The Securities and Exchange Commission unanimously voted to request public comment on rules that will allow companies to use the Internet to satisfy proxy material delivery requirements.
It's estimated that public companies spend $1 billion each year to print and mail the material.
Under current rules, the proxy statement and annual report must be delivered in paper form or, if the shareholder consents, they may be delivered electronically. According to the SEC, the electronic delivery option requires affirmative shareholder consent and currently is used only on a limited basis. The proposed rules have two significant potential benefits -- first, they could result in a substantial decrease in the expense incurred by issuers to comply with the proxy rules; and second, they would provide persons other than the company with a more cost-effective way to undertake their own proxy solicitations.
SEC Chairman Christopher Cox has been a vocal supporter of technology and how computers can help shareholders get access to information quicker and more cheaply.
Comments on the proposed rules, available at www.sec.gov, should be received within the next 60 days before the drawing up of a final rule. If approved, the rule is likely to affect proxy voting beginning in 2007. Paper copies would still be made available to shareholders, but they would have to e-mail the company or call a toll-free telephone number to request a copy.
In June the SEC approved a similar procedure for final prospectuses on new securities offerings, a change that goes into effect Dec. 1.
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