Also known as: proxy solicitation · soliciting proxies · solicited proxies · solicitations of proxies
Written by attorneys · grounded in primary & secondary sources — see below
A communication by which a person seeks authority from shareholders to vote their shares at a corporate meeting. The term encompasses both direct requests to furnish, revoke, or withhold proxies and indirect statements that may accomplish the same result or form part of a chain of communications aimed at that outcome.
Skyline Construction fixes March 1 as the record date for its annual director election. On March 15 the board adopts a bylaw promising reimbursement of reasonable proxy solicitation expenses to qualifying shareholders. Solstice Ventures, which began soliciting proxies in February, demands payment after its slate loses. The corporation refuses because the record date preceded adoption of the bylaw.
Sierra Solutions circulates proxy materials containing misleading statements about the terms of a proposed merger with Sapphire Holdings. Shareholder Seth Shapiro votes in favor based on the materials and later sues when the merger terms prove less favorable than described. The suit alleges the solicitation violated federal proxy rules.
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Stroud family members controlling a closely held corporation refuse to release detailed financial data during a proxy contest over a proposed sale. Minority shareholder Sean Steele demands the information to solicit proxies against the transaction. The court balances the duty to disclose material facts against the need to protect confidential business information.
Virginia Bankshares directors solicit proxies for a freeze-out merger and omit facts showing the offered price undervalues the shares. Shareholder Sabrina Shah withholds her proxy upon learning the omitted information. The court examines whether the omitted facts would have assumed actual significance in a reasonable shareholder's decision.
Stephen Shaw, an outside consultant, assists Sierra Solutions in preparing proxy materials that contain false statements about upcoming director elections. Investor Serena Soto loses her investment after relying on the materials and sues the consultant. The court determines whether the consultant's conduct qualifies as primary liability under the proxy rules.
TSC Industries omits facts from its proxy materials about a proposed acquisition that would have altered the total mix of information available to shareholders. Sydney Santos, a shareholder who approved the transaction, later claims the omission was material. The court applies the standard that an omitted fact is material if there is a substantial likelihood a reasonable shareholder would consider it important.
A corporation may adopt a bylaw requiring reimbursement of reasonable expenses incurred by a shareholder in soliciting proxies or consents in connection with an election of directors. The bylaw must set forth procedures and conditions, and it cannot apply to any election for which the record date precedes its adoption.
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No. The statute expressly provides that a reimbursement bylaw shall not apply to elections for which any record date precedes its adoption. Once the record date is fixed, later adoption of the bylaw cannot create reimbursement rights for that election even if the vote occurs afterward.
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The term includes both direct requests to furnish, revoke, or withhold proxies and communications that may indirectly accomplish the same result or constitute a step in a chain of communications ultimately designed to obtain proxy authority.
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…we did not require proof that material omissions or misstatements in a proxy statement decisively affected voting, because the proxy solicitation itself, rather than the defect in the solicitation materials, served as an essential link in the transaction. See Mills v. Electric Auto-Lite Co., 396 U. S. 375, 384-385 (1970). The modern…