| Release No. 34-33232 Release No. IC-19887 November 22, 1993
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 Table of Contents
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I. PROPOSED RULE CHANGES
In 1987, the Commission adopted amendments to the proxy rules to eliminate the requirement to file preliminary proxy or information statements in certain circumstances. 5 In their present form, Rules 14a-6 and 14c-5 provide that a preliminary statement shall not be filed if it relates to an annual, or special meeting held in lieu of the annual, meeting of security holders at which the only matters to be acted upon are (1) the election of directors, (2) the election, approval or ratification of auditors, and/or (3) a security holder proposal. 6 In adopting amendments to Section 16 of the Exchange Act, 7 the Commission noted that "where a plan amendment is submitted for shareholder approval, whether or not such amendment is for the purpose of conforming a plan to [the new Section 16 rules], the proposal will no longer trigger the requirement to file the proxy or information statement in preliminary form." 8
During the comment period for the recent proposed amendments to the executive compensation rules, the Commission received numerous inquiries regarding the application of this interpretation. 9 In order to clarify and publicize this position, the Commission proposes to codify the noted interpretation.
The proposal revises Rules 14a-6(a) and 14c-5(a) specifically to include compensation plan amendments among the matters for which a preliminary filing is not necessary. The proposed amendment, like the staffs interpretation, applies to existing compensation plans. The Commission, however, is considering extending this position to votes on new plans and requests commenters views as to whether this should be done.
II. GENERAL REQUEST FOR COMMENT
Any interested persons wishing to submit written comments on the proposed amendments to Rule 14a-6 and Rule 14c-5 of the Exchange Act are invited to do so by submitting them in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W., Stop 6-9, Washington, D.C. 20549. Comment letters should refer to File No. S7-31-93. Comment is requested as to the potential impact of the proposals on such matters as tax planning and regulatory burdens. The Commission also requests comment on whether the proposals, if adopted, would have an adverse effect on competition that is neither necessary nor appropriate in furthering the Exchange Act. Comments responsive to this inquiry will be considered by the Commission in complying with its responsibilities under Section 23(a) of the Exchange Act. 10 All comments received will be available for public inspection and copying in the Commissions Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549. Since the proposal formally eliminates a filing burden and merely codifies an existing interpretation, the proposal provides for a comment period of 21 days.
III. COST BENEFIT ANALYSIS
As an aid in the evaluation of the costs and benefits of these proposals, the Commission requests the views of and other supporting information from the public. It appears to the Commission that the benefit to be gained by amending the proxy rules to clarify that preliminary proxy and information statements are not necessary where the only matters to be voted upon at an annual meeting are the election of directors; the election, approval or ratification of auditors; a shareholder proposal; and one or more amendments to an existing compensation plan outweighs any costs associated with implementing these proposals.
IV. INITIAL REGULATORY FLEXIBILITY ANALYSIS
The Commission has prepared the following Initial Regulatory Flexibility Analysis in accordance 5 U.S.C. 603.
1. The Commission is proposing amendments to Rules 14a-6 and 14c-5 under the Exchange Act to codify an interpretive position.
2. The Commissions objective is to publicize and clarify its interpretation in order to remove any ambiguity regarding the scope of the exemption from filing preliminary materials.
3. The proposed amendments would affect all registrants, including small businesses, that are reporting companies under the Exchange Act. The Commission does not have a basis for estimating the number of small businesses that will file proxy or information statements under the Exchange Act.
4. Since the proposal simply codifies current practice, it is expected that the proposed amendments will have no effect on recordkeeping, reporting and compliance requirements.
5. No current federal rules duplicate, overlap or conflict with the proposals.
6. A number of significant alternatives to the proposed amendments have been considered. One alternative would be to provide differing or simplified requirements for small businesses that are based on performance rather than design standards. However, the adoption of performance standards would not be consistent with the Commissions statutory mandate to require disclosure to investors of material information necessary to make informed investment decisions. The proposed amendments clarifies an interpretation that simplifies reporting requirements for all registrants, including small businesses. Other alternatives would involve the establishment of different compliance or reporting requirements or timetables to take into account the resources available to small businesses and to provide an exemption from coverage of the provisions for small businesses. Since the proposals impose no added burden on small business issuers, different treatment is not warranted.
Written comments are encouraged with respect to any aspect of the Analysis. Such comments will be considered in the preparation of the Final Regulatory Flexibility Analysis if the proposed amendments are adopted.
V. STATUTORY BASIS
The amendments contained herein are being proposed pursuant to Sections 12, 13, 14(a), 15(d) and 23(a) of the Exchange Act.
List of Subjects in 17 CFR Part 240
Reporting and recordkeeping requirements, Securities.
TEXT OF PROPOSED AMENDMENT
In accordance with the foregoing, Title 17, Chapter II of the Code of Federal Regulations is proposed to be amended as follows:
PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934
1. The authority citation for Part 240 continues to read in part as follows:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78i, 78j, 78l, 78m, 78n, 78o, 78p, 78s, 78w, 78x, 78ll (d), 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4 and 80b-11, unless otherwise note.
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2. By amending §240.14a-6 by revising paragraph (a) preceding the notes to read as follows:
§240.14a-6 Filing requirements.
(a) Preliminary proxy statement. Five preliminary copies of the proxy statement and form of proxy shall be filed with the Commission at least 10 calendar days prior to that date definitive copies of such material are first sent or given to security holders, or such shorter period prior to the date as the Commission may authorize upon a showing of good cause thereunder. A registrant, however, shall not file with the Commission a preliminary proxy statement, form of proxy or other soliciting material to be furnished to security holders concurrently therewith if the solicitation relates to an annual (or special meeting in lieu of the annual) meeting, or for an investment company registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) or a business development company, if the solicitation relates to any meeting of security holders at which the only matters to be acted upon are:
(1) the election of directors;
(2) the election, approval or ratification of accountant(s);
(3) a security holder proposal included pursuant to 240.14a-8;
(4) the approval of amendments to a plan as defined in paragraph (a)(7)(ii) of Item 402 of Regulation S-K (§229.402(a)(7)(ii) of this chapter);
(5) with respect to an investment company registered under the Investment Company Act of 1940 or a business development company, a proposal to continue, without change, any advisory or other contract or agreement that previously has been the subject of a proxy solicitation for which proxy material was filed with the Commission pursuant to this section; and/or
(6) with respect to an open-end investment company registered under the Investment Company Act of 1940, a proposal to increase the number of shares authorized to be issued. This exclusion from filing preliminary proxy material does not apply if the registrant comments upon or refers to a solicitation in opposition in connection with the meeting in its proxy material.
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3. By amending §240.14c-5 to revise paragraph (a) preceding the notes to read as follows:
§240.14c-5 Filing requirements.
(a) Preliminary information statement. Five preliminary copies of the information statement shall be filed with the Commission at least 10 calendar days prior to the date definitive copies of such statement are first sent or given to security holders, or such shorter period prior to that date as the Commission may authorize upon a showing of good cause therefore. In computing the 10-day period, the filing date of the preliminary copies is to be counted as the first day and the 11th day is the date on which definitive copies of the information statement may be mailed to security holders. A registrant, however, shall not file with the Commission a preliminary information statement if it relates to an annual (or special meeting in lieu of the annual) meeting, of security holders at which the only matters to be acted upon are:
(1) the election of directors;
(2) the election, approval or ratification of accountant(s);
(3) a security holder proposal identified in the registrants information statement pursuant to Item 4 of Schedule 14C (§240.14c-101); and/or
(4) the approval of amendments to a plan as defined in paragraph (a)(7)(ii) of Item 402 of Regulation S-K (§229.402(a)(7)(ii) of this chapter). This exclusion from filing a preliminary information statement does not apply if the registrant comments upon or refers to a solicitation in opposition in connection with the meeting in its information statement.
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By the Commission.
1 17 CFR 240.14a-6.
2 17 CFR 240.14c-5.
3 15 U.S.C. 78a et seq.
4 Release No. 33-7032 (November 22, 1993).
5 Release No. 34-25217 (December 21, 1987) [52 FR 48977].
6 17 CFR 240.14a-6(a); 17 CFR 240.14c-5(a). The exclusion from filing preliminary material in Rule 14a-6(a) also covers, with respect to an investment company registered under the Investment Company Act of 1940 or a business development company, a proposal to continue, without change, an advisory or other contract or agreement that previously has been subject to a solicitation for which proxy material was filed pursuant to Rule 14a-6 as well as a proposal to increase the number of shares authorized to be issued in an open-end investment company registered under the Investment Company Act of 1940.
7 15 U.S.C. §78p.
8 Release No. 34-28869 (February 8, 1991) [56 FR 7242] at note 244. See also Thompson, Hine and Flory (avail. March 29, 1991) (affirming that plan amendments do not trigger the preliminary filing requirement of Rule 14a-6).
9 File No. S7-23-93.
10 15 U.S.C. §78w(a).
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