Automatic Shelf Registration and Proxy Information

In a joint telephone call by Cleary Gottlieb and Sullivan & Cromwell with senior members of the staff of the SEC’s Division of Corporation Finance, the staff modified a recent statement that it would object to a takedown from an automatic shelf registration statement filed by an issuer after its annual report on Form 10-K but before it had filed its proxy statement incorporated by reference in that Form 10-K. In the absence of the modification, many issuers could have been prevented from using their newly filed automatic shelf registration statements or otherwise forced to make certain proxy-related disclosures earlier than anticipated in order to do so.

Form 10-K permits issuers to forward incorporate certain information regarding management compensation, related party transactions and securities ownership (commonly referred to as Part III information) from their subsequently filed proxy statements. Many issuers take advantage of this mechanism and leave Part III information out of their Form 10-K filings.

At the “SEC Speaks in 2006” conference on March 4, a senior staff member indicated that although the SEC staff would not object to the filing of an automatic shelf registration statement between the filing of an issuer’s Form 10-K and its proxy statement, it would object to a takedown from that automatic shelf during that period, unless the Part III information were included or incorporated by reference in the Form 10-K or in the prospectus supplement for that takedown.

The SEC staff has now modified its position. At the same time as it reiterated that it will not object to the filing of an automatic shelf registration statement in these circumstances—leaving it to issuers and their counsel to determine whether the automatic shelf at the time of its filing satisfies applicable requirements—the staff withdrew its previous statement that it would object to a takedown in these circumstances. Instead, consistent with its traditional position with respect to shelf takedowns, the staff will leave it to issuers and their counsel to determine whether the prospectus at the time of a takedown satisfies applicable requirements.

We believe that an issuer should be able to conclude that its automatic shelf registration statement at the time of filing and the prospectus at the time of a takedown comply with applicable requirements if the issuer incorporates by reference in its registration statement the Part III information from its prior year proxy statement, together with any subsequent Form 8-Ks that reflect changes or additions to that information. The issuer also should ensure that any other information necessary to prevent these disclosures from being materially misleading is included or incorporated in its registration statement and in the prospectus used in connection with a takedown. For example, if the issuer is in the process of preparing its proxy statement, it should consider whether any information to be included in the proxy statement that is not already disclosed in an Exchange Act report could be material to an investor. (Alternatively, the issuer may choose to file an amended Form 10-K or a Form 8-K containing the Part III information or, if a preliminary proxy statement containing the Part III information has been filed, specifically incorporate by reference that preliminary proxy statement.)

In the same telephone call, the staff reiterated its longstanding position that it remains unwilling to declare effective a non-automatic shelf registration statement during the period between the filing of an issuer’s Form 10-K that does not include Part III information and the filing of the issuer’s proxy statement.

We believe the staff does not intend to issue any written statements or make any further public statements about this matter, although it would confirm its position if asked.

Please feel free to call any of your regular contacts at the firm or any of our partners and counsel listed under Capital Markets or Corporate Governance in the Our Practice section of our web site if you have any questions.

CLEARY GOTTLIEB STEEN & HAMILTON LLP