal after the completion of related private sector initiatives and review of the concept of mandatory peer review. Part II of this release provides a synopsis of each of the proposed amendments to the proxy rules, which follows the structure of the regulations and schedules, and the Commissions action on such proposals. 17
II. Discussion
A. Regulations 14A and 14C
1. Registrant/Issuer; Security Holder/ Shareholder
The Commission is replacing the term "issuer" with "registrant" and "shareholder" with "security holder," as proposed.
2. Executive Officer/Officer
In order to be consistent with Regulation S-K the Commission is, as proposed, replacing "officer" with "executive officer" in Item 5, Interest of Certain Persons in Matters to be Acted Upon, and Item 8, Compensation of Directors and Executive Officers, of Schedule 14A.
B. Rule 14a-1, Definitions
1. Technical Revision
The Commission has adopted, as proposed, a technical amendment to the first paragraph of Rule 14a-1 18 to replace the phrase "terms used in §§240.14a-1 to 240.14a-10 and in Schedule 14A" by "terms used in this regulation" to clarify that the definitions are intended to apply to Regulation 14A in its entirety.
2. Last Fiscal Year
The Commission has adopted the proposed definition of "last fiscal year" to clarify the applicability of the definition to consent solicitations. A registrants last fiscal year will not only be defined in terms of the date of the meeting, as in former rules, but also in terms of the date as of which consents or authorizations may be used to effect corporate action.
3. Record Date
A new defined term, "record date," has been adopted as proposed.
4. Solicitation
After consideration of a proposed revision to the definition of "solicitation", the Commission has concluded that the current definition and its judicial construction have worked well and that there is no need to revise the existing definition.
C. Rule 14a-2, Solicitations to Which §240.14a-3 to §240.14a-13 Apply
Solicitation Pursuant to Chapter 11 of Bankruptcy Reform Act
The Commission has amended Rule 14a-2 19 as proposed to conform to changes in bankruptcy laws pursuant to the Bankruptcy Reform Act of 1978. 20 The revision to paragraph (a)(4) of Rule 14a-2 21 will exempt a solicitation pursuant to a reorganization under Chapter 11, if such solicitation is made subsequent to or concurrently with the transmittal of a court approved disclosure statement.
D. Rule 14a-3, Information to be Furnished to Security Holders
1. Technical Revisions
The Commission has amended paragraph (b) of Rule 14a-3 22 (and Rule 14c-3(a), 23 with regard to information statements) as proposed to clarify that the annual report to security holders is required whether the registrant is soliciting proxies or consents in connection with the annual election of directors. 24
The proposed relocation of paragraph (d) of Rule 14a-3 25 to Rule 14a-13, Obligations of Registrants in Communicating with Beneficial Owners, 26 was adopted in a prior release with respect to the shareholder communications rules. 27
2. Annual Report to Security Holders
The Commission is adopting, with a minor revision, 28 the proposed amendment to paragraph (b) of Rule 14a-3, to clarify that, if the registrant convenes a special meeting to elect directors in lieu of an annual meeting, the registrant must furnish an annual report to security holders in connection with such special meeting. This provision is intended to assure that the annual report be furnished in connection with the first meeting held during the year to elect directors. The Commission also solicited comment as to whether the rule should be modified to apply to elections of directors that take place either before or after the annual election in a given year. After consideration of the current requirement and of the public comment, the Commission believes that furnishing the annual report more than once per year is not necessary.
3. Rule 14a-3(b)(10), Furnishing of Information in Documents Filed Pursuant to Exchange Act Section 13(a) Subsequent to the Form 10-K
The proposed amendments to Rule 14a-3 would have required an undertaking in the annual report to security holders or in the registrants proxy statement for an annual meeting (or special meeting in lieu of the annual meeting) to provide, upon written request, information in addition to a copy of the annual report on Form 10-K. 29 A registrant would have been required to provide a copy of any information contained in Exchange Act Section 13(a) 30 reports filed during the period between the filing of the Form 10-K and the date a response was made to the request. Upon further consideration, the Commission has determined that the current requirement in Note D.2 of Schedule 14A that the registrant must undertake to furnish, upon request, copies of information incorporated by reference is adequate and responsive to investors needs.
E. Rule 14a-4, Requirements as to Proxy
1. Rule 14a-4(d)(3)
As proposed, the Commission has added paragraph (d)(3) to Rule 14a-4 31 to codify current interpretations that a proxy may not confer authority to vote at more than one meeting or consent solicitation.
2. Rule 14a-4(d)(4)
The Commission has revised Rule 14a-4 32 to clarify that paragraph (d) applies to consent solicitations. The language of proposed paragraph (d)(4) has been revised to avoid any possible conflict with Rule 14a-4(c). 33 This addresses a concern raised by commentators.
Questions also have been raised about paragraph 14a-4(c)(1), 34 which permits a proxy statement or form of proxy to confer discretionary authority with respect to matters that the soliciting party does not know, a reasonable time prior to the solicitation, will be presented at the meeting. The purpose of this provision is only to allow the party filing the proxy statement to respond to proposals initiated by others.
3. Sufficiency of Current Requirements with Respect to Telegraphic Proxies
Rule 14a-4 applies to any form of written proxy, authorization or consent, including telexes, telegrams or cablegrams. 35 The Commission requested comment as to whether the current proxy card requirements are sufficient with respect to telegraphic proxies. After weighing various suggestions made by commentators and the fact that there is no indication of problems today, the Commission has determined not to change the current proxy card requirements.
F. Rule 14a-5, Presentation of Information in Proxy Statement
1. Technical Revision
As proposed, the requirements of paragraph (e) of Rule 14a-5 36 have been moved to new Item 1 of Schedule 14A.
2. Standard With Regard to Information in Proxy Statement Not Known to Soliciting Persons
In the proposing release, the Commission inquired whether the standard in Rule 14a-5(b), 37 concerning information required in the proxy statement but not known to persons making a solicitation, should be revised to conform to the standard applied to Exchange Act reports 38 and registration statements filed pursuant to the Securities Act of 1933 ("Securities Act"). 39 The Commission has determined not to change Rule 14a-5(b) because the current standard has worked well and there was little commentator support for the change.
G. Rule 14a-6, Filing Requirements
1. Technical Revisions 40
Former paragraph (e) of Rule 14a-6 41 has been divided as proposed into two paragraphs--paragraph (e), Release Dates, and paragraph (f), Public Availability of Information.
Paragraph (h), 42 Speeches, Press Releases and Scripts, has been amended as proposed to clarify that it also applies to material filed pursuant to Rule 14a-12, Solicitation Prior to Furnishing Required Proxy Statement. 43
The proposed amendment to implement provisions of Exchange Act Section 14(g) (statutory filing fees for proxy solicitation material involving business combinations) 44 was adopted in an earlier release. 45 Pursuant to the amendment, paragraph (j), filing fees, refers to Rule 0-11 of the Securities Exchange Act. 46
A new paragraph (1), Computing Time Periods, has been added as proposed to notify registrants that the filing date of a document shall be counted as the first day of the time period and that mid-night of the last day shall constitute the end of the period.
2. New Note--Fundamental Changes in Preliminary Material
The Commission is adopting a proposed note to Rule 14a-6 47 to make clear that the filing of revised preliminary proxy material will not recommence the ten day time period for which information must be on file with the Commission prior to the date definitive copies of such material are first sent or given to security holders, unless such revised material contains fundamental changes.
While Rule 14a-6 deals with the time periods for filing information with the Commission, questions have also been raised concerning time periods required for adequate dissemination of material changes. When there have been material changes in the proxy soliciting material or material subsequent events (in contrast to routine updating), an additional proxy card, along with revised or additional proxy soliciting material, should be furnished to security holders. 48 A sufficient period of time should be allowed for adequate dissemination of the material information to security holders prior to the meeting of security holders or the date on which the consents or authorizations may be used to effect the proposed action to permit security holders to assess the information and to change their voting decisions if desired. 49
If a registrant is furnishing information at the S-3 level and incorporates by reference subsequently-filed documents, it may provide material information through such forward incorporation unless the incorporated information is a change to information previously delivered to all security holders. 50 However, the registrant must furnish security holders with an additional proxy card, accompanied by a brief identification of the material information. While the entire 20 business day period specified in Note D.3 to Schedule 14A need not recommence, the registrant must allow sufficient time to afford security holders an opportunity to obtain and then consider the document containing the information incorporated by reference. It would not be necessary to provide as much time if the additional information is set forth in full in the material accompanying the proxy card. 51
3. Identification of Changes from Prior Year
The Commission has determined to modify Note 1 to paragraph (a) of Rule 14a-6 52 and Note 2 to paragraph (a) of Rule 14c-5 (with respect to information statements). 53 These modifications, suggested by a commentator, will eliminate the administrative requirement to submit a marked copy of the preliminary proxy statement identifying the changes from the prior years proxy statement and the requirement that a cover letter indicate whether the current preliminary material includes material changes from the prior years material. These requirements have not proved useful to the staff in reviewing proxy materials and elimination of the requirement should benefit registrants. Registrants must continue to comply with paragraph (i) of Rule 14a-6 54 or paragraph (e) of Rule 14c-5, 55 which provide that, where amendments or revisions alter the text of the preliminary material, the changes are to be indicated by means of underscoring or in some other appropriate manner.
4. Proposed Rules 14a-6(f) and 14c-5(d), Public Availability of Released or Abandoned Proxy Material
The Commission had proposed to revise paragraph (f) of Rule 14a-6 56 and paragraph (d) of Rule 14c-5 57 to provide that preliminary proxy material "may be deemed available for public inspection when the staff determines that the registrant has released the proxy material to security holders or has abandoned the intention of releasing the proxy material." As the substance of the proposal is already mandated by the Freedom of Information Act ("FOIA"), 58 the Commission has determined that the proposed revisions are unnecessary. Under the FOIA, the Commission maintains that preliminary proxy material is confidential until definitive material is filed, the material has been released to security holders or no filing of definitive material is anticipated. 59 After definitive material has been filed, or in instances in which no filing of definitive material is anticipated, preliminary proxy material is made available to persons requesting the information under the FOIA.
H. Rule 14a-7, Mailing Communications for Security Holders
The first paragraph of Rule 14a-7 60 has been revised as proposed to make clear that the rule applies to Regulation 14A in its entirety.
I. Rule 14a-8, Proposals of Security Holders
1. Eligibility
Rule 14a-8(a)(1) 61 has been revised as proposed to make clear that the securities owned by the proponent must be entitled to be voted "on the proposal."
2. Six Copies
Paragraph (d) of Rule 14a-8 62 has been amended as proposed to require the registrant to submit six instead of five copies of security holder proposals, no-action requests and all related materials.
J. Rule 14a-13, Obligations of Registrants in Communicating with Beneficial Owners
The proposed amendment to Rule 14a-13 to address the specific circumstances of solicitations and the election of solicitations and the election of directors at special meetings in lieu of annual meetings was adopted in a prior release. 63
K. Headnotes to Schedule 14A, Information Required in Proxy Statement
Note A to Schedule 14A is being adopted as proposed. The first sentence continues to provide that where any item calls for information with respect to any matter to be acted upon and such matter involves other matters with respect to which information is called for by other items of Schedule 14A, registrants are required to give the information called for by such other items. A new example concerning authorization of securities in connection with an acquisition has been added to better illustrate application of the headnote.
New Note D, concerning incorporation by reference, has been adopted substantially as proposed. A revision based on a commentators suggestion has been made to require a statement, located on the last page(s) of the proxy statement, listing all of the documents or portions of documents that are incorporated by reference. Listing the information in one place should facilitate security holder requests for information. Such treatment is consistent with Form S-4.
The Commission has adopted Note E substantially as proposed with a change in language to retain consistency with Forms S-2-3-4. The Commission notes that investment companies, and business development companies as defined in Section 2(a)(48) of the Investment Company Act of 1940, 64 are required to file on registration forms other than Forms S-2 and S-3. These companies, therefore, would not be considered to "meet the requirements" of Form S-2 or S-3 within the meaning of Note E, for purposes of Items 13(b)(1), 14(b)(1) and 14(b)(2).
L. Item 1, of Schedule 14A, Date, Time and Place Information 65
1. Date, Time, Place and Mailing Address
The first sentence of paragraph (a) of Item 1 has been adopted as proposed to require a statement of the date, time and place of the security holders meeting, and mailing address of registrants executive offices.
2. Deadline for Submission of Consents
As proposed, the second sentence of paragraph (a) of Item I would have required the registrant to state the date, time and place of counting consents, if action was to be taken by written consent. This sentence, as adopted, has been clarified to require instead that the registrant specify the deadline for submitting consents, if state law requires that such a date be set or if the soliciting person intends to set such a date. The modification is intended to better reflect the actuality of consent solicitations and to make clear that Item I does not require that a deadline be set in the absence of a state law requirement to do so.
3. Date of Mailing Proxy Statement and Form of Proxy and Date for Receipt of Security Holder Proposals
New paragraphs (b) (requiring a statement of the approximate date on which the proxy statement and on which the proxy statement and form of proxy are first sent or given to security holders) and (c) (requiring a statement of the date by which security holder proposals must be received) have been relocated from Rule 14a-5(e) to Item 1 as proposed.
M. Item 2, Revocability of Proxy
In the proposing release, comment was solicited as to whether a specific note with regard to the revocability of written consents was necessary. The Commission believes that Item 2 adequately addresses questions of disclosure with regard to consents and thus has determined that no change to Item 2 is necessary.
N. Item 6, Voting securities and principal holders thereof; Item 403 of Regulation S-K, Securities Ownership
1. Technical Revision
Paragraphs (d), (e) and (g) of Item 6 have been consolidated as proposed and paragraph (d) has been corrected to call for information required by "Item 403," rather than "Item 403(a)," of Regulation S-K. 66
2. Item 6(b), Criteria for Entitling Security Holders to Vote or Give Consent
A revision to the first sentence of Item 6(b) is being adopted as proposed. The previous reference to the record date for security holders entitled to vote "at the meeting" has been changed to a reference to the record date "with respect to this solicitation."
A commentator recommended, and the Commission is adopting, a similar refinement to the language of the second sentence of Item 6(b) to clarify the required disclosure. The second sentence of Item 6(b) formerly required disclosure of the "conditions" under which security holders other than holders on the record date were entitled to vote. The sentence has been revised to refer specifically to consents. It provides that, if the right to vote or give consent is not to be determined, in whole or in part, by reference to a record date, the registrant should indicate the criteria for determining which security holders are entitled to vote or give consent. 67
3. Directors and Officers
The Commission has retained the reference in Item 403 of Regulation S-K to beneficial ownership by "directors and officers of the registrant," rather than amend the rule to apply to "directors and executive officers of the registrant." 68 For purposes of determining security ownership that management may be in a position to influence or control, the Commission believes that it is appropriate to continue to include all officers.
4. Address of Beneficial Owner
The Commission has amended Item 403 of Regulation S-K as proposed to permit a beneficial owner of more than 5% of a registrants voting securities to provide a business or mailing address when an address must be disclosed.
O. Item 7, Directors and Executive Officers.
1. Technical Revisions
Information required by Instruction 4 to Item 103 of Regulation S-K, Legal Proceedings, 69 has been relocated from Item 8, Compensation of Directors and Executive Officers, to Item 7 as proposed. Paragraphs (b) and (c) of Item 7 have been consolidated into one paragraph (c), as proposed. In addition, an inadvertent error, whereby it appeared that investment companies no longer had to disclose the information required by paragraphs (a), Transactions with Management, and Others, and (c), Indebtedness of Management, of Item 404 of Regulation S-K, 70 was corrected.
2. Item 7(e) and 9(f), Committees of Board of Directors; Number of Meetings and Directors Attendance
Although the Commission proposed no substantive change, it solicited comment as to whether the disclosure called for by paragraphs (e) and (f) of Item 7 (committees of the Board of Directors; number of meetings and director attendance) should be revised. As there was little support for such revision, no indication of undue burden and a number of comments supporting the interest of investors in such information, the current requirements have not been revised.
3. Item 7(h), Votes Cast Against or Withheld From Directors
In the proposing release, the Commission solicited comment as to whether the disclosure required by paragraph (h) of Item 7 (regarding directors with respect to whom 5% or more of the security holder vote was cast against or withheld) should be revised or should be retained. After consideration of the commentator response and review of the disclosure obtained pursuant to this requirement, the Commission has concluded that the information is not particularly useful to security holders and has determined to eliminate the requirement.
P. Item 8, Compensation of directors and executive officers
1. Technical Revision
The title has been changed as proposed to reflect a previous change from "remuneration" to "Compensation" in Item 402 of Regulation S-K. 71
2. Compensation Plan Payment
As suggested by a commentator, an instruction has been added to Item 8 to codify a staff interpretation concerning the disclosure required by Item 402(b) of Regulation S-K (description of a compensation plan to which cash or non-cash compensation was paid or distributed during the last fiscal year to executive officers). 72 The instruction provides that, where (1) the plan became subject to disclosure because of an acquisition or merger and (2) within one year of the acquisition or merger such plan was terminated for purposes of prospective eligibility, the registrant need not provide a full description of the plan but instead may furnish disclosure limited to its obligations to individuals under the compensation plan.
Q. Item 9, Independent Public Accountants Peer Review
The Commission has determined not to adopt at this time the proposed revisions to Item 9 concerning disclosure with regard to the membership of the registrants auditor in an organization that has a peer review program and an independent oversight function. This proposal as well as others are being examined in light of related private sector initiatives under consideration. 73
R. Item 304 of Regulation S-K; Item 9, Independent Public Accountants;
1. Item 304 of Regulation S-K
Prior to the proposal, Item 304 of Regulation S-K only required disclosure of recurring transactions or events that were the subject of a disagreement with a previous accountant. As proposed, the existing provisions of Item 304 have been designated as 304(b) 74 and new paragraph (a) has been added to the Item. 75 Pursuant to new paragraph (a), information concerning changes in and disagreements with accountants will now be provided wherever Item 304 disclosure is required, unless disclosure has previously been made. As proposed, these requirements will extend to those engaging in initial public offerings 76 and registrants newly subject to Exchange Act reporting requirements. 77
2. Item 9 of Schedule 14A
In addition to requiring information concerning changes in accountants, Item 9 78 of Schedule 14A required proxy statement disclosure concerning disagreements previously reported on Form 8-K. The Item called for a description of such disagreement and provided that the former accountant be afforded an opportunity to respond to the registrants description.
The Commission proposed to amend Item 9 to require disclosure of disagreements in connection with changes in accountants since the last proxy statement for the most recent annual meeting, even though they have not been previously reported on Form 8-K. 79 The Commission has adopted that proposal and further modified the language to simply refer to the requirements of Item 304(a). 80
Item 9 as proposed required disclosure of disagreements, notwithstanding prior disclosure. In contrast, proposed Item 304, which also required disclosure of disagreements, specified that the disclosure need not be provided if previously reported. Because the proposal called for information pursuant to both Item 9 and Item 304 in connection with proposed actions requiring financial statements, there was an ambiguity. The Commission is clarifying that the information need not be furnished if previously disclosed. 81 Accordingly, Item 9 as adopted no longer calls for information concerning disagreements because a proposed action requires the furnishing of financial statements. 82 Item 9 continues, however, to require the information, notwithstanding prior disclosure, when the annual election of directors or the election, approval or ratification of the accountant is involved. 83
T. Item 10, Compensation Plans
Former Items 9, 10 and 11 have been consolidated and simplified. Information with respect to plans previously in effect is to be required only for plans in effect within the last three years, rather than five years. In addition, the Commission has deleted the requirement to disclose information concerning the sale of securities subsequent to the exercise of options as unnecessary and unduly burdensome.
Certain clarifying revisions have been made throughout Item 10 to clarify that the disclosure required with respect to (1) directors who are not executive officers and (2) all employees is to be made on a group rather than individual basis. In addition, disclosure concerning executive officers is required only as to those in office at the time the proxy statement is distributed.
3. Disclosure of Accounting Treatment of Compensation Plan
In the proposing release, the Commission solicited comment on whether Item 10 should require disclosure of the accounting treatment to be accorded a compensation plan subject to approval. The Commission believes it is appropriate to await completion of the Financial Accounting Standards Boards project evaluating the measurement of compensation costs for stock option or stock award plans and accordingly has not amended Item 10 to require such disclosure.
4. Item 10(a)(3) of Schedule 14A; Item 11 of Form 10-K; Item 402(b) of Regulation S-K
Certain commentators highlighted a potential conflict between disclosure requirements of Item 10 of Schedule 14A and Item 11 of Form 10-K.
Item 10(a)(3) of Schedule 14A requires disclosure of the executive compensation information called for by Item 402(b) of Regulation S-K with respect to compensation plans currently in effect or in effect during the last three years, with certain specified exceptions. The information to be provided is aggregated for the three year period.
Item 11 of Form 10-K also calls for disclosure of Item 402(b) information. The information required by item 11 is ordinarily incorporated by reference from the registrants definitive proxy statement or definitive information statement. Because the Form 10-K information is required for the most recent fiscal year, a question has arisen as to whether separate disclosure of plan payments for the last fiscal year only would be required even when Item 10 of Schedule 14A has been Complied with. However, the instruction to Item 11 of Form 10-K will make clear that a registrant incorporating by reference the three year aggregated history of plan compensation required by Item 10(a)(3) of Schedule 14A will be deemed to have complied with the requirement of Item 11 of Form 10-K.
U. Item 11, Authorization or Issuance of Securities Otherwise than for Exchange, and Item 12, Modification or Exchange of Securities
No substantive changes have been made to these Items as proposed, except that the proposed requirement to provide the disclosure called for by Item 201 of Regulation S-K 84 has not been adopted.
V. Item 13, Financial and Company Information, and Item 14, Mergers, Consolidations, Acquisitions and Similar Matters
As proposed, Item 13 would have specified disclosure requirements for mergers, consolidations and acquisitions, and Item 14 would have specified the company specific requirements (including financial statements), common to Items 11, 12 and 13.
The Commission, upon reconsideration, has determined that the proposed Item 14 requirements unintentionally and unduly increased the disclosure requirements for registrants electing S-2 or S-3 level disclosure for Item 11 and 12 transactions. Therefore, the Commission has restructured Items 13 and 14.
Item 13, as adopted, provides the financial and other company-specific information required for Items 11 and 12 transactions, which parallel those formerly required by Item 15 of Schedule 14A. Item 13 also specifies the extent to which such information may be incorporated by reference from previously-filed documents or from the annual report to security holders. To avoid increasing substantially the disclosure obligations of registrants incorporating by reference, the proposal has been modified so that a registrant need not incorporate an entire document, but rather only those specific sections that provide the required information. Nor will Item 13 require a registrant incorporating by reference from a Form 10-K to incorporate subsequently filed reports.
New Item 13 also permits a registrant to incorporate by reference Information meeting the requirements from its annual report to security holders or any previously-filed document, if the report or document is delivered with the proxy statement. Registrants meeting the requirements of Form S-3 may incorporate by reference without delivery of documents. 85
New item 14, Mergers, Consolidations, Acquisitions and Similar Matters, specifies both the required transaction-related disclosure (proposed in Item 13) and the financial and other company-specific information (proposed in Items 13 and 14) for such transactions. 86 The requirements are not materially different from those proposed, and are intended to bring the proxy disclosures into conformity with the Form S-4 disclosures 87 for the same types of transactions. 88 Consistent with Forms S-2-3-4, registrants electing to incorporate by reference must incorporate into the proxy statement the entire annual report on Form 10-K and subsequently filed reports. 89
The Commission has, as proposed, retained the ability of registrants to incorporate by reference the required information from an annual report sent to security holders pursuant to Rule 14a-3 with respect to the same meeting as that to which the proxy statement relates. Thus, registrants providing information at the S-1 level may incorporate any of the required company-specific information contained in such an annual report.
An instruction to both Items 13 and 14 has been added that requires a registrant to furnish a draft of the financial statements incorporated in preliminary proxy material if the document containing the financial statements (e.g., annual report on Form 10-K) has not yet been filed with or furnished to the Commission. 90
W. Item 19, Amendments of Charter, Bylaws or Other Documents
As proposed, an instruction has been added that directs the registrants attention to Release No. 34-15230 91 regarding proxy disclosure of defensive corporate charter and bylaw amendments.
As proposed, the Commission is substituting in Schedule 14B the term "registrant" for "issuer" and is permitting the use of a business or mailing address rather than a residence address.
The revisions being adopted as proposed to Regulation 14C correspond to revisions to Regulation 14A with the following exceptions:
(1) Rule 14c-2, Distribution of Information Statement
The Commission is adopting a proposed revision to paragraph (a) of Rule 14c-2 92 that modifies the language to state more clearly its position that a registrant must furnish an information statement to every holder of a class of securities registered under Securities Exchange Act Section 12 93 that is entitled to vote or to give consents or authorizations, if a proxy is not solicited from the security holder. The amendment makes clear that if the registrant solicits consents from a few security holders who have enough shares to approve the transaction, the registrant must furnish information statements to the remaining security holders as required by Rule 14c-2. 94
(2) Rule 14c-3, Annual Report to be Furnished Security Holders
As proposed, to avoid needless repetition, paragraphs (a)(1) through (a)(11), which formerly set forth the required annual report to security holders disclosure, will now require that the information specified in paragraph (b)(1) through (b)(11) of Rule 14a-3 95 be provided in the annual report. As proposed, conforming references have been made to indicate which paragraphs are applicable to investment companies registered under the Investment Company Act of 1940.
Z. Schedule 14C, Information Required in Information Statement
Technical revisions to Schedule 14C that are being adopted as proposed are (1) renumbering of items to reflect deletion of Item 3, which is now part of new Item 1 of Schedule 14A; (2) revision of the list of Schedule 14A items that are not required in information statements to reflect new numbering of Schedule 14A items; (3) addition of Item 1(c) of Schedule 14A to the list of Schedule 14A items excluded from Schedule 14C; and (4) addition of a note to Item 1, stating that the notes at the beginning of Schedule 14A also apply to Schedule 14C.
The Commission also is adopting additional technical changes: (1) the references to provisions of the Internal Revenue Code ("Code") in Item 202 of Regulation S-K are being changed to conform to corresponding changes in the Code; (2) certain portions of the exhibit table in Item 601 of Regulation S-K are being corrected to reflect accurately which exhibits should be supplied in connection with various filings or to clarify language used in the footnotes; and (3) references to Item 1 of Schedule 14A have been added to Item 18 of Form S-4 and to Item 18 of Form F-4.
III. Final Regulatory Flexibility Analysis
This final regulatory flexibility analysis, which relates to amendments to the proxy rules and certain other rules, has been prepared in accordance with 5 U.S.C. 604. The corresponding Initial Regulatory Flexibility Analysis is contained in the proposing release.
The Need for, and Objectives of the Comprehensive Revisions to the Proxy Rules
The Commission has recognized the need to clarify, to provide certainty by codifying staff interpretation, and to simplify the proxy rules. The principal purpose of the proxy rules, to ensure that information is made available to security holders being asked to vote on or consent to corporate action, is furthered by such clarification, codification and simplification. In addition, the revisions to Item 9 of Schedule 14A, Form S-18 and to Item 304 of Regulation S-K will assure that disclosure concerning changes in accountants and any related disagreements will be made in registration statements by registrants engaged in initial public offerings and in proxy statements and periodic filings by registrants not subject to Exchange Act filing registrants at the time a change in accountants occurred.
Issues Raised by Public Comment in Response to the Initial Regulatory Flexibility Analysis
One commentator, the American Bar Association, commented on the Initial Regulatory Flexibility Analysis contained in the proposing release. This commentator expressed the view that the proposed provisions, if adopted, would not have an adverse effect on competition or impose a burden on competition that is neither necessary nor appropriate in furthering the purposes of the Exchange Act.
The commentator also noted that, whereas it was conscious of the benefits of encouraging small businesses by minimizing their regulatory burden, it shared the Commissions view that exemption from the provisions of the proxy rules or Item 304 of Regulation S-K would not be justified. This commentator stated:
It is fundamental to the capital formation process that investors who fund new enterprises be treated fairly and be given reasonable information concerning the businesses in which they invest. Moreover, requiring small businesses to live with appropriate regulations as a quid pro quo for access to public markets will doubtless have the salutary side effect of accustoming their managers to an ordered approach to the conduct of their businesses thus facilitating their future access to the capital markets.
Significant Alternatives
Pursuant to section 604 of the Regulatory Flexibility Act, the following types of alternatives were considered:
(1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities;
(2) the clarification, consolidation or simplification of compliance and reporting requirements under the rules for such small entities;
(3) the use of performance rather than design standards; and
(4) an exemption from coverage of the rules, or any part thereof, for small entities.
The Commission does not believe that the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities would be consistent with the Commissions statutory mandate to protect investors. The revisions to the proxy rules will, however, streamline and simplify reporting requirements under these rules for such small entities as well as for large entities. With respect to the amendments to Item 9 of Schedule 14A, Form S-18 and to Item 304 of Regulation S-K, an alternative would have been to exempt small entities that were not subject to Exchange Act filing requirements at the time of a change in accountants from furnishing the disclosure. Such an exemption, however, would not serve the purposes of the Commissions statutory mandate to protect investors. In the Commissions view, alternative (3) is not appropriate since the amendments are not related to either performance or design standards. Similarly, the Commission does not believe that other alternatives, such as exempting small entities from all or part of the proxy rules, would be consistent with the objectives of investor protection.
IV. Statutory Basis and Text of Amendments
The amendments to Items 202, 304, 403 and 601 of Regulation S-K, Rule 3-05 of Regulation S-X, Forms S-4, F-4, N-14, 10-K and S-18, Rule 13e-3, Schedule 13E-3, Rule 14F-1, Rule 20a-3 of the Investment Company Act of 1940 and to the proxy and information statement rules are being adoped by the Commission pursuant to Sections 6, 7, 8, 10, and 19(a) of the Securities Act of 1933, Sections 3, 10, 12, 13, 14, 15(d), 17 and 23(a) of the Securities Exchange Act of 1934, and Sections 20(a) and 38(a) of the Investment Company Act of 1940.
List of Subjects in 17 CFR
Parts 210, 229, 239, 240, 249 and 270
Reporting and recordkeeping requirements, securities.
V. Text of Amendments
In accordance with the foregoing, Title 17, Chapter II of the Code of Federal Regulations is amended as follows:
PART 210--FORM AND CONTENT OF AND REQUIREMENTS FOR FINANCIAL STATEMENTS, SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934, PUBLIC UTILITY HOLDING COMPANY ACT OF 1934, INVESTMENT COMPANY ACT OF 1940, AND ENERGY POLICY AND CONSERVATION ACT OF 1975.
1. The authority citation for Part 210 continues to read, in part, as follows:
Authority: Secs. 6, 7, 8, 10, 12, 13, 15, 19, 23, 48 Stat. 78, 79, amended, 81, as amended, 85, as amended, 892, as amended, 894, 895, as amended, 901, as amended, secs. 5, 14, 20, 49 Stat. 812, 827, 833, secs. 8, 30, 31, 38, 54 Stat. 803, 836, 838, 841; 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 781, 78m, 78o, 78w, 79e, 79n, 79t, 80a-8, 80a-29, 80a-30, 80a-37, §210.3-05 also issued under 15 U.S.C. 77aa, 78n and 80a-20.
§210.3-05Amended
2. In paragraph (b)(1), introductory text, of §210.3-05 the reference to "Item 15" is removed and replaced with the words "Item 14."
PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER THE SECURITIES ACT OF 1933 AND SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND CONSERVATION ACT OF 1975--REGULATION S-K.
3. The authority citation for Part 229 continues to read, in part, as follows:
Authority: Secs. 6, 7, 8, 10, 19(a), 48 Stat. 78, 79, 81, 85; secs. 12, 13, 14, 15(d), 23(a), 48 Stat. 892, 894, 901; secs. 205, 209, 48 Stat. 906, 908; sec. 203(a), 49 Stat. 704; secs. 1, 3, 8, 49 Stat. 1375, 1379; sec. 301, 54 Stat 857; secs. 8, 202, 68 Stat. 685, 686; secs. 3, 4, 5, 6, 78 Stat. 565-568, 569, 570-574; sec. 1, 79 Stat. 1051; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 1, 2, 3-5, 28(c) 84 Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 11, 18, 89 Stat. 117, 118, 119, 155; 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 781, 78m, 78n, 781(d), 78w(a).
4. In section 229.202, paragraph (b)(9) is amended by removing the first reference to "1232" and replacing it with "paragraph (a) of section 1273," by removing the second reference to "1232" and replacing it with "1273" and by removing the third reference to "section 1232" and replacing it with "sections 1271-1278."
§229.202 (Item 202) Description of registrants securities.
* * * * *
(b) * * *
* * * * *
(9) If debt securities are to be offered at a price such that they will be deemed to be offered at an "original issue discount" as defined in paragraph (a) of section 1273 of the Internal Revenue Code (26 U.S.C. 1273), or if a debt security is sold in a package with another security and the allocation of the offering price between the two securities may have the effect of offering the debt security at such an original issue discount, the tax effects thereof pursuant to sections 1271-1278;
* * * * *
5. By revising §229.304 to read as follows:
§229.304 (Item 304) Changes in and disagreements with accountants an accounting and financial disclosure.
(a)If a change in accountants has taken place within 24 months prior to, or in any period subsequent to, the date of the most recent financial statements, the information called for by Item 4 of Form 8-K (§249.308 of this chapter) or, with respect to registered investment companies, Items 77K or 102J of Form N-SAR (§274.101 of this chapter) shall be disclosed.
(b) If, (1) in connection with a change in accountants subject to paragraph (a) of this section, there was any disagreement of the type described in Item 4(b) of Form 8-K or item 77k or 102J of Form N-SAR; (2) during the fiscal year in which the change in accountants took place or during the subsequent fiscal year, there have been any transactions or events similar to those which involved such disagreement; and (3) such transactions or events were material and were accounted for or disclosed in a manner different from that which the former accountants apparently would have concluded was required, state the existence and nature of the disagreement and also state the effect on the financial statements if the method had been followed which the former accountants apparently would have concluded was required. These disclosures need not be made if the method asserted by the former accountants ceases to be generally accepted because of authoritative standards or interpretations subsequently issued.
Instructions to Item 304. 1. The disclosure called for by paragraph (a) of this section need not be provided it has been previously reported (as that term is defined in Rule 12b-2 under the Exchange Act (§240.12b-2 of this chapter)); the disclosure called for by paragraph (a) must be provided, however, notwithstanding prior disclosure, if required pursuant to Item 9 of Schedule 14A (§240.14a-101 of this chapter). The diclosure called for by paragraph (b) of this section must be furnished, where applicable, notwithstanding any prior disclosure about accountant changes or disagreements.
2. When disclosure is required by paragraph (a) of this section the accountants letter referred to in Item 4(d) of Form 8-K or Item 77K or 102J of Form N-SAR shall be filed as an exhibit to the report or registration statement. When the document is an annual report to security holders pursuant to Rule 14a-3 (§240.14a-3 of this chapter) or Rule 14c-3 (§240.14c-3 of this chapter), or is a proxy or information statement filed pursuant to the requirements of Schedules 14A or 14C (§240.14a-101 and §240.14c-101 of this chapter), no such exhibit shall be required, and in lieu of a letter pursuant to Item 4(d) of Form 8-K or Item 77K or 102J of Form N-SAR, the registrant, prior to filing such materials with or furnishing such materials to the Commission, shall furnish the disclosure required by this section to any former accountant engaged by the registrant during the period set forth in paragraph (a) of this section. If that accountant believes that the statements made in response to this section are incorrect or incomplete, he may present his views in a brief statement, ordinarily expected not to exceed 200 words, to be included in the annual report or proxy or information statement. This statement shall be submitted to the registrant within ten business days of the date the accountant receives the registrants disclosure.
3. The information required by this section need not be provided for companies being acquired by the registrant that are not subject to the filing requirements of either section 13(a) or 15(d) of the Exchange Act.
6. By amending paragraph (a) of §229.403 by adding a sentence after the first complete sentence. The first complete sentence is published for the convenience of the reader.
§229.403 (Item 403) Security ownership of certain beneficial owners and management.
(a) Security ownership of certain beneficial owners. Furnish the following information, as of the most recent practicable date, substantially in the tabular form indicated, with respect to any person (including any "group" as that term is used in section 13(d)(3) of the Exchange Act) who is known to the registrant to be the beneficial owner of more than five percent of any class of the registrants voting securities. The address given in column (2) may be a business, mailing or residence address. * * *
* * * * *
7. By revising the Exhibit Table of §229.601 to read as follows:
§229.601 (Item 601) Exhibits.
*16*Exhibit Table
Securities Act forms Exchange Act forms
S-4 F-4 10-
S-1 S-2 S-3
# S-8 S-11 F-1 F-2 F-3
# 10 8-K Q 10-K
(1) Underwriting agreement ........ X X X
X .. X X X X X
X .. X .. ..
(2) Plan of acquisition,
reorganization, arrangement,
liquidation or
succession ........................ X X X
X .. X X .. X X
X X X X X
..
(3) Articles of Incorporation
and by-laws ....................... X .. ..
X .. X X X .. ..
X X .. .. X
(4) Instruments defining the
rights of security
holders, including indentures
................................... X X X
X X X X X X X
X X X X X
(5) Opinion re legality ........... X X X
X X X X X X X
X .. .. .. ..
capital shares .................... X X ..
X X .. X X X
X .. X X .. ..
..
(7) Opinion re liquidation
preference ........................ X X ..
X .. X X X X ..
X X .. .. ..
(8) X X X
X .. X X X X X X
.. .. .. ..
(9) Voting trust agreement ........ X .. ..
X .. X X X .. ..
X X .. .. X
(10) Material contracts ........... X X ..
X .. X X X X ..
X X .. .. X
(11) Statement re computation of
per share earnings ................ X X ..
X .. X .. X X ..
X X .. .. X
(12) Statements re computation
of ratios ......................... X X X
X .. X .. X X ..
X X .. .. X
(13) Annual report to
security holders, Form
10-Q or quarterly report
to security holders * ........... .. X
.. X .. .. .. ..
.. .. .. .. .. .. X
(14) Material foreign patents ..... X .. ..
X .. .. X X .. ..
X X .. .. ..
(15) Letter re unaudited
interim financial
information ....................... X X X
X X X X X X XB
X .. .. X ..
(16) Letter re change in
certifying accountant ............. X ## X ## .. X ## .. X
## ## .. ..
.. X ## X .. X:SI
##
(17) Letter re director resignation
................................... .. .. ..
.. .. .. .. .. .. ..
.. .. X .. ..
(18) Letter re change in
accounting principles ............. .. .. ..
.. .. .. .. .. .. ..
.. .. .. X X
(19) Previously unfiled
documents ......................... .. .. ..
.. .. .. .. .. .. ..?
.. .. X X
(20) Report furnished to
security holders .................. .. .. ..
.. .. .. .. .. .. ..
.. .. .. X ..
(21) Other documents or statements
to security
holders ........................... .. .. ..
.. .. .. .. .. .. ..
.. .. X .. ..
(22) Subsidiaries of the
registrant ........................ X .. ..
X .. X .. X .. ..
X X .. .. X
(23) Published report regarding
matters submitted
to vote of security
holders ........................... .. .. ..
.. .. .. .. .. .. ..
.. .. .. X X
(24) Consents of experts and
X
counsel ........................... X X X
X X X X X X X
X .. ** X ** X **
(25) Power of attorney ............ X X X
X X X X X X X
X X X X X
(26) Statement of elifibility
of trustee ........................ X X X
X .. X X X X X
X .. .. .. ..
(27) Invitations for competitive
bids .............................. X X X
X .. .. X X X X
X .. .. .. ..
(28) Additional exhibits .......... X X X
X X X X X X X
X X X X X
(29) Information from reports
furnished to state
insurance regulatory
authorities ....................... X X X
X X .. .. .. .. ..
.. X .. .. X
* Where incorporated by reference into the text of the
prospectus and delivered to security holders along with the prospectus as
permitted by the registration statement; or, in the case of the Form 10-K, where the annual report to
security holders is incorporated by reference into the text of the Form 10-K.
** Where the opinion of the expert or
counsel has been incorporated by reference into a previously filed Securities
Act registration statement.
# An exhibit need not be provided about a company if (1)
with respect to such company an election has been made under Form S-4 or F-4 to
provide information about such company at a level prescribed by Forms S-2, S-3, F-2 and (2) the form, the level of which has
been elected under Forms S-4 or F-4, would not require such company to provide
such exhibit if it were registering a primary offering.
PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933
8. The authority citation for Part 239 continues to read, in part, as follows:
Authority: The Securities Act of 1933, 15 U.S.C. 77a, et seq.,
9. Paragraph (i) of Item 11 of Form S-1 (§239.11) is revised to read as follows note that the text of Form S-1 does not appear in the Code of Federal Regulations:
§239.11 Form S-1, General from of registration statement.
* * * * *
Form S-1
* * * * *
Part I. Information Required in Prospectus.
* * * * *
Item 11. Information with Respect to the Registrant.
(i) Information required by Item 304 of Regulation S-K (§229.304 of this chapter), changes in and disagreements with accountants on accounting and financial disclosure;
* * * * *
10. Paragraph (b)(8) of Item 11 of Form S-2 (§239.12) is revised to read as follows note that the text of Form S-2 does not appear in the Code of Federal Regulations:
§239.12 Form S-2, For registration under the Securities Act of 1933 of securities of certain issuers.
* * * * *
Form S-2
* * * * *
Part I. Information Required in Prospectus.
* * * * *
Item II. Information with Respect to the Registrant.
* * * * *
(b) * * *
(8) Furnish information concerning changes in and disagreements with accountants on accounting and financial disclosure required by Item 304 of Regulation S-K (§229.304) of this chapter.
* * * * *
11. Item 27 of Form S-11 (§239.18) is revised to read as follows note that the text of From S-11 does not appear in the Code of Federal Regulations:
§239.18 Form S-11, For securities of certain real estate companies.
* * * * *
Form S-11
* * * * *
Part I. Information Required in Prospectus
* * * * *
Item 27. Financial Statements and Information
Include in the prospectus the financial statements required by Regulation S-X, the supplementary financial information required by Item 302 of Regulation S-K (§229.302 of this chapter) and the information concerning changes in an disagreements with accountants on accounting and financial disclosure required by Item 304 of Regulation S-K (§229.304 of this chapter). * * *
* * * * *
12. Section 239.23 is amended by revising Item 7 of Form N-14 (§239.23) to read as follows note that the text of Form N-14 does not appear in the Code of Federal Regulations:
§239.23 Form N-14, for the registration of securities issued in business combination transactions.
* * * * *
Form N-14
* * * * *
Item 7. Voting Information
(a) If proxies are to be solicited, include, where applicable, the information called for by Items 2 and 4 of Schedule 14A (17 CFR 240.14a-101) of Regulation 14A under the 1934 Act.
(b) If the transaction is an exchange offer or if proxies are not to be solicited, include, where applicable, the information called for by Item 2 of Schedule 14C (17 CFR 240.14c-101) under the 1934 Act, and state the date, time and place of the meeting of the security holders, unless such information is otherwise disclosed in material furnished to security holders with the information statement.
(c) In additional to the information called for by paragraphs (a) and (b) above, include:
(1) the information called for by Item 3 of Schedule 14A (17 CFR 240.14a-101) of Regulation 14A under the 1934 Act; * * *
(2) the information called for by Item 21 of Schedule 14A (17 CFR 240.14a-101) of Regulation 14A under the 1934 Act about both the registrant and the company being acquired;
(3) the information called for by Items 6(a) and (b) of Schedule 14A (17 CFR 240.14a-101) of Regulation 14A under the 1934 Act about both the registrant and the company being acquired;
* * * * *
13. Section 239.25 is amended by revising paragraph (b)(3)(vi) of Item 12, paragraphs (a)(1)-(6) of Item 18 and paragraphs (a)(2), (3), and (5)-(7) of Item 19 of Form S-4 (§239.25) to read as follows note that the text of From S-4 does not appear in the Code of Federal Regulations:
§239.25 Form S-4, for the registration of securities issued in business combination transactions.
* * * * *
From S-4
* * * * *
Part I. Information Required in the Prospectus.
* * * * *
Item 12. Information with Respect to S-2 or S-3 Registrants.
* * * * *
(b) * * *
(3) * * *
(vi) Item 304 of Regulation S-K (§229.304 of this chapter), changes in and disagreements with accountants on accounting and financial disclosure.
* * * * *
D. Voting and Management Information
Item 18. Information if Proxies, Consents or Authorizations are to be Solicited.
(a) If proxies, consents or authorizations are to be solicited, furnish the following information, except as provided by paragraph (b) of this Item:
(1) The information required by Item 1 of Schedule 14A, date, time and place information;
(2) The information required by Item 2 of Schedule 14A, revocability of proxy;
(3) The information required by Item 3 of Schedule 14A, dissenters rights of appraisal;
(4) The information required by Item 4 of Schedule 14A, persons making the solicitation;
(5) With respect to both the registrant and the company being acquired, the information required by:
(i) Item 5 of Schedule 14A, interest of certain persons in matters to be acted upon; and
(ii) Item 6 of Schedule 14A, voting securities and principal holders thereof;
(6) The information required by Item 21 of Schedule 14A, vote required for approval; and
(7) With respect to each person * * *
* * * * *
Item 19. Information if Proxies, Consents or Authorizations are not to be Solicited or in an Exchange Offer.
(a) If the transaction is an exchange offer or if proxies, consents or authorizations are not to be solicited, furnish the following information, except as provided by paragraph (c) of this Item;
(1) The information required by Item 2 of Schedule 14C, statement that proxies are not to be solicited;
(2) The date, time and place of the meeting of security holders, unless such information is otherwise disclosed in material furnished to security holders with the prospectus.
(3) The information required by Item 3 of Schedule 14A, dissenters rights of appraisal;
* * * * *
(5) With respect to both the registrant and the company being acquired, the information required by Item 6 of Schedule 14A, voting securities and principal holders thereof;
(6) The information required by Item 21 of Schedule 14A, vote required for approval; and
(7) With respect to each person * * *
* * * * *
14. Section 239.28 is amended by revising Item 21 of Form S-18 (§239.28) to add new paragraph (k) to read as follows note that the text of Form S-18 does not appear in the Code of Federal Regulations:
§239.28 Form S-18, optional form for the registration of securities to be sold to the public by the issuer for an aggregate cash price not to exceed $7,500,000.
* * * * *
Form S-18
* * * * *
Item 21. Financial statements
* * * * *
(k) Furnish the information required by Item 304 of Regulation S-K (§239.304 of this chapter), changes in and disagreements with accountants on accounting and financial disclosure.
* * * *
15. Section 239.34 is amended by revising paragraphs (a)(1)-(6) including the Instruction following paragraph (a)(4) of Item 18 and paragraphs (a)(2), (3) and (5)-(7), including the Instruction following paragraph (a)(5) of Item 19 of Form F-4 (§239.34 of this chapter) to read as follows note that the text of Form F-4 does not appear in the Code of Federal Regulations:
§239.34 Form F-4, for registration of securities of certain foreign private issuers issued in certain business combination transactions.
* * * * *
Form F-4
* * * * *
D. Voting and Management Information.
* * * * *
Item 18. Information if Proxies, Consents or Authorizations Are To Be Solicited.
(a) If proxies, consents or authorizations are to be solicited, furnish the following information, except as provided by paragraph (b) of this Item:
(1) The information required by item 1 of Schedule 14A, date, time and place information;
(2) The information required by Item 2 of Schedule 14A, revocability of proxy;
(3) The information required by Item 3 of Schedule 14A, dissenters rights of appraisal;
(4) The information required by Item 4 of Schedule 14A, persons making the solicitation;
(5) With respect to both the registrant and the company being acquired, the information required by;
(i) Item 5 of Schedule 14A, interests of certain persons in matters to be acted upon; and
(ii) Item 6 of Schedule 14A, voting securities and principal holders thereof.
Instruction
The information specified in Item 4 of Form 20-F may be provided in lieu of the information specified in Item 6(d) of Schedule 14A.
(6) The information required by Item 9 of Schedule 14A, independent public accountants;
(7) The information required by Item 21 of Schedule 14A, vote required for approval;
* * * * *
Item 19. Information if Proxies, Consents or Authorizations Are Not To Be Solicited in an Exchange Offer.
(a) If the transaction is an exchange offer or if proxies, consents or authorizations are not to be solicited, furnish the following information, except as provided by paragraph (b) of this Item:
(1) The information required by Item 2 of Schedule 14C, statement that proxies are not to be solicited:
(2) The date, time and place of the meeting of security holders, unless such information is otherwise disclosed in material furnished to security holders with or preceding the prospectus.
(3) The information required by Item 3 of Schedule 14A, dissenters rights of appraisal;
* * * * *
(5) With respect to both the registrant and the company being acquired, the information required by Item 6 of Schedule 14A, voting securities and principal holders thereof.
Instruction
The information specified in Item 4 of Form 20-F may be provided in lieu of the information specified in Item 6(d) of Schedule 14A.
(6) The information required by Item 9 of Schedule 14A, independent public accountants;
(7) The information required by Item 21 of Schedule 14A, vote required for approval, and
* * * * *
PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934.
16. The authority citation for Part 240 continues to read, in part, as follows:
Authority: Sec. 23, 48 Stat. 901, as amended U.S.C. 78w.
§240.13e-3 Amended
17. In §240.13e-3 in paragraphs (a)(3)(i)(C), (c)(2) and (e)(1) the reference to "240.14a-103" is removed and replaced with the reference "240.14b-1" and in paragraph (f)(1)(ii) the reference to "Rule 14a-3(d) §240.14a-3(d)" is removed and replaced with "Rule 14a-13(a) §240.14a-13(a)."
§240.13e-100 Amended
18. By amending §240.13e-100 by removing the reference to "240.14a-130" and replacing it with "240.14b-1" in paragraph (a) and General Instructions F and G.
19. By revising §240.14a-1 to read as follows:
§240.14a-1 Definitions.
Unless the context otherwise requires, all terms used in this regulation have the same meanings as in the Act or elsewhere in the general rules and regulations thereunder. In addition, the following definitions apply unless the context otherwise requires:
(a) Associate. The Term "associate," used to indicate a relationship with any person, means (1) any corporation or organization (other than the registrant or a majority owned subsidiary of the registrant) of which such person is an officer or partner or is, directly or indirectly, the beneficial owner of 10 percent or more of any class of equity securities; (2) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity: and (3) any relative or spouse of such person, or any relative of such spouse, who has the same home as such person or who is a director or officer of the registrant or any of its parents or subsidiaries.
(b) Last fiscal year. The term "last fiscal year" of the registrant means the last fiscal year of the registrant ending prior to the date of the meeting for which proxies are to be solicited or, if the solicitation involves written authorizations or consents in lieu of a meeting, the earliest date they may be used to effect corporate action.
(c) Proxy. The term "proxy" includes every proxy, consent or authorization within the meaning of section 14(a) of the Act. The consent or authorization may take the form of failure to object or to dissent.
(d) Proxy statement. The term "proxy statement" means the statement required by §240.14a-3(a) whether or not contained in a single document.
(e) Record date. The term "record date" means the date as of which the record holders of securities entitled to vote at a meeting or by written consent or authorization shall be determined.
(f) Registrant. The term "registrant" means the issuer of the securities in respect of which proxies are to be solicited.
(g) Solicitation. (1) The terms "solicit" and "solicitation" include:
(i) Any request for a proxy whether or not accompanied by or included in a form of proxy:
(ii) Any request to execute or not to execute, or to revoke, a proxy: or
(iii) The furnishing of a form of proxy or other communication to security holders under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy.
(2) The terms do not apply, however to the furnishing of a form of proxy to a security holder upon the unsolicited request of such security holder, the performance by the registrant of acts required by §240.14a-7, or the performance by any person of ministerial acts on behalf of a person soliciting a proxy.
20. Section 240.14a-2 is amended by revising the section heading, introductory paragraph, and paragraphs (a) introductory text, (a)(4)(a)(6), (b) introductory text, (b)(1) and (b)(2)(ii) to read as follows:
§240.14a-2 Solicitations to which §240.14a-3 to §240.14a-13 apply.
Sections 240.14a-3 to 240.14a-13 do not apply to every solicitation of a proxy with respect to securities registered pursuant to section 12 of the Act, whether or not trading in such securities has been suspended, except that:
(a) Sections 240.14a-3 to 240.14a-13 do not apply to the following:
* * * * *
(4) Any solicitation with respect to a plan of reorganization under Chapter 11 of the Bankruptcy Reform Act of 1978, as amended, if made after the entry of an order approving the written disclosure statement concerning a plan of reorganization pursuant to section 1125 of said Act and after, or concurrently with, the transmittal of such disclosure statement as required by section 1125 of said Act:
* * * * *
(6) Any solicitation through the medium of a newspaper advertisement which informs security holders of a source from which they may obtain copies of a proxy statement, form of proxy and any other soliciting material and does no more than (i) name the registrant, (ii) state the reason for the advertisement, and (iii) identify the proposal or proposals to be acted upon by security holders.
(b) Sections 240.14a-3 to 240.14a-8 and 240.14a-10 to 240.14a-13 do not apply to the following:
(1) Any solicitation made otherwise than on behalf of the registrant where the total number of persons solicited is not more than ten: and
(2)a * * *
(ii) The advisor discloses to the recipient of the advice any significant relationship with the registrant or any of its affiliates, or a security holder proponent of the matter on which advice is given as well as any material interest of the advisor in such matter.
* * * * *
21. Section 240.14a-3 is amended by revising paragraph (b) introductory text, revising the heading of "NOTE 1" after paragraph (b)(1) to read "NOTE," revising (b)(4), and (b)(6) through (b)(10), and Notes after (b)(10) and (b)(11), revising (b)(13), (c), and the Note following paragraph (c), deleting the Note after paragraph (b)(7), removing paragraph (d) and redesignating and revising paragraphs (e) and (f) as paragraphs (d) and (e) to read as follows:
§240.14a-3 Information to be furnished to security holders.
* * * * *
(b) If the solicitation is made on behalf of the registrant and relates to an annual (or special meeting in lieu of the annual) meeting of security holders, or written consent in lieu of such meeting, at which directors are to be elected, each proxy statement furnished pursuant to paragraph (a) of this section shall be accompanied or preceded by an annual report to security holders as follows:
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(4) The report shall contain information concerning changes in and disagreements with accountants on accounting and financial disclosure required by Item 304 of Regulation S-K (§229.304 of this chapter).
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(6) The report shall contain a brief description of the business done by the registrant and its subsidiaries during the most recent fiscal year which will, in the opinion of management, indicate the general nature and scope of the business of the registrant and its subsidiaries.
(7) The report shall contain information relating to the registrants industry segments, classes of similar products or services, foreign and domestic operations and export sales required by paragraphs (b), (c)(1)(i) and (d) of Item 101 of Regulation S-K (§229.101 of this chapter).
(8) The report shall identify each of the registrants directors and executive officers, and shall indicate the principal occupation or employment of each such person and the name and principal business of any organization by which such person is employed.
(9) The report shall contain the market price of and dividends on the registrants common equity and related security holder matters required by Item 201 of Regulation S-K (§229.201 of this chapter).
(10) The registrants proxy statement, or the report, shall contain an undertaking in bold face or otherwise reasonably prominent type to provide without charge to each person solicited upon the written request of any such person, a copy of the registrants annual report on Form 10-K, including the financial statements and the financial statements schedules, required to be filed with the Commission pursuant to Rule 13a-1 under the Act for the registrants most recent fiscal year, and shall indicate the name and address (including title or department) of the person to whom such a written request is to be directed. In the discretion of management, a registrant need not undertake to furnish without charge copies of all exhibits to its Form 10-K provided that the copy of the annual report on Form 10-K furnished without charge to requesting security holders is accompanied by a list briefly describing all the exhibits not contained therein and indicating that the registrant will furnish any exhibit upon the payment of a specified reasonable fee which fee shall be limited to the registrants reasonable expenses i