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Federal Register / Vol. 86, No. 228 / Wednesday, December 1, 2021 / Rules and Regulations
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A deadline that is 10 calendar days after the latest date the registrant will receive the dissidents notice of nominees is appropriate because it provides a sufficient period of time for the registrant to consider the dissidents notice, finalize its nominees, and respond with its own notice of nominees. The 10-day period is appropriate, given that the dissidents notice of nominees may be the first indication of a contested solicitation that the registrant receives. Moreover, the 50-day deadline is appropriate for providing dissidents with timely access to the names of registrant nominees for purposes of preparing a universal proxy card. While the deadline for registrants is 10 days after the deadline for dissidents, as a practical matter, dissidents are unlikely to be disadvantaged because registrant nominees are often existing directors about whom information will already be available.
Based on a review of recent contested elections and the staffs experience, dissidents typically do not file their definitive proxy statement more than 50
calendar days before the meeting date.88
Thus, based on this market practice, we would not expect the rules adopted in this document to delay the timing of the filing of dissidents definitive proxy statement.
It is possible that a registrant could provide notice of the names of its nominees under Rule 14a19 and later change its nominees. As with the notice requirement for dissidents, Rule 14a 19d, as adopted, requires a registrant to promptly notify the dissident of any change in the registrants nominees. If there is a change in the registrants nominees after the dissident has disseminated a universal proxy card, the dissident could elect, but would not be required, to disseminate a new universal proxy card reflecting the change in registrant nominees. Each side will generally be incentivized to amend its own card if such a change occurs to make it more appealing to shareholders, who could otherwise turn to the other sides universal proxy card for a current list of director nominees. Votes for an individual nominee who withdraws his or her name from consideration are 88 Because the deadline under Rule 14a19d is tied to the anniversary of the previous years annual meeting date, 50 calendar days prior to the meeting date approximates the latest date on which registrants would be required to notify the dissident of the names of the registrants nominees. Based on a review of the contested elections sample, see supra note 71, we estimate that dissidents filed their definitive proxy statement more than 50
calendar days prior to the shareholder meeting date in 20% of the contests.

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generally disregarded pursuant to state law, as under current rules.
D. Minimum Solicitation Requirement for Dissidents 1. Proposed Rules The Commission proposed, as a key piece of the new universal proxy requirement, that the dissident in a contested election be required to solicit the holders of shares representing at least a majority of the voting power of shares entitled to vote on the election of directors. The Commission also proposed that the dissident would need to affirm its intention to meet the minimum solicitation requirement by making a statement to that effect in its proxy materials and in its notice to the registrant.89
The minimum solicitation requirement was intended to strike the appropriate balance to ensure that, where a universal proxy requirement is implemented, dissidents must still engage in meaningful independent solicitation efforts in order to have their director nominees elected. Current proxy rules do not obligate a dissident to solicit any number of shareholders or percentage of voting power in an election contest; rather, current rules only require a dissident to furnish a proxy statement to each person solicited.90 The Proposed Rules were based on the premise that, while registrants would have to include dissident nominees on their universal proxy card, dissidents would be subject to a new requirement to solicit a minimum percentage of voting power.
The concept of a minimum solicitation threshold for dissidents remains central to the universal proxy requirement we are adopting, and we have increased the threshold for the reasons discussed below.
2. Comments Received We received significant comment on the proposed minimum solicitation requirement for dissidents. Initially, there was significant support for the majority minimum solicitation requirement proposed.91 When the comment period was reopened in 2021, however, most commenters who addressed the issue favored an increased minimum solicitation requirement.92 Most of those advocating 89 See
proposed Rule 14a19a3 and b3.
17 CFR 240.14a3.
91 See letters from ICI; CII; CalSTRS; CFA
Institute; SBAFL; Carpenters; NY Comptroller;
Colorado PERA; AFSCME.
92 See letters from ICI; Society; CCMC; OPERS;
Mediant; Elliott; letter dated May 27, 2021 from American Business Conference ABC. CII, in its third letter submitted to the comment file, dated 90 See
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an increased solicitation threshold for dissidents recommended either twothirds or 75% of the voting power. Two commenters advocated a 100%
minimum solicitation requirement for dissidents in order to treat retail investors equally with institutional investors and because, as a practical matter, the registrant will solicit all shareholders as well.93 Two commenters recommended that the Commission adopt a requirement that all soliciting parties solicit proxies from the same number of shareholders, which in practice would likely mean all shareholders because registrants typically solicit all shareholders.94
Another commenter urged a minimum solicitation threshold of a majority of shareholder accounts versus voting power entitled to vote on director nominations, asserting that this would help ensure meaningful dissident solicitation efforts.95 Another commenter suggested that the Commission consider whether an additional requirement that a minimum number of registered shareholders are solicited is necessary to prevent frivolous use of universal proxy.96
One commenter suggested that, as a compliance mechanism, a dissident should provide the registrant with a written statement indicating that the dissident has taken the necessary steps to solicit shareholders of at least a majority of the voting power. 97
Another commenter suggested that registrants should reimburse dissidents for the reasonable costs associated with the solicitation process when at least 50% or a more appropriate percentage established by the Commission of a dissidents nominees are elected.98
Another commenter opposed any type Nov. 8, 2018, indicated that, while it continued to agree with the minimum solicitation requirement as originally proposed, it wouldin light of concerns expressed by then-Chairman Claytonsupport moving to a higher threshold in the final rule that would i increase the minimum solicitation requirement to 75% and ii require that the total number of persons solicited exceeds 10. In its fourth and final letter submitted to the comment file, dated Jun. 2, 2021, CII indicated support for moving to a minimum solicitation threshold of twothirds of outstanding voting power. See also letter from UPWG, which states that a two-thirds dissident minimum solicitation requirement could also be workable, while noting that its members held differing views on the subject. See also IAC
Report, which also supports increasing the dissident minimum solicitation threshold to 67%.
93 See letters from SIFMA; Mediant.
94 See letters from BM; Mediant.
95 See letter from Elliott.
96 See letter from CalSTRS.
97 See letter from CalSTRS.
98 See letter from BM.

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