Earlier today, as noted in this press release, the SEC proposed to modernize the proxy solicitation process (at the same time, it proposed to rescind Rule 14a-8 – which I’ll blog about tomorrow). Wow. Here’s the 152-page proposing release – and here’s the fact sheet.
In the proposal, the SEC offers a number of elements of a proxy-plumbing modernization package: eliminate annual report delivery burdens, fewer EDGAR filings, minimized timing constraints – and a significantly faster broker-search process. If adopted, the proposal could dramatically alter your annual meeting timetable. There’s a 60-day comment period.
Here are eight things to know:
- Eliminate Mandatory Delivery of the Annual Report to Shareholders: The SEC proposes to eliminate the Rule 14a-3 requirement that an annual report to shareholders accompany – or precede – proxy materials for meetings at which directors are elected. Instead, before furnishing the proxy, a company could satisfy the requirement by having its most recent Form 10-K already filed on EDGAR. Alternatively, it could “furnish” an annual report on EDGAR to satisfy the rule’s requirements. Companies could still voluntarily send shareholders a traditional “glossy” annual report.
- Add Contact Information to Proxy and Information Statements: The SEC proposes requiring the cover pages of Schedule 14A proxy statements and Schedule 14C information statements to identify a representative who can respond to questions or comments regarding the filing, including the representative’s name, address and telephone number. An email address could satisfy the address requirement. The objective is to facilitate communications between SEC staff and filers during the review process.
- Eliminate the Stock Performance Graph: As part of eliminating the separate annual report requirement, the SEC proposes to eliminate Item 201(e)’s stock performance graph requirement as that type of information is now readily available online.
- Eliminate the 20-Business-Day Proxy Delivery Requirement for Incorporation by Reference: Note D.3 to Schedule 14A requires a proxy incorporating certain information by reference to be sent at least 20 business days before the shareholder meeting – but the SEC’s proposal would eliminate the need to file it early because the filings incorporated by reference are easily accessible on EDGAR. The SEC similarly proposes eliminating the 20-business-day requirements in Forms S-4 and F-4.
- Eliminate “Notices of Exempt Solicitation” (PX14A6G) Altogether: Back in January, Corp Fin issued a CFI objecting to the voluntary filing of Notices of Exempt Solicitation for those shareholders who hold less than $5 million of a company’s securities. Now, the SEC has proposed to eliminate the ability to file this notice altogether regardless of the size of a shareholder by rescinding Rule 14a-6(g).
Currently, certain written exempt solicitations under Rule 14a-2(b)(1) by persons beneficially owning more than $5 million of a company’s securities must be submitted to the SEC – but the SEC notes that these exempt solicitation materials increasingly are publicly available through other channels.
The SEC also notes that voluntary notices have come to dominate PX14A6G submissions – rising from approximately 40% of notices in 2018 to 80% in 2025 – and expresses concern that voluntary shareholder communications appearing alongside required company filings on EDGAR may cause confusion and make mandatory filings harder to locate. Shareholders would remain free to disseminate exempt solicitation materials through other channels. - Shorten the Broker Search Period From 20 to Five Business Days: Rule 14a-13 currently requires companies generally to initiate the broker search at least 20 business days before the record date. The SEC proposes cutting that minimum to just five business days. The SEC notes that technological improvements have dramatically accelerated the intermediary process – and that broker searches can now often be completed in approximately three days.
- Possible Acceleration of M&A and Proxy Contests: As noted on pages 57-59 of the proposing release, the broker-search change could have consequences beyond routine annual meeting mechanics. The SEC notes that the existing 20-business-day requirement can delay transactions requiring shareholder approval and can affect contested director elections and other proxy contests.
Reducing the minimum to five business days could permit companies to establish record dates and move toward shareholder meetings more quickly, which could reduce transaction delays, costs and uncertainty. Shareholders also would have less time to acquire shares or coordinate with other investors before the record date, reducing the ability to wage campaigns or conduct other activist activities. - Potential Impact on “Empty Voting” and Share Lenders: As noted on pages 60-63 of the proposing release, the SEC notes that a shorter broker-search period could reduce the ability for “empty voting” practices as shareholders would have less time to borrow shares. It also could leave institutional shareholders with less time to recall loaned shares so they can vote them.
Authored by
Broc Romanek