Pg 21

Question 1

What is the rule for filing of preliminary copies of proxy materials?

Answer 1

You must do this with the SEC at least 10 days before mailing the preliminary copies of proxy materials to the shareholders

Question 2

What are the requirements for a proxy card?

Answer 2

– blank space to date the proxy
– identification of the solicitor
– authorization to vote at a specific meeting
– statement that proxy will be voted as directed with information about how it will be voted
– way to vote the proposal [approved, disapprove, abstain]
– instructions about how to withhold approval
– means to approve/withhold approval of the entire board
– signature line

Question 3

The proxy voting system favours who?

Answer 3

Management of the corporation because they are legally able to use the corporation’s resources to solicit shareholders and create restrictions on how shares will be voted as well as the timing for changes in corporate governance. Often it is only the corporation that engages in proxy solicitation.

Question 4

What are topics that a shareholder has to give express instructions in writing on in order for a proxy to vote on them?

Answer 4

• de-staggering a Board of Directors
  – effectuating a majority in the board election
  – eliminating a super majority voting requirement
  – authorizing the use of written consent by shareholders
  – authorizing written consent by shareholders to call special meetings
  – overriding antitakeover measures

Question 5

What is the point of board staggering?

Answer 5

To ensure continuity on the board by stopping members from being totally changed in one year

Question 6

What is SEC 14?

Answer 6

• it is unlawful for any person
  – through the mail or any instrumentality of interstate commerce
  – to solicit or permit the use of his name to solicit any proxy
  – for any security registered in this title

Question 7

Who are considered to be people under SEC 14?

Answer 7

Any natural person, company, government, political subdivision, agency, or instrumentality of the government. I.e.: Bill Gates, the state of New York, the EPA

Question 8

What are considered to be the mails or instrumentalities of interstate commerce under the SEC 14?

Answer 8

Any solicitation that involves:

• phones
• the mail
• the Internet
• NASDAQ/stock exchange
• anything that touches on interstate commerce

Question 9

Federal proxy regulations only apply to what kinds of companies?

Answer 9

Ones that are listed on a national securities exchange or traded with at least 500 shareholders and assets worth $10 million.

Question 10

Is piggybacking allowed when it comes to solicitation of proxy votes?

Answer 10

Yes, so shareholders can piggyback on a management proxy solicitation by adding their own materials to it in support of a proposal they want to introduce at an upcoming meeting. But the shareholder must pay the cost of the separate proxy.