Securities Law Group Special Bulletin
“SEC Facilitation of Electronic Shareholder Forums”
On January 18, 2008, the Securities and Exchange Commission adopted amendments to the proxy rules under the Securities Exchange Act of 1934, as amended, to facilitate the use of electronic shareholder forums. Although electronic shareholder forums were permissible prior to the adoption of these amendments, many shareholders have been reluctant to use them due to uncertainty over potential liability for statements and information provided in such forums. In addition, many shareholders have expressed concern regarding whether views and statements expressed through a forum would be considered proxy solicitations. The proxy rule amendments are intended to clarify that participation in an electronic shareholder forum will be exempt from most of the proxy rules if the conditions to the exemption are satisfied. Further, under the new rules, forum organizers will not be liable for statements or information provided by other participants.
The amendments are intended to foster communications among shareholders and between shareholders and the company and are not meant to be a substitute for a shareholder’s right, under Rule 14a-8, to submit non-binding proposals for inclusion in a company’s proxy materials.
The amendments became effective on February 25, 2008.