SEC Issues Proxy Compliance and Disclosure Interpretations

On May 11, the SEC's Division of Corporation Finance issued 45 proxy C+DIs to replace previous proxy interpretations set forth in its Telephone Interpretations Manual and March 1999 Supplement. The vast majority of the C+DIs are reiterations of, or technical updates to, existing guidance. However, there are a number of new interpretations, including the following:

• Rule 14a-4(b)(1) states that a proxy may confer discretionary authority with respect to matters as to which a choice has not been specified by the security holder, so long as the form of proxy states in bold-faced type how the proxy holder will vote where no choice is specified. If action is to be taken with respect to the election of directors and the persons solicited have cumulative voting rights, a soliciting party can cumulate votes among director nominees by simply indicating this in bold-faced type on the proxy card, as long as state law grants the proxy holder the authority to exercise discretion to cumulate votes and does not require separate security holder approval with respect to cumulative voting.
• A registrant is not required to file a preliminary proxy statement in connection with a proposed corporate name change to be submitted for security holder approval at the annual meeting.
• A registrant solicits its security holders to approve the authorization of additional common stock for issuance in a public offering. While the registrant could use the cash proceeds from the public offering as consideration for a recently announced acquisition, it has alternative means for fully financing the transaction. In this case, the proposal to authorize additional common stock would not "involve" the acquisition for purposes of Note A of Schedule 14A (requiring specified disclosure, as well as financial and other information), because raising proceeds through a sale of common stock is not an integral part of the acquisition. However, if the cash proceeds from the public offering are expected to be used to pay any material portion of the consideration for the acquisition, Note A would apply.
• If a registrant is required to disclose the New Plan Benefits Table called for under Item 10(a)(2) of Schedule 14A, it should either list in the table all of the individuals and groups for which award and benefit information is required, even if the amount to be reported is "0," or identify any individual or group for which award and benefit information is "0" through narrative disclosure that accompanies the New Plan Benefits Table.

© Arnold & Porter Kaye Scholer LLP 2018 All Rights Reserved. This Alert is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.