Sure, it’s important to know that Corp Fin recently issued three new CDIs and updated two existing CDIs regarding Notices of Exempt Solicitations (also known as “PX14A6G” filings).
But the big news is that Corp Fin has started the practice of providing redlined versions of CDIs when it modifies them. This is a huge help, as before one had to slug the modified CDI against a version of the CDI that didn’t exist before. Thank you, Corp Fin!
The new and modified CDIs are important too, particularly the one that involves the notion that there has to be something real behind an exempt solicitation. There have been complaints that some shareholder proposal proponents have used PX14A6G filings to support their proposals that contain unsubstantiated claims, or that don’t disclose their involvement with the proposal. Not only does there need to be something real, but also, one actually has to solicit – someone can’t just file the exempt solicitation.
Here are the three new CDIs:
Question 126.08
Question: Can a person submit written soliciting material under the cover of a Notice of Exempt Solicitation on EDGAR if the written soliciting material has not been sent or given to security holders?
Answer: No. The submission of a Notice of Exempt Solicitation on EDGAR is not intended to be the means through which a person disseminates written soliciting material to security holders. Rather, its purpose is to notify the public of the written soliciting material that the person has sent or given to security holders through other means. See Release No. 34-30849 (June 23, 1992) (proposing the notice requirement so there would be public notice of extensive soliciting activity made in reliance on the Rule 14a-2(b)(1) exemption); Release No. 34-31326 (Oct. 16, 1992) (adopting the notice requirement in response to commenters’ concerns that, absent such a requirement, the Rule 14a-2(b)(1) exemption would permit large shareholders to conduct “secret” solicitation campaigns). [January 27, 2025]
Question 126.09
Question: Can a person submit a Notice of Exempt Solicitation on EDGAR for a written communication that does not constitute a “solicitation” under Rule 14a-1(l)?
Answer: No. Because Rule 14a-6(g) only applies to solicitations made pursuant to the Rule 14a-2(b)(1) exemption, only written communications that constitute a “solicitation” should be submitted under the cover of a Notice of Exempt Solicitation. For example, a written communication solely about matters that are not the subject of a solicitation by the registrant or a third party for an upcoming shareholder meeting generally would not be viewed as a solicitation and, therefore, should not be submitted under the cover of a Notice of Exempt Solicitation. [January 27, 2025]
Question 126.10
Question: Does Rule 14a-9, which prohibits materially false or misleading statements, apply to written soliciting materials sent or given to security holders in reliance on the Rule 14a-2(b)(1) exemption and filed under the cover of a Notice of Exempt Solicitation?
Answer: Yes. Rule 14a-2(b) does not provide an exemption from Rule 14a-9. As a result, written soliciting material attached to a Notice of Exempt Solicitation is subject to liability under Rule 14a-9. See also Release No. 34-31326 (Oct. 16, 1992) (“Pursuant to the [Rule 14a-2(b)(1)] exemption, solicitations by or on behalf of eligible persons would be exempt from all of the proxy statement filing, delivery and information requirements imposed by the proxy rules but remain subject to Rule 14a-9, which prohibits false or misleading statements in connection with written or oral solicitations.”). [January 27, 2025]
Here are links to the redlines of the two modified CDIs:
Authored by
Broc Romanek