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The Staff of the Division of Corporation Finance has updated several Compliance and Disclosure Interpretations (CDIs) under the Securities Act, proxy rules, and tender offer rules. The changes provide additional clarity on lock-up agreements, exempt solicitations, unexpected dissident consent solicitations, and cross-border tender offers, while communicating expectations concerning notices of exempt solicitations.
These updates potentially affect how companies and deal teams structure transactions, solicit shareholder support, and manage disclosure obligations. Specifically, the updates establish a more unified framework across lock-up agreements in various transaction structures, clarify the proper scope and format of exempt solicitation notices, provide practical flexibility for broker searches and consent scenarios, and address timing and agency questions in cross-border tender offers.
Key Updates
Lock-Up Agreements (Securities Act CDIs 239.13, 139.29, 139.30)
- Align guidance across Rule 145(a) transactions and issuer and third-party exchange offers, establishing clear investor qualification requirements
- Explicitly address pre-filing written consents by target company insiders
- Confirm continued availability of dual-track structures—exempt issuances to insiders alongside registered offerings to other holders—when standard conditions cannot be met
- Reinforce the need for parallel tender offer analysis when soliciting lock-ups
Proxy Rules and Exempt Solicitations (CDIs 126.06, 126.07, 133.02, 182.01)
- Indicate that the Staff will object to voluntary Notices of Exempt Solicitation by shareholders below the $5 million beneficial ownership threshold and specify that such communications should not be filed on EDGAR if they have not been disseminated to shareholders or do not constitute solicitations.
- Provide timing flexibility for "broker searches" under Rules 14a-13 and 14c-7, permitting companies to conduct searches less than 20 business days before the record date if they reasonably believe proxy materials will be timely disseminated
- Provide practical relief for companies unable to meet Rule 14c-2 timing requirements due to unexpected dissident consent solicitations, confirming that disclosure timing issues do not invalidate corporate action
Tender Offer Rules (CDIs 166.02, 166.03)
- Clarify that Rule 14e-5 exceptions remain available for purchases made outside of a tender offer after public announcement but before dissemination of Tier I cross-border tender offer documents, provided subsequent disclosure is made
- Confirm that financial advisor affiliates may effect outside purchases in an agency capacity without triggering the "no facilitation" restriction, while remaining subject to price-matching and other Rule 14e-5 conditions
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
