The SEC Division of Corporation Finance today updated its COVID-19-related guidance that was initially released on March 13 relating to shareholder meetings. The guidance summarizes the updates as follows:
- New section on delays in printing and mailing of full set of proxy materials
- Updated section on changes in date, time, and location of a shareholder meeting to clarify that it applies to special meetings
- Updated section on changes in date, time, and location of a shareholder meeting to include the position of the staff of the Division of Investment Management with respect to a meeting held by an investment company in connection with a business combination or certain other transactions
The principal change is the new section on delays in printing and mailing of full set of proxy materials, which is reportedly responsive to some companies that are seeking to use the notice-only delivery option (due to COVID-19-triggered delays in printing and mailing) being unable to comply with certain provisions of that rule, such as the requirement to send the notice 40 calendar days before the meeting date. The guidance provides welcome flexibility here [emphasis added]:
The primary goal of the proxy process is allow shareholders to receive material information about the matters to be presented at a shareholder meeting in a timely manner so they can make informed voting decisions. The staff encourages issuers affected by printing and mailing delays caused by COVID-19 to use all reasonable efforts to achieve this goal without putting the health or safety of anyone involved at risk. In some cases, this may mean delaying a meeting in accordance with state law requirements and the procedures described above, if necessary, in order to provide materials on a timely basis. In circumstances where delays are unavoidable due to COVID-19 related difficulties, the staff would not object to an issuer using the “notice-only” delivery option in a manner that, while not meeting all aspects of the notice and timing requirements of Rule 14a-16, will nonetheless provide shareholders with proxy materials sufficiently in advance of the meeting to review these materials and exercise their voting rights under state law in an informed manner and so long as the issuer announces the change in the delivery method by following the steps described above for announcing a change in the meeting date, time, or location. Affected issuers and intermediaries also should continue to use their best efforts to send paper copies of proxy materials and annual reports to requesting shareholders, even if such deliveries would be delayed.
As a reminder, the steps for announcing a change consist of:
- Issuing a press release announcing such change
- Filing the announcement as definitive additional soliciting material on EDGAR
- Taking all reasonable steps necessary to inform other intermediaries in the proxy process (such as any proxy service provider) and other relevant market participants (such as the appropriate national securities exchanges) of such change
As is the case generally, companies are encouraged to contact the staff with questions or concerns.
Access additional resources on our Annual Meeting and Virtual Meetings pages.