As discussed in our previous alert, Annual Meetings in a World Without Meetings: The Impact of COVID-19 on Public Companies, on March 13, 2020, the Staff of the Division of Corporation Finance of the Securities and Exchange Commission (SEC) issued guidance permitting public companies that have already filed and mailed their definitive proxy materials to change the date, time and location of their meetings without mailing additional soliciting materials to shareholders so long as they (i) issue a press release announcing such change, (ii) file the announcement as definitive additional soliciting material on EDGAR and (iii) take all reasonable steps necessary to inform intermediaries in the proxy process and other relevant market participants (including the appropriate national securities exchanges) of the change.
On April 7, 2020, the SEC Staff issued an announcement updating its March 13, 2020, guidance by providing relief to public companies related to printing and mailing proxy materials.
The Staff recognizes that some public companies that were planning to provide “full set” delivery of their proxy materials for upcoming shareholder meetings may be experiencing delays in the printing and physical mailing of the materials due to the impact of the COVID-19 pandemic on the facilities and staffing of their proxy service providers or transfer agents. The announcement notes that some public companies would like to switch to furnishing their proxy materials through the “notice-only” delivery option permitted by Exchange Act Rule 14a-16 but have concerns about their ability to comply with certain provisions of the Rule, such as sending notice of the electronic availability of the proxy materials at least 40 calendar days before the meeting, providing intermediaries (such as a broker, dealer or bank) with the information needed so the intermediaries can send the notice to beneficial owners within the 40-calendar-day timeframe required by Exchange Act Rule 14b-1 or 14b-2, or responding to a shareholder’s request for paper copies of proxy materials in a timely manner.
At the core of the Staff’s guidance is a reminder to public companies affected by printing and mailing delays caused by the COVID-19 pandemic that they should use “all reasonable efforts” to allow shareholders to receive material information about matters to be presented at a shareholders’ meeting in a timely manner to enable informed voting decisions. In particular, the Staff’s guidance provides as follows:
- Postponing the meeting: The use of “all reasonable efforts” may mean, in certain circumstances, actually postponing the meeting.
- Unavoidable printing and mailing delays: When printing and mailing delays are unavoidable due to COVID-19-related difficulties, the Staff would not object to the company using the “notice-only” delivery option in a manner that, while not meeting all aspects of the notice and timing requirements of Rule 14a-16, will still provide shareholders with proxy materials sufficiently in advance of the meeting to review them and exercise their voting rights under state law in an informed manner. This limited relief is also only available if the public company announces the change in the delivery method by following the steps described in the SEC’s guidance for announcing a change in the meeting date, time or location (as described in our previous alert and above).
- Paper copies: Public companies and intermediaries should continue using their best efforts to send paper copies of proxy materials and annual reports to requesting shareholders, even if such deliveries would be delayed.
The announcement is a welcome clarification for public companies with upcoming meetings of shareholders that are experiencing or concerned about experiencing delays related to printing and mailing proxy materials due to the COVID-19 pandemic. However, public companies should note that the relief is limited to “unavoidable” printing and mailing delays and should, to the extent reasonably possible, plan in advance for delays and work with intermediaries and others to limit their impact.
 The announcement also clarifies that the date, time and location guidance previously issued by the Staff also applies to special meetings of shareholders.