In response to the COVID-19 pandemic, the U.S. Securities and Exchange Commission previously provided guidance on updating the time, date or location of a stockholder meeting and eliminated the federal securities law requirement that such a change require a full mailing of notice to stockholders. The notice requirements and the ambiguity presented by compliance with state laws including the Delaware General Corporation Law are discussed here. The SEC and the state of Delaware have provided additional relief and guidance.
Satisfaction of Delaware Notice Requirements
On April 6, 2020, Delaware Governor John Carney issued an order to clarify that new mail or email notice would not be necessary. Section 4 of the order states that notice requirements will be satisfied for purposes of Delaware state law if the document noting such change is publicly filed with the SEC and a press release is promptly posted on the company’s website after release.
Extension of Forward Incorporation Deadline
Additionally, the SEC clarified on April 6, 2020, that if the 120-day deadline for incorporation by reference of Part III information into a company’s Annual Report on Form 10-K falls within the relief period (March 1 to July 1) in the SEC’s COVID-19 order extending filing deadlines (discussed in a prior alert here), and the other conditions of the order are satisfied—the most important being the reporting company’s inability to timely file due to COVID-related matters—then the affected company may rely on the order to extend the 120-day deadline by filing a Current Report on Form 8-K with the required information. Once the Current Report on Form 8-K is filed, the company would then be permitted to provide the Part III information within 45 days of the 120-day deadline by including it in an amendment to the Annual Report on Form 10-K/A or definitive proxy statement on Form DEF 14A or information statement. The other requirements of the Current Report on Form8-K are discussed here and here.
Delays in Printing and Mailing Full Set of Proxy Materials
On April 7, 2020, the SEC updated its staff guidance to address unexpected printing and mailing delays caused by COVID-19 in connection with complying with the “notice-only” delivery option permitted by Exchange Act Rule 14a-16. In particular, the staff noted that issuers are concerned about the requirements to send the notice of electronic availability of the proxy materials at least 40 calendar days before the meeting or respond to a shareholder’s request for paper copies of proxy materials in a timely manner. The staff of the SEC urged companies to use all reasonable efforts to comply with the rules, including possibly delaying a meeting.
However, if printing and mailing delays become unavoidable due to COVID-19, the staff noted it would not object to a company’s use of the “notice-only” delivery option in a manner that, while not meeting all aspects of the notice and timing requirements of Rule 14a-16, nonetheless provides stockholders with proxy materials sufficiently in advance of the meeting to review these materials and exercise their voting rights under state law in an informed manner and so long as the issuer announces the change in the delivery method by following the steps described above for announcing a change in the meeting date, time or location. In the guidance, the staff also noted that the same rules would apply to special stockholder meetings as well as annual stockholder meetings.