June 19, 1991
TO: SEC RULES COMMITTEE NO. 35-91
INVESTMENT ISSUES COMMITTEE NO. 4-91
INVESTMENT ADVISERS COMMITTEE NO. 25-91
CLOSED-END FUND COMMITTEE NO. 14-91
RE: SEC SOLICITS COMMENTS ON REFORM OF PROXY VOTING RULES
__________________________________________________________
The Securities and Exchange Commission recently released
proposed amendments to its proxy rules under Section 14(a) of the
Securities Exchange Act of 1934. The proposals are designed to
facilitate shareholder communications and reduce the costs of
compliance for persons engaged in proxy solicitations. A copy of
the release is attached.
The release states that the proposals are intended to be
the first in a series of possible rulemaking initiatives relating
to corporate governance matters resulting from the Commission's
ongoing proxy review project. It contains four proposals which
would amend existing proxy rules as described below:
1. Disinterested Persons. Solicitations by
"disinterested persons" would be exempt from all proxy rules
except for anti-fraud provisions. A disinterested person would
be defined as a person who "does not have, and is not acting on
behalf of a person who has, a material economic interest in the
matters to be acted upon, other than as a securityholder of the
registrant..." The disinterested person could not seek the power
to act as a proxy for a shareholder nor could he furnish or
request shareholder authorization for delivery to the registrant.
It appears that the proposal would allow shareholders to
communicate among themselves if they believe corporate actions
which are the subject of a proxy solicitation would be
detrimental to the value of their investment.
The proposed exemption would not be available to the
registrant, its affiliates and any officers or directors of the
registrant or its affiliates. Also, it would not be available to
an "interested person" of a registered investment company.
2. Elimination of Preliminary Filing. The Commission is
proposing to eliminate preliminary filing requirements with
respect to all soliciting materials and Schedules 14B, other than
the proxy statement and form of proxy. Instead, all soliciting
materials would be filed with, or mailed for filing to, the
Commission simultaneously with their use. This amendment is
intended to streamline the solicitation process by reducing costs
and alleviating timing concerns.
3. Elimination of Proxy Confidentiality. The proposed
amendments would provide that all proxy material, whether in
preliminary or definitive form, would be public upon filing with
the Commission.
4. Access to Securityholder Lists. Finally, the
Commission is proposing to eliminate the registrant's existing
choice to mail a requesting securityholder's proxy materials
rather than produce a securityholder list upon request, and to
transfer that choice to the requesting securityholder. The
proposal also would expand the scope of the list to encompass the
names, addresses and securities holdings of record and beneficial
owners. The securityholder list must be delivered within 5
business days of the receipt of the request for the list.
The list could be used solely for the purpose of engaging
in a solicitation of securityholders with respect to the subject
matter or meeting for which the registrant is soliciting or
intends to solicit. However, if the registrant has actually
commenced a solicitation, the list could be used for other
purposes. For example, one securityholder could use the list to
"test the waters" or gauge the interest of other securityholders
in determining whether to mount a solicitation in opposition to
the registrant's management.
Comment letters responding to the proposals and the
questions presented therein must be filed 45 days after the
release is published in the Federal Register. If there are
positions you would like the Institute to consider in a comment
letter, please call me no later than July 15, 1991 at 202/955-
3516.
W. Richard Mason
Assistant Counsel
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