How to Understand the SEC Compliance Laws for Shareholder Meetings

Recent changes have made U.S. Securities and Exchange Commission (SEC) compliance laws for shareholder meetings even easier to work with. The newest changes have specified that the use of Internet reports is completely acceptable for full SEC compliance. These changes will make it easier for your shareholders to access information about your corporation and for you to make this information available to them. Expect to devote at least 4 hours to familiarizing yourself with current SEC compliance laws.

Instructions

Difficulty: Moderately Challenging

Things You’ll Need:

• Phone
• Computer with Internet access

Provide Proxy Materials to Shareholders Prior to Your Meeting

1. Prepare a "Notice of Internet Availability of Proxy Materials" and submit this by email to your shareholders at least 40 days before the meeting. One of the SEC's most convenient new rules allows corporations to post their proxy information on their Web site.
2. Make sure that the "Notice of Internet Availability" is mailed to shareholders who have requested all correspondence be received by U.S. Mail, or to shareholders for whom you do not have an email address. When you contact these shareholders by mail, you can ask permission for all future correspondence to be received via email.
3. List the date, time and place of the shareholder meeting on all announcements.
4. Make available to all shareholders the method in which they can order proxy materials prior to the shareholders meeting. This includes an email address, telephone number, Web site and any control numbers needed to get a proxy card.
5. Provide an agenda of the matters to be addressed during the shareholders meeting. If you fail to do this, you will be in violation of SEC compliance laws.
6. Post a placard or sign with the "Notice of Internet Availability" for public viewing. You must use a bold legend that gives the URL of your corporation's Web site. If the proxy information will be hosted at a different URL, provide that URL as well. Make clear that shareholders can ask for copies of this proxy agreement at no charge, along with a description of how to do so.
7. Make sure the proxy information is posted at the URL you advertised with a software-based proxy vote system.

Follow SEC Laws When You Hold Your Shareholders Meetings

8. Learn your individual state's requirements for shareholders meetings. Your corporate counsel can advise you on how to comply with these laws as well as SEC laws.
9. Determine how many shareholders meetings to schedule. In general, shareholders are allowed 1 meeting per year.
10. Be sure all meetings are publicized in the methods described in your state's corporation statute.

Tips & Warnings

• New proxy rules that allow you to furnish shareholders with information via the Internet can save time and money. If you haven't already made the switch to online documentation, consider doing so to make your meetings more efficient.
• No professional or officer is necessary to ensure you are compliant. However, you may request that your corporate counsel read through your code of ethics and documented procedures for distributing shareholder updates and proxy notices to ensure compliance with state law.
• The new rules specified by the SEC do not affect state laws regarding proxy cards and their delivery.
• Failure to comply with SEC regulations concerning shareholder meetings can leave your company open to lawsuits, prosecution and SEC-imposed fines.