15 U.S.C. § 78n — Proxies

Page 311 TITLE 15—COMMERCE AND TRADE § 78n sidiary that is an operator, of a coal or other mine shall file a current report with the Com- mission on Form 8–K (or any successor form) disclosing the following regarding each coal or other mine of which the issuer or subsidiary is an operator: (1) The receipt of an imminent danger order issued under section 107(a) of the Federal Mine Safety and Health Act of 1977 (30 U.S.C. 817(a)). (2) The receipt of written notice from the Mine Safety and Health Administration that the coal or other mine has— (A) a pattern of violations of mandatory health or safety standards that are of such nature as could have significantly and sub- stantially contributed to the cause and ef- fect of coal or other mine health or safety hazards under section 104(e) of such Act (30 U.S.C. 814(e)); or (B) the potential to have such a pattern. (c) Rule of construction Nothing in this section shall be construed to affect any obligation of a person to make a dis- closure under any other applicable law in effect before, on, or after July 21, 2010. (d) Commission authority (1) Enforcement A violation by any person of this section, or any rule or regulation of the Commission issued under this section, shall be treated for all purposes in the same manner as a violation of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) or the rules and regulations issued thereunder, consistent with the provi- sions of this section, and any such person shall be subject to the same penalties, and to the same extent, as for a violation of such Act or the rules or regulations issued thereunder. (2) Rules and regulations The Commission is authorized to issue such rules or regulations as are necessary or appro- priate for the protection of investors and to carry out the purposes of this section. (e) Definitions In this section— (1) the terms ‘‘issuer’’ and ‘‘securities laws’’ have the meaning given the terms in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c); (2) the term ‘‘coal or other mine’’ means a coal or other mine, as defined in section 3 of the Federal Mine Safety and Health Act of 1977 (30 U.S.C. 802), that is subject to the provi- sions of such Act (30 U.S.C. 801 et seq.); and (3) the term ‘‘operator’’ has the meaning given the term in section 3 of the Federal Mine Safety and Health Act of 1977 (30 U.S.C. 802). (f) Effective date This section shall take effect on the day that is 30 days after July 21, 2010. (Pub. L. 111–203, title XV, § 1503, July 21, 2010, 124 Stat. 2218.) Editorial Notes REFERENCES IN TEXT Such Act, referred to in subsecs. (a)(1)(F) and (e)(2), is the Federal Mine Safety and Health Act of 1977, Pub. L. 91–173, Dec. 30, 1969, 83 Stat. 742, which is classified principally to chapter 22 (§ 801 et seq.) of Title 30, Min- eral Lands and Mining. For complete classification of this Act to the Code, see Short Title note set out under section 801 of Title 30 and Tables. The Securities Exchange Act of 1934, referred to in subsec. (d)(1), is act June 6, 1934, ch. 404, 48 Stat. 881, which is classified principally to this chapter. For com- plete classification of this Act to the Code, see section 78a of this title and Tables. CODIFICATION Section was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and not as part of the Securities Exchange Act of 1934 which comprises this chapter. Statutory Notes and Related Subsidiaries DEFINITIONS For definitions of terms used in this section, see sec- tion 5301 of Title 12, Banks and Banking. § 78n. Proxies (a) Solicitation of proxies in violation of rules and regulations (1) It shall be unlawful for any person, by the use of the mails or by any means or instrumen- tality of interstate commerce or of any facility of a national securities exchange or otherwise, in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors, to solicit or to permit the use of his name to solicit any proxy or con- sent or authorization in respect of any security (other than an exempted security) registered pursuant to section 78l of this title. (2) The rules and regulations prescribed by the Commission under paragraph (1) may include— (A) a requirement that a solicitation of proxy, consent, or authorization by (or on be- half of) an issuer include a nominee submitted by a shareholder to serve on the board of di- rectors of the issuer; and (B) a requirement that an issuer follow a certain procedure in relation to a solicitation described in subparagraph (A). (b) Giving or refraining from giving proxy in re- spect of any security carried for account of customer (1) It shall be unlawful for any member of a national securities exchange, or any broker or dealer registered under this chapter, or any bank, association, or other entity that exercises fiduciary powers, in contravention of such rules and regulations as the Commission may pre- scribe as necessary or appropriate in the public interest or for the protection of investors, to give, or to refrain from giving a proxy, consent, authorization, or information statement in re- spect of any security registered pursuant to sec- tion 78l of this title, or any security issued by an investment company registered under the In- vestment Company Act of 1940 [15 U.S.C. 80a–1 et seq.], and carried for the account of a customer. (2) With respect to banks, the rules and regu- lations prescribed by the Commission under paragraph (1) shall not require the disclosure of the names of beneficial owners of securities in an account held by the bank on December 28, Page 312 TITLE 15—COMMERCE AND TRADE § 78n 1985, unless the beneficial owner consents to the disclosure. The provisions of this paragraph shall not apply in the case of a bank which the Commission finds has not made a good faith ef- fort to obtain such consent from such beneficial owners. (c) Information to holders of record prior to an- nual or other meeting Unless proxies, consents, or authorizations in respect of a security registered pursuant to sec- tion 78l of this title, or a security issued by an investment company registered under the In- vestment Company Act of 1940 [15 U.S.C. 80a–1 et seq.], are solicited by or on behalf of the man- agement of the issuer from the holders of record of such security in accordance with the rules and regulations prescribed under subsection (a) of this section, prior to any annual or other meeting of the holders of such security, such issuer shall, in accordance with rules and regu- lations prescribed by the Commission, file with the Commission and transmit to all holders of record of such security information substan- tially equivalent to the information which would be required to be transmitted if a solicita- tion were made, but no information shall be re- quired to be filed or transmitted pursuant to this subsection before July 1, 1964. (d) Tender offer by owner of more than five per centum of class of securities; exceptions (1) It shall be unlawful for any person, directly or indirectly, by use of the mails or by any means or instrumentality of interstate com- merce or of any facility of a national securities exchange or otherwise, to make a tender offer for, or a request or invitation for tenders of, any class of any equity security which is registered pursuant to section 78l of this title, or any eq- uity security of an insurance company which would have been required to be so registered ex- cept for the exemption contained in section 78l(g)(2)(G) of this title, or any equity security issued by a a closed-end investment company registered under the Investment Company Act of 1940 [15 U.S.C. 80a–1 et seq.], if, after con- summation thereof, such person would, directly or indirectly, be the beneficial owner of more than 5 per centum of such class, unless at the time copies of the offer or request or invitation are first published or sent or given to security holders such person has filed with the Commis- sion a statement containing such of the infor- mation specified in section 78m(d) of this title, and such additional information as the Commis- sion may by rules and regulations prescribe as necessary or appropriate in the public interest or for the protection of investors. All requests or invitations for tenders or advertisements mak- ing a tender offer or requesting or inviting tenders of such a security shall be filed as a part of such statement and shall contain such of the information contained in such statement as the Commission may by rules and regulations pre- scribe. Copies of any additional material solic- iting or requesting such tender offers subse- quent to the initial solicitation or request shall contain such information as the Commission may by rules and regulations prescribe as nec- essary or appropriate in the public interest or for the protection of investors, and shall be filed with the Commission not later than the time copies of such material are first published or sent or given to security holders. Copies of all statements, in the form in which such material is furnished to security holders and the Commis- sion, shall be sent to the issuer not later than the date such material is first published or sent or given to any security holders. (2) When two or more persons act as a partner- ship, limited partnership, syndicate, or other group for the purpose of acquiring, holding, or disposing of securities of an issuer, such syn- dicate or group shall be deemed a ‘‘person’’ for purposes of this subsection. (3) In determining, for purposes of this sub- section, any percentage of a class of any secu- rity, such class shall be deemed to consist of the amount of the outstanding securities of such class, exclusive of any securities of such class held by or for the account of the issuer or a sub- sidiary of the issuer. (4) Any solicitation or recommendation to the holders of such a security to accept or reject a tender offer or request or invitation for tenders shall be made in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. (5) Securities deposited pursuant to a tender offer or request or invitation for tenders may be withdrawn by or on behalf of the depositor at any time until the expiration of seven days after the time definitive copies of the offer or request or invitation are first published or sent or given to security holders, and at any time after sixty days from the date of the original tender offer or request or invitation, except as the Commission may otherwise prescribe by rules, regulations, or order as necessary or appropriate in the pub- lic interest or for the protection of investors. (6) Where any person makes a tender offer, or request or invitation for tenders, for less than all the outstanding equity securities of a class, and where a greater number of securities is de- posited pursuant thereto within ten days after copies of the offer or request or invitation are first published or sent or given to security hold- ers than such person is bound or willing to take up and pay for, the securities taken up shall be taken up as nearly as may be pro rata, dis- regarding fractions, according to the number of securities deposited by each depositor. The pro- visions of this subsection shall also apply to se- curities deposited within ten days after notice of an increase in the consideration offered to secu- rity holders, as described in paragraph (7), is first published or sent or given to security hold- ers. (7) Where any person varies the terms of a ten- der offer or request or invitation for tenders be- fore the expiration thereof by increasing the consideration offered to holders of such securi- ties, such person shall pay the increased consid- eration to each security holder whose securities are taken up and paid for pursuant to the tender offer or request or invitation for tenders wheth- er or not such securities have been taken up by such person before the variation of the tender offer or request or invitation. (8) The provisions of this subsection shall not apply to any offer for, or request or invitation for tenders of, any security— Page 313 TITLE 15—COMMERCE AND TRADE § 78n 1 See Adjustment of Registration Fee Rate notes below. (A) if the acquisition of such security, to- gether with all other acquisitions by the same person of securities of the same class during the preceding twelve months, would not ex- ceed 2 per centum of that class; (B) by the issuer of such security; or (C) which the Commission, by rules or regu- lations or by order, shall exempt from the pro- visions of this subsection as not entered into for the purpose of, and not having the effect of, changing or influencing the control of the issuer or otherwise as not comprehended with- in the purposes of this subsection. (e) Untrue statement of material fact or omission of fact with respect to tender offer It shall be unlawful for any person to make any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or to engage in any fraudulent, de- ceptive, or manipulative acts or practices, in connection with any tender offer or request or invitation for tenders, or any solicitation of se- curity holders in opposition to or in favor of any such offer, request, or invitation. The Commis- sion shall, for the purposes of this subsection, by rules and regulations define, and prescribe means reasonably designed to prevent, such acts and practices as are fraudulent, deceptive, or manipulative. (f) Election or designation of majority of direc- tors of issuer by owner of more than five per centum of class of securities at other than meeting of security holders If, pursuant to any arrangement or under- standing with the person or persons acquiring securities in a transaction subject to subsection (d) of this section or subsection (d) of section 78m of this title, any persons are to be elected or designated as directors of the issuer, otherwise than at a meeting of security holders, and the persons so elected or designated will constitute a majority of the directors of the issuer, then, prior to the time any such person takes office as a director, and in accordance with rules and reg- ulations prescribed by the Commission, the issuer shall file with the Commission, and trans- mit to all holders of record of securities of the issuer who would be entitled to vote at a meet- ing for election of directors, information sub- stantially equivalent to the information which would be required by subsection (a) or (c) of this section to be transmitted if such person or per- sons were nominees for election as directors at a meeting of such security holders. (g) Filing fees (1)(A) At the time of filing such preliminary proxy solicitation material as the Commission may require by rule pursuant to subsection (a) of this section that concerns an acquisition, merger, consolidation, or proposed sale or other disposition of substantially all the assets of a company, the person making such filing, other than a company registered under the Invest- ment Company Act of 1940 [15 U.S.C. 80a–1 et seq.], shall pay to the Commission the following fees: (i) for preliminary proxy solicitation mate- rial involving an acquisition, merger, or con- solidation, if there is a proposed payment of cash or transfer of securities or property to shareholders, a fee at a rate that, subject to paragraph (4), is equal to $92 1 per $1,000,000 of such proposed payment, or of the value of such securities or other property proposed to be transferred; and (ii) for preliminary proxy solicitation mate- rial involving a proposed sale or other disposi- tion of substantially all of the assets of a com- pany, a fee at a rate that, subject to paragraph (4), is equal to $92 1 per $1,000,000 of the cash or of the value of any securities or other property proposed to be received upon such sale or dis- position. (B) The fee imposed under subparagraph (A) shall be reduced with respect to securities in an amount equal to any fee paid to the Commission with respect to such securities in connection with the proposed transaction under section 77f(b) of this title, or the fee paid under that sec- tion shall be reduced in an amount equal to the fee paid to the Commission in connection with such transaction under this subsection. Where two or more companies involved in an acquisi- tion, merger, consolidation, sale, or other dis- position of substantially all the assets of a com- pany must file such proxy material with the Commission, each shall pay a proportionate share of such fee. (2) At the time of filing such preliminary in- formation statement as the Commission may re- quire by rule pursuant to subsection (c) of this section, the issuer shall pay to the Commission the same fee as required for preliminary proxy solicitation material under paragraph (1) of this subsection. (3) At the time of filing such statement as the Commission may require by rule pursuant to subsection (d)(1) of this section, the person mak- ing the filing shall pay to the Commission a fee at a rate that, subject to paragraph (4), is equal to $92 1 per $1,000,000 of the aggregate amount of cash or of the value of securities or other prop- erty proposed to be offered. The fee shall be re- duced with respect to securities in an amount equal to any fee paid with respect to such secu- rities in connection with the proposed trans- action under section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)), or the fee paid under that section shall be reduced in an amount equal to the fee paid to the Commission in connection with such transaction under this subsection. (4) ANNUAL ADJUSTMENT.—For each fiscal year, the Commission shall by order adjust the rate required by paragraphs (1) and (3) for such fiscal year to a rate that is equal to the rate (ex- pressed in dollars per million) that is applicable under section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)) for such fiscal year. (5) FEE COLLECTION.—Fees collected pursuant to this subsection for fiscal year 2012 and each fiscal year thereafter shall be deposited and credited as general revenue of the Treasury and shall not be available for obligation. (6) REVIEW; EFFECTIVE DATE; PUBLICATION.—In exercising its authority under this subsection, the Commission shall not be required to comply Page 314 TITLE 15—COMMERCE AND TRADE § 78n with the provisions of section 553 of title 5. An adjusted rate prescribed under paragraph (4) shall be published and take effect in accordance with section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)). (7) PRO RATA APPLICATION.—The rates per $1,000,000 required by this subsection shall be ap- plied pro rata to amounts and balances of less than $1,000,000. (8) Notwithstanding any other provision of law, the Commission may impose fees, charges, or prices for matters not involving any acquisi- tion, merger, consolidation, sale, or other dis- position of assets described in this subsection, as authorized by section 9701 of title 31, or other- wise. (h) Proxy solicitations and tender offers in con- nection with limited partnership rollup transactions (1) Proxy rules to contain special provisions It shall be unlawful for any person to solicit any proxy, consent, or authorization con- cerning a limited partnership rollup trans- action, or to make any tender offer in further- ance of a limited partnership rollup trans- action, unless such transaction is conducted in accordance with rules prescribed by the Com- mission under subsections (a) and (d) as re- quired by this subsection. Such rules shall— (A) permit any holder of a security that is the subject of the proposed limited partner- ship rollup transaction to engage in prelimi- nary communications for the purpose of de- termining whether to solicit proxies, con- sents, or authorizations in opposition to the proposed limited partnership rollup trans- action, without regard to whether any such communication would otherwise be consid- ered a solicitation of proxies, and without being required to file soliciting material with the Commission prior to making that determination, except that— (i) nothing in this subparagraph shall be construed to limit the application of any provision of this chapter prohibiting, or reasonably designed to prevent, fraudu- lent, deceptive, or manipulative acts or practices under this chapter; and (ii) any holder of not less than 5 percent of the outstanding securities that are the subject of the proposed limited partnership rollup transaction who engages in the business of buying and selling limited partnership interests in the secondary market shall be required to disclose such ownership interests and any potential con- flicts of interests in such preliminary com- munications; (B) require the issuer to provide to holders of the securities that are the subject of the limited partnership rollup transaction such list of the holders of the issuer’s securities as the Commission may determine in such form and subject to such terms and condi- tions as the Commission may specify; (C) prohibit compensating any person so- liciting proxies, consents, or authorizations directly from security holders concerning such a limited partnership rollup trans- action— (i) on the basis of whether the solicited proxy, consent, or authorization either ap- proves or disapproves the proposed limited partnership rollup transaction; or (ii) contingent on the approval, dis- approval, or completion of the limited partnership rollup transaction; (D) set forth disclosure requirements for soliciting material distributed in connection with a limited partnership rollup trans- action, including requirements for clear, concise, and comprehensible disclosure with respect to— (i) any changes in the business plan, vot- ing rights, form of ownership interest, or the compensation of the general partner in the proposed limited partnership rollup transaction from each of the original lim- ited partnerships; (ii) the conflicts of interest, if any, of the general partner; (iii) whether it is expected that there will be a significant difference between the exchange values of the limited partner- ships and the trading price of the securi- ties to be issued in the limited partnership rollup transaction; (iv) the valuation of the limited partner- ships and the method used to determine the value of the interests of the limited partners to be exchanged for the securities in the limited partnership rollup trans- action; (v) the differing risks and effects of the limited partnership rollup transaction for investors in different limited partnerships proposed to be included, and the risks and effects of completing the limited partner- ship rollup transaction with less than all limited partnerships; (vi) the statement by the general partner required under subparagraph (E); (vii) such other matters deemed nec- essary or appropriate by the Commission; (E) require a statement by the general partner as to whether the proposed limited partnership rollup transaction is fair or un- fair to investors in each limited partnership, a discussion of the basis for that conclusion, and an evaluation and a description by the general partner of alternatives to the lim- ited partnership rollup transaction, such as liquidation; (F) provide that, if the general partner or sponsor has obtained any opinion (other than an opinion of counsel), appraisal, or re- port that is prepared by an outside party and that is materially related to the limited partnership rollup transaction, such solic- iting materials shall contain or be accom- panied by clear, concise, and comprehensible disclosure with respect to— (i) the analysis of the transaction, scope of review, preparation of the opinion, and basis for and methods of arriving at con- clusions, and any representations and un- dertakings with respect thereto; (ii) the identity and qualifications of the person who prepared the opinion, the method of selection of such person, and Page 315 TITLE 15—COMMERCE AND TRADE § 78n any material past, existing, or con- templated relationships between the per- son or any of its affiliates and the general partner, sponsor, successor, or any other affiliate; (iii) any compensation of the preparer of such opinion, appraisal, or report that is contingent on the transaction’s approval or completion; and (iv) any limitations imposed by the issuer on the access afforded to such pre- parer to the issuer’s personnel, premises, and relevant books and records; (G) provide that, if the general partner or sponsor has obtained any opinion, appraisal, or report as described in subparagraph (F) from any person whose compensation is con- tingent on the transaction’s approval or completion or who has not been given access by the issuer to its personnel and premises and relevant books and records, the general partner or sponsor shall state the reasons therefor; (H) provide that, if the general partner or sponsor has not obtained any opinion on the fairness of the proposed limited partnership rollup transaction to investors in each of the affected partnerships, such soliciting mate- rials shall contain or be accompanied by a statement of such partner’s or sponsor’s rea- sons for concluding that such an opinion is not necessary in order to permit the limited partners to make an informed decision on the proposed transaction; (I) require that the soliciting material in- clude a clear, concise, and comprehensible summary of the limited partnership rollup transaction (including a summary of the matters referred to in clauses (i) through (vii) of subparagraph (D) and a summary of the matter referred to in subparagraphs (F), (G), and (H)), with the risks of the limited partnership rollup transaction set forth prominently in the fore part thereof; (J) provide that any solicitation or offer- ing period with respect to any proxy solici- tation, tender offer, or information state- ment in a limited partnership rollup trans- action shall be for not less than the lesser of 60 calendar days or the maximum number of days permitted under applicable State law; and (K) contain such other provisions as the Commission determines to be necessary or appropriate for the protection of investors in limited partnership rollup transactions. (2) Exemptions The Commission may, consistent with the public interest, the protection of investors, and the purposes of this chapter, exempt by rule or order any security or class of securi- ties, any transaction or class of transactions, or any person or class of persons, in whole or in part, conditionally or unconditionally, from the requirements imposed pursuant to para- graph (1) or from the definition contained in paragraph (4). (3) Effect on Commission authority Nothing in this subsection limits the author- ity of the Commission under subsection (a) or (d) or any other provision of this chapter or precludes the Commission from imposing, under subsection (a) or (d) or any other provi- sion of this chapter, a remedy or procedure re- quired to be imposed under this subsection. (4) ‘‘Limited partnership rollup transaction’’ defined Except as provided in paragraph (5), as used in this subsection, the term ‘‘limited partner- ship rollup transaction’’ means a transaction involving the combination or reorganization of one or more limited partnerships, directly or indirectly, in which— (A) some or all of the investors in any of such limited partnerships will receive new securities, or securities in another entity, that will be reported under a transaction re- porting plan declared effective before De- cember 17, 1993, by the Commission under section 78k–1 of this title; (B) any of the investors’ limited partner- ship securities are not, as of the date of fil- ing, reported under a transaction reporting plan declared effective before December 17, 1993, by the Commission under section 78k–1 of this title; (C) investors in any of the limited partner- ships involved in the transaction are subject to a significant adverse change with respect to voting rights, the term of existence of the entity, management compensation, or in- vestment objectives; and (D) any of such investors are not provided an option to receive or retain a security under substantially the same terms and con- ditions as the original issue. (5) Exclusions from definition Notwithstanding paragraph (4), the term ‘‘limited partnership rollup transaction’’ does not include— (A) a transaction that involves only a lim- ited partnership or partnerships having an operating policy or practice of retaining cash available for distribution and rein- vesting proceeds from the sale, financing, or refinancing of assets in accordance with such criteria as the Commission determines appropriate; (B) a transaction involving only limited partnerships wherein the interests of the limited partners are repurchased, recalled, or exchanged in accordance with the terms of the preexisting limited partnership agree- ments for securities in an operating com- pany specifically identified at the time of the formation of the original limited part- nership; (C) a transaction in which the securities to be issued or exchanged are not required to be and are not registered under the Securities Act of 1933 [15 U.S.C. 77a et seq.]; (D) a transaction that involves only issuers that are not required to register or report under section 78l of this title, both be- fore and after the transaction; (E) a transaction, except as the Commis- sion may otherwise provide by rule for the protection of investors, involving the com- bination or reorganization of one or more limited partnerships in which a non-affili- Page 316 TITLE 15—COMMERCE AND TRADE § 78n ated party succeeds to the interests of a gen- eral partner or sponsor, if— (i) such action is approved by not less than 662⁄3 percent of the outstanding units of each of the participating limited part- nerships; and (ii) as a result of the transaction, the ex- isting general partners will receive only compensation to which they are entitled as expressly provided for in the preexisting limited partnership agreements; or (F) a transaction, except as the Commis- sion may otherwise provide by rule for the protection of investors, in which the securi- ties offered to investors are securities of an- other entity that are reported under a trans- action reporting plan declared effective be- fore December 17, 1993, by the Commission under section 78k–1 of this title, if— (i) such other entity was formed, and such class of securities was reported and regularly traded, not less than 12 months before the date on which soliciting mate- rial is mailed to investors; and (ii) the securities of that entity issued to investors in the transaction do not exceed 20 percent of the total outstanding securi- ties of the entity, exclusive of any securi- ties of such class held by or for the ac- count of the entity or a subsidiary of the entity. (i) Disclosure of pay versus performance The Commission shall, by rule, require each issuer to disclose in any proxy or consent solici- tation material for an annual meeting of the shareholders of the issuer a clear description of any compensation required to be disclosed by the issuer under section 229.402 of title 17, Code of Federal Regulations (or any successor there- to), including, for any issuer other than an emerging growth company, information that shows the relationship between executive com- pensation actually paid and the financial per- formance of the issuer, taking into account any change in the value of the shares of stock and dividends of the issuer and any distributions. The disclosure under this subsection may in- clude a graphic representation of the informa- tion required to be disclosed. (j) Disclosure of hedging by employees and direc- tors The Commission shall, by rule, require each issuer to disclose in any proxy or consent solici- tation material for an annual meeting of the shareholders of the issuer whether any employee or member of the board of directors of the issuer, or any designee of such employee or member, is permitted to purchase financial in- struments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds) that are designed to hedge or offset any decrease in the market value of equity securi- ties— (1) granted to the employee or member of the board of directors by the issuer as part of the compensation of the employee or member of the board of directors; or (2) held, directly or indirectly, by the em- ployee or member of the board of directors. (k) Data standards for proxy and consent solici- tation materials (1) Requirement The Commission shall, by rule, adopt data standards for all information contained in any proxy or consent solicitation material pre- pared by an issuer for an annual meeting of the shareholders of the issuer, except that the Commission may exempt exhibits, signatures, and certifications from those data standards. (2) Consistency The data standards required under para- graph (1) shall incorporate, and ensure com- patibility with (to the extent feasible), all ap- plicable data standards established in the rules promulgated under section 5334 of title 12, including, to the extent practicable, by having the characteristics described in clauses (i) through (vi) of subsection (c)(1)(B) of such section 5334. (June 6, 1934, ch. 404, title I, § 14, 48 Stat. 895; Pub. L. 88–467, § 5, Aug. 20, 1964, 78 Stat. 569; Pub. L. 90–439, § 3, July 29, 1968, 82 Stat. 455; Pub. L. 91–567, §§ 3–5, Dec. 22, 1970, 84 Stat. 1497; Pub. L. 98–38, § 2(b), June 6, 1983, 97 Stat. 205; Pub. L. 99–222, § 2, Dec. 28, 1985, 99 Stat. 1737; Pub. L. 101–550, title III, § 302, Nov. 15, 1990, 104 Stat. 2721; Pub. L. 103–202, title III, § 302(a), Dec. 17, 1993, 107 Stat. 2359; Pub. L. 105–353, title III, § 301(b)(7), Nov. 3, 1998, 112 Stat. 3236; Pub. L. 107–123, § 6, Jan. 16, 2002, 115 Stat. 2396; Pub. L. 111–203, title IX, §§ 953(a), 955, 971(a), 991(b)(3), July 21, 2010, 124 Stat. 1903, 1904, 1915, 1953; Pub. L. 112–106, title I, § 102(a)(2), Apr. 5, 2012, 126 Stat. 309; Pub. L. 117–263, div. E, title LVIII, § 5821(g), Dec. 23, 2022, 136 Stat. 3426.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsecs. (b) and (h)(1)(A), (2), (3), was in the original ‘‘this title’’. See References in Text note set out under section 78a of this title. The Investment Company Act of 1940, referred to in subsecs. (b)(1), (c), (d)(1), and (g)(1)(A), is title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789, which is classified generally to subchapter I (§ 80a–1 et seq.) of chapter 2D of this title. For complete classification of this Act to the Code, see section 80a–51 of this title and Tables. The Securities Act of 1933, referred to in subsec. (h)(5)(C), is act May 27, 1933, ch. 38, title I, 48 Stat. 74, which is classified generally to subchapter I (§ 77a et seq.) of chapter 2A of this title. For complete classifica- tion of this Act to the Code, see section 77a of this title and Tables. AMENDMENTS 2022—Subsec. (k). Pub. L. 117–263 added subsec. (k). 2012—Subsec. (i). Pub. L. 112–106 inserted ‘‘, for any issuer other than an emerging growth company,’’ after ‘‘including’’. 2010—Subsec. (a). Pub. L. 111–203, § 971(a), designated existing provisions as par. (1) and added par. (2). Subsec. (g)(1)(A). Pub. L. 111–203, § 991(b)(3)(A), sub- stituted ‘‘paragraph (4)’’ for ‘‘paragraphs (5) and (6)’’ in cls. (i) and (ii). Subsec. (g)(3). Pub. L. 111–203, § 991(b)(3)(B), sub- stituted ‘‘paragraph (4)’’ for ‘‘paragraphs (5) and (6)’’. Subsec. (g)(4) to (6). Pub. L. 111–203, § 991(b)(3)(C), (D), added pars. (4) to (6) and struck out former pars. (4) to (6) which related to deposit and crediting of fees as off- setting collections, annual adjustment of rates, and final rate adjustment, respectively. Page 317 TITLE 15—COMMERCE AND TRADE § 78n Subsec. (g)(8) to (11). Pub. L. 111–203, § 991(b)(3)(E), (F), redesignated par. (11) as (8) and struck out former pars. (8) to (10) which related to review and effective date of adjusted rate, collection of fees upon lapse of appro- priation, and publication of rate, respectively. Subsec. (i). Pub. L. 111–203, § 953(a), added subsec. (i). Subsec. (j). Pub. L. 111–203, § 955, added subsec. (j). 2002—Subsec. (g)(1)(A)(i), (ii), (3). Pub. L. 107–123, § 6(1), substituted ‘‘a fee at a rate that, subject to para- graphs (5) and (6), is equal to $92 per $1,000,000 of’’ for ‘‘a fee of 1⁄50 of 1 per centum of’’. Subsec. (g)(4) to (11). Pub. L. 107–123, § 6(2), (3), added pars. (4) to (10) and redesignated former par. (4) as (11). 1998—Subsec. (g)(4). Pub. L. 105–353 substituted ‘‘con- solidation, sale,’’ for ‘‘consolidation sale,’’. 1993—Subsec. (h). Pub. L. 103–202 added subsec. (h). 1990—Subsec. (b)(1). Pub. L. 101–550, § 302(a), sub- stituted ‘‘section 78l of this title, or any security issued by an investment company registered under the Invest- ment Company Act of 1940,’’ for ‘‘section 78l of this title’’ and ‘‘authorization, or information statement’’ for ‘‘or authorization’’. Subsec. (c). Pub. L. 101–550, § 302(b), substituted ‘‘title, or a security issued by an investment company reg- istered under the Investment Company Act of 1940,’’ for ‘‘title’’. 1985—Subsec. (b). Pub. L. 99–222 designated existing provision as par. (1), inserted ‘‘or any bank, associa- tion, or other entity that exercises fiduciary powers,’’ after ‘‘under this chapter,’’, and added par. (2). 1983—Subsec. (g). Pub. L. 98–38 added subsec. (g). 1970—Subsec. (d)(1). Pub. L. 91–567, § 3, included equity securities of an insurance company which would have been required to be registered except for the exemption contained in section 78l(g)(2)(G) of this title, and sub- stituted ‘‘5 per centum’’ for ‘‘10 per centum’’. Subsec. (d)(8). Pub. L. 91–567, § 4, struck out cl. (A) which excluded offers for, or invitations for tenders of, securities proposed to be made by means of a registra- tion statement under the Securities Act of 1933, and re- designated cls. (B) to (D) as (A) to (C), respectively. Subsec. (e). Pub. L. 91–567, § 5, inserted provisions re- quiring the Commission, for the purposes of the sub- section, by rules and regulations to define, and pre- scribe means reasonably designed to prevent, such acts and practices as are fraudulent, deceptive, or manipula- tive. 1968—Subsecs. (d) to (f). Pub. L. 90–439 added subsecs. (d) to (f). 1964—Subsec. (a). Pub. L. 88–467, § 5(a), substituted provisions which make it unlawful for any person, in contravention of the Commission’s rules and regula- tions, to solicit, or to permit the use of his name to so- licit, proxies in respect of any security registered pur- suant to section 78l of this title for former provisions which limited the Commission’s rulemaking authority to proxies relating to securities listed and registered on a national securities exchange. Subsec. (b). Pub. L. 88–467, § 5(b), substituted provi- sions which make it unlawful for members of a national securities exchange and brokers and dealers registered under this chapter, in contravention of such rules as may be prescribed by the Commission, to give, or to re- frain from giving proxies, consents, and other author- izations in respect of any security registered under sec- tion 78l of this title carried for the account of cus- tomers for former provisions which limited the Com- mission’s rulemaking authority only to the giving of proxies in respect to listed securities carried for the ac- count of customers by members of the national securi- ties exchanges and by brokers or dealers who conduct business through the medium of an exchange member, and deleted the reference to brokers and dealers who transacted business through the medium of an ex- change member as being now covered by brokers and dealers registered under this chapter. Subsec. (c). Pub. L. 88–467, § 5(c), added subsec. (c). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by sections 953(a), 955, and 971(a) of Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of Title 12, Banks and Banking. Amendment by section 991(b)(3) of Pub. L. 111–203 ef- fective Oct. 1, 2011, see section 991(b)(4) of Pub. L. 111–203, set out as a note under section 77f of this title. EFFECTIVE DATE OF 2002 AMENDMENT Amendment by Pub. L. 107–123 effective Oct. 1, 2001, except that authorities provided by subsec. (g)(9) of this section to not apply until Oct. 1, 2002, see section 11 of Pub. L. 107–123, set out as a note under section 78ee of this title. EFFECTIVE DATE OF 1990 AMENDMENT Pub. L. 101–550, title III, § 303, Nov. 15, 1990, 104 Stat. 2721, provided that: ‘‘The amendments made by section 302 of this title [amending this section] shall take ef- fect upon the expiration of 180 days after the date of en- actment of this Act [Nov. 15, 1990].’’ EFFECTIVE DATE OF 1985 AMENDMENT Pub. L. 99–222, § 3, Dec. 28, 1985, 99 Stat. 1737, provided that: ‘‘The amendments made by this Act [amending this section] shall become effective one year after the date of enactment of this Act [Dec. 28, 1985].’’ EFFECTIVE DATE OF 1964 AMENDMENT Amendment by Pub. L. 88–467 effective Aug. 20, 1964, see section 13 of Pub. L. 88–467, set out as a note under section 78c of this title. REGULATIONS Pub. L. 111–203, title IX, § 971(b), (c), July 21, 2010, 124 Stat. 1915, provided that: ‘‘(b) REGULATIONS.—The Commission may issue rules permitting the use by a shareholder of proxy solicita- tion materials supplied by an issuer of securities for the purpose of nominating individuals to membership on the board of directors of the issuer, under such terms and conditions as the Commission determines are in the interests of shareholders and for the protec- tion of investors. ‘‘(c) EXEMPTIONS.—The Commission may, by rule or order, exempt an issuer or class of issuers from the re- quirement made by this section [amending this section] or an amendment made by this section. In determining whether to make an exemption under this subsection, the Commission shall take into account, among other considerations, whether the requirement in the amend- ment made by subsection (a) disproportionately bur- dens small issuers.’’ [For definitions of terms used in section 971(b), (c) of Pub. L. 111–203, set out above, see section 5301 of Title 12, Banks and Banking.] Pub. L. 103–202, title III, § 302(b), Dec. 17, 1993, 107 Stat. 2363, provided that: ‘‘The Securities and Exchange Commission shall conduct rulemaking proceedings and prescribe final regulations under the Securities Act of 1933 [15 U.S.C. 77a et seq.] and the Securities Exchange Act of 1934 [15 U.S.C. 78a et seq.] to implement the re- quirements of section 14(h) of the Securities Exchange Act of 1934 [15 U.S.C. 78n(h)], as amended by subsection (a), and such regulations shall become effective not later than 12 months after the date of enactment of this Act [Dec. 17, 1993].’’ RULE OF CONSTRUCTION—NO NEW DISCLOSURE REQUIREMENTS Amendment by Pub. L. 117–263 not to be construed to require certain additional information to be collected or disclosed, see section 5826 of Pub. L. 117–263, set out as a note under section 77g of this title. Page 318 TITLE 15—COMMERCE AND TRADE § 78n–1 CONSTRUCTION OF 1993 AMENDMENT Amendment by Pub. L. 103–202 not to limit authority of Securities and Exchange Commission, a registered securities association, or a national securities ex- change under any provision of this chapter or preclude the Commission or such association or exchange from imposing a remedy or procedure required to be imposed under such amendment, see section 304(b) of Pub. L. 103–202, set out in an Effective Date of 1993 Amendment note under section 78f of this title. STUDY AND REPORT ON SHAREHOLDER ACCESS TO PROXY STATEMENTS Pub. L. 104–290, title V, § 510(b), Oct. 11, 1996, 110 Stat. 3450, provided that the Securities and Exchange Com- mission should conduct a study to determine if share- holder access to proxy statements pursuant to this sec- tion had been impaired by recent statutory, judicial, or regulatory changes and the ability of shareholders to have proposals relating to corporate practices and so- cial issues included as part of proxy statements, and provided that the Commission report the study and any recommendations to Congress by 1 year after Oct. 11, 1996. EVALUATION OF FAIRNESS OPINION PREPARATION, DISCLOSURE, AND USE Pub. L. 103–202, title III, § 302(c), Dec. 17, 1993, 107 Stat. 2363, provided that the Comptroller General of the United States should, within 18 months after Dec. 17, 1993, conduct a study of the use of fairness opinions in limited partnership rollup transactions, the standards which preparers use in making determinations of fair- ness, the scope of review, quality of analysis, qualifica- tions and methods of selection of preparers, costs of preparation, and any limitations imposed by issuers on such preparers, the nature and quality of disclosures provided with respect to such opinions, any conflicts of interest concerning such opinions, and the usefulness of the opinions to limited partners, with a report required to be sent to Congress by the end of the 18-month pe- riod. ADJUSTMENT OF REGISTRATION FEE RATE By order dated Aug. 25, 2023, the Securities and Ex- change Commission adjusted the fee rates applicable under subsec. (g) of this section to $147.60 per $1,000,000, effective Oct. 1, 2023, see 88 F.R. 59953. By order dated Aug. 25, 2022, the Securities and Ex- change Commission adjusted the fee rates applicable under subsec. (g) of this section to $110.20 per $1,000,000, effective Oct. 1, 2022, see 87 F.R. 53030. By order dated Aug. 23, 2021, the Securities and Ex- change Commission adjusted the fee rates applicable under subsec. (g) of this section to $92.70 per $1,000,000, effective Oct. 1, 2021, see 86 F.R. 47696. By order dated Aug. 26, 2020, the Securities and Ex- change Commission adjusted the fee rates applicable under subsec. (g) of this section to $109.10 per $1,000,000, effective Oct. 1, 2020, see 85 F.R. 53890. By order dated Aug. 23, 2019, the Securities and Ex- change Commission adjusted the fee rates applicable under subsec. (g) of this section to $129.80 per $1,000,000, effective Oct. 1, 2019, see 84 F.R. 45601. By order dated Aug. 24, 2018, the Securities and Ex- change Commission adjusted the fee rates applicable under subsec. (g) of this section to $121.20 per $1,000,000, effective Oct. 1, 2018, see 83 F.R. 44101. By order dated Aug. 24, 2017, the Securities and Ex- change Commission adjusted the fee rates applicable under subsec. (g) of this section to $124.50 per $1,000,000, effective Oct. 1, 2017, see 82 F.R. 41080. By order dated Aug. 30, 2016, the Securities and Ex- change Commission adjusted the fee rates applicable under subsec. (g) of this section to $115.90 per $1,000,000, effective Oct. 1, 2016, see 81 F.R. 61283. By order dated Aug. 26, 2015, the Securities and Ex- change Commission adjusted the fee rates applicable under subsec. (g) of this section to $100.70 per $1,000,000, effective Oct. 1, 2015, see 80 F.R. 52824. By order dated Aug. 29, 2014, the Securities and Ex- change Commission adjusted the fee rates applicable under subsec. (g) of this section to $116.20 per $1,000,000, effective Oct. 1, 2014, see 79 F.R. 52771. By order dated Aug. 30, 2013, the Securities and Ex- change Commission adjusted the fee rates applicable under subsec. (g) of this section to $128.80 per $1,000,000, effective Oct. 1, 2013, see 78 F.R. 54934. By order dated Aug. 31, 2012, the Securities and Ex- change Commission adjusted the fee rates applicable under subsec. (g) of this section to $136.40 per $1,000,000, effective Oct. 1, 2012, see 77 F.R. 55240. By order dated Aug. 31, 2011, the Securities and Ex- change Commission adjusted the fee rates applicable under subsec. (g) of this section to $114.60 per $1,000,000, effective Oct. 1, 2011, see 76 F.R. 55139. Executive Documents TRANSFER OF FUNCTIONS For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title. § 78n–1. Shareholder approval of executive com- pensation (a) Separate resolution required (1) In general Not less frequently than once every 3 years, a proxy or consent or authorization for an an- nual or other meeting of the shareholders for which the proxy solicitation rules of the Com- mission require compensation disclosure shall include a separate resolution subject to share- holder vote to approve the compensation of ex- ecutives, as disclosed pursuant to section 229.402 of title 17, Code of Federal Regulations, or any successor thereto. (2) Frequency of vote Not less frequently than once every 6 years, a proxy or consent or authorization for an an- nual or other meeting of the shareholders for which the proxy solicitation rules of the Com- mission require compensation disclosure shall include a separate resolution subject to share- holder vote to determine whether votes on the resolutions required under paragraph (1) will occur every 1, 2, or 3 years. (3) Effective date The proxy or consent or authorization for the first annual or other meeting of the share- holders occurring after the end of the 6-month period beginning on July 21, 2010, shall in- clude— (A) the resolution described in paragraph (1); and (B) a separate resolution subject to share- holder vote to determine whether votes on the resolutions required under paragraph (1) will occur every 1, 2, or 3 years. (b) Shareholder approval of golden parachute compensation (1) Disclosure In any proxy or consent solicitation mate- rial (the solicitation of which is subject to the rules of the Commission pursuant to sub- section (a)) for a meeting of the shareholders occurring after the end of the 6-month period