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Dodd-Frank

SEC Issues C&DIs on Exempt Solicitations

by   |   August 1, 2018

We recently noted a shareholder proponent had been making aggressive use of Notices of Exempt Solicitation on EDGAR.

Exchange Act Rule 14a-6(g)(1) requires that any person who engages in a solicitation pursuant to Exchange Act Rule 14a-2(b)(1) and beneficially owns over $5 million of the class of securities that is the subject of the solicitation to furnish or mail to the Commission a statement containing the information specified in the Notice of Exempt Solicitation (Exchange Act Rule 14a-103) no later than three days after the date the written solicitation is first sent or given to any security holder.

The SEC has provided two new Compliance and Disclosure Interpretations on exempt solicitations. In new CD&I 126.06, the SEC confirms that a Notice of Exempt Solicitation may be provided on a voluntary basis. Thus filers of a Notice do not have to own $5 million of the relevant securities. However, the Notice must specifically state it is being provided on a voluntary basis.

New CD&I 126.07 provides all of the information required by Rule 14a-103 must be presented in the submission before any written soliciting materials (including any logo or other graphics used by the soliciting party) are presented. Rule 14a-103 requires the name of the registrant and the name and address of the person making the solicitation be presented. To the extent that the notice itself is being used as a means of solicitation, the failure to present Rule 14a-103 information in this manner may, depending upon the particular facts and circumstances, be misleading within the meaning of Exchange Act Rule 14a-9.