SEC Releases Guidance on COVID-19 Issues Associated with Annual Meetings of Stockholders

On March 13, 2020, the staff of the Securities and Exchange Commission’s (“SEC”) Divisions of Corporation Finance and Investment Management issued guidance regarding compliance with the federal proxy rules in light of the health, transportation, and other logistical issues raised by the spread of novel coronavirus (“COVID-19”). 

The SEC staff will take the position that an issuer that has already mailed and filed its definitive proxy materials may notify shareholders of a change in the date, time, or location of its annual meeting without mailing additional soliciting materials or amending its proxy materials if it:

  • issues a press release announcing such change;
  • files the announcement as definitive additional soliciting materials on EDGAR; and
  • takes all reasonable steps necessary to inform other intermediaries in the proxy process and other relevant market participants of such change (these other intermediaries and relevant market participants include third-party proxy service providers and national securities exchanges).

If an issuer has not yet mailed and filed its definitive proxy materials, the issuer may consider adding disclosure of a possibility of a change in the date, time, and location of the annual meeting due to COVID-19 concerns.

If an issuer is planning to hold a virtual annual meeting or a hybrid annual meeting (where the meeting is held in-person but alternatively permits participation through electronic means), the SEC staff will expect robust disclosure of the logistical details of how shareholders can access, participate in, and vote at such a meeting.

The SEC staff is also encouraging issuers, to the extent feasible under state law, to provide shareholder proponents with a means to present their proposals electronically as opposed to requiring in-person attendance by shareholder proponents.

In issuing this guidance, the SEC staff expects all parties involved in the proxy process to be flexible and work collaboratively. The SEC will expect issuers to disclose their decisions surrounding the date, time, and location of their annual meetings, and if there are any changes to such decisions, promptly give shareholders and other parties reasonable lead time in preparing for the meetings.

The SEC’s new guidance is available at this link.

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