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Federal Register / Vol. 86, No. 228 / Wednesday, December 1, 2021 / Rules and Regulations
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19b will not meaningfully impact dissidents because, as discussed above, most registrants advance notice provisions impose an earlier deadline to provide notice of a dissidents nominees.73 In those cases, the new requirement does not affect timing considerations, as dissidents would already have signaled to registrants their intent to launch a contest pursuant to the registrants bylaw requirements.
We acknowledge that where the registrant does not have an advance notice provision in its governing documents, or has such a provision requiring less than 60 days advance notice, Rule 14a19b imposes an additional obligation. Such latedeveloping contests are rare.74 The Rule 14a19b 60-day notice requirement is designed to ensure the orderly conduct of proxy contests under the new universal proxy framework and justifies the potential burden that may arise in the few director contests at companies with no advance notice provision or a provision requiring less than 60 days advance notice.
Despite some commenters suggestions,75 we are not adopting exceptions to the 60-day notice deadline imposed by new Rule 14a19. The universal proxy requirement we are adopting is designed to ensure consistency and predictability in election contests; exceptions to the 60day deadline would likely invite gamesmanship, create confusion, and fundamentally undermine the goals of the rulemaking. As discussed above, the orderly use of universal proxy cards in director election contests requires timely notice to the registrant, with the 60-day deadline in Rule 14a19b establishing a baseline for such notice.76
Exceptions to this deadline, or requiring that registrants receive of impending proxy contests. See letters from CCMC; CGCIV; Society;
IBC. To clarify and address these concerns, where an advance notice bylaw provision requires dissidents to provide earlier notice of its nominees, that longer time period controls. Rule 14a19b establishes a minimum, not a maximum, notice period.
73 According to a law firm report, 99% of the S&P
500 and 95% of the Russell 3000 had advance notice provisions at 2020 year-end. See WilmerHale, 2021 M&A Report, at 6 2021, available at https www.wilmerhale.com/en/
insights/publications/2021-manda-report citing www.SharkRepellent.net WilmerHale M&A
Report.
74 Based on a review of the contested elections sample, see supra note 71, the staff found that dissidents provided notice of their intent to nominate director candidates fewer than 60
calendar days prior to the shareholder meeting date in 10% of the contests.
75 See, in particular, letters from Olshan.
76 Further, as previously noted, most registrants require advance notice under their governing documents far earlier than the Rule 14a19b notice requirement.

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less than 60 days advance notice, could lead to confusion among registrants, dissidents, and shareholders, as well as increase the risk that universal proxy cards and other proxy materials would not be delivered in a timely and orderly manner. Finally, in response to the commenters who supported allowing contests to take place after the 60-day deadline,77 we would note that while dissidents who are unable to meet the 60-day notice deadline would be prevented from conducting an election contest under the rule amendments we are adopting,78 such dissidents would not be prevented from taking other actions to attempt to effectuate changes to the board, such as initiating a vote no campaign, conducting an exempt solicitation, or calling a special meeting to the extent permitted under the registrants bylaws to remove existing directors and appoint their own nominees to fill the vacancies.
The Rule 14a19b notice requirement should not deter settlements between dissidents and registrants. Under current market practice, settlements often occur after the parties have filed their proxy statements and even after they have begun soliciting. The new notice requirement therefore is unlikely to affect this practice. Finally, the purpose of the notice requirement is not served by requiring that the notice be made public. However, in practice, each of the dissident and the registrant is likely to publicize the sending of the notice voluntarily.79
C. Registrants Notice of Its Nominees 1. Proposed Rules Similar to the notice required from a dissident under Rule 14a19b, the Commission proposed to require the registrant to notify the dissident of the names of its nominees unless the names have already been provided in a preliminary or definitive proxy statement filed by the registrant.80 For the registrant, the Commission proposed that the deadline for such notice be no 77 See
supra note 65 and accompanying text.
our view, this is appropriate when balanced against the goals of the rulemaking and the necessity of the notice period for the orderly solicitation process under a mandatory universal proxy system.
79 For example, depending on the particular facts and circumstances, the registrant may disclose the notice under its Form 8K filing obligations. We acknowledge the commenter who suggested that a publication requirement could be beneficial to those investors who engage in securities lending, but we see securities lenders voting practices and record date disclosure practices as outside the scope of this rulemaking, with any concerns more appropriately addressed through a separate effort.
80 See proposed Rule 14a19d.
78 In
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later than 50 calendar days prior to the anniversary of the previous years annual meeting date.
2. Comments Received Relatively few commenters addressed this proposed requirement. Two commenters expressly supported the proposed notice requirement for registrants.81 Three others argued in favor of establishing the same notice deadline for registrants and dissidents.82 One of these commenters believed the proposed later deadline for registrants would give registrants a significant strategic advantage over dissidents in the solicitation.83 This commenter suggested that registrants should be required to publicly announce their nominees before dissidents are required to provide notice of their nominees.84 By contrast, two commenters opposed any notice requirement for registrants.85
3. Final Amendments We are adopting Rule 14a19d as proposed. As discussed in the Proposing Release and as explained above in the context of the dissidents notice deadline, notification deadlines are important in a mandatory universal proxy system to provide the parties with a definitive date by which they will have the names of all nominees to compile a universal proxy card. Absent such a requirement for registrants, dissidents could face an informational and timing disadvantage in a universal proxy system. Registrants would know the names of dissident nominees no later than 60 days prior to the meeting,86
while dissidents would not necessarily know the names of the registrant nominees until the registrant files its preliminary proxy statement, which is only required to be filed at least 10
calendar days before the definitive proxy statement is first sent to shareholders and may be filed much closer to the meeting date.87 In that case, dissidents would have to wait to file their definitive proxy statement and proxy card until the registrant filed its preliminary proxy statement with the names of the registrant nominees.
81 See
letters from CalSTRS; CII.
letters from Olshan; CFA Institute; Elliott.
83 See letters from Olshan.
84 See letters from Olshan.
85 See letters from Society; Sidley.
86 Because the deadline under proposed Rule 14a19b1 is tied to the anniversary of the previous years annual meeting date, 60 calendar days before the meeting date approximates the latest date on which registrants would know the names of dissident nominees.
87 See, as adopted, Rule 14a19b1; 17 CFR
240.14a6a.
82 See
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