What Is a Schedule 14C Information Statement?

A Schedule 14C Information Statement is a document filed with the U.S. Securities and Exchange Commission (SEC) to inform shareholders about significant corporate actions. Governed by Section 14(c) of the Securities Exchange Act, its purpose is purely informational and it does not solicit a vote from shareholders. Instead, it notifies them of material decisions that have already been approved by shareholders holding a sufficient majority of the company’s voting power, making a formal shareholder meeting unnecessary. This document ensures that all shareholders are kept aware of important changes within the company.

Triggers for Filing a Schedule 14C

A company is required to file a Schedule 14C when a corporate action needs shareholder approval, but the company is not actively soliciting votes. This situation arises when the company has already secured the necessary approval through written consent from shareholders who control a majority of the voting shares. This process is an alternative to filing a Schedule 14A, which is a proxy statement used to request votes from shareholders ahead of a formal meeting.

Common corporate actions that trigger a Schedule 14C filing are those that materially affect the company’s structure or finances. These include:

• Mergers, acquisitions, or the sale of a significant portion of the company’s assets.
• Changes to the company’s articles of incorporation, such as a corporate name change.
• A reverse stock split.
• A change in the company’s state of domicile.

Key Information Contained in the Statement

A Schedule 14C provides a detailed description of the corporate action being taken and the context for its approval. The first page includes a bold-faced statement clarifying that the company is not asking for a proxy and that shareholders should not send one.

The statement provides specifics on the voting securities and their principal holders, detailing the ownership of those who provided written consent. It also outlines the date the corporate action is expected to become effective. For certain transactions, the document must include information on dissenters’ rights of appraisal, which allow eligible shareholders to demand payment of the fair value of their shares.

The Schedule 14C also includes many of the same disclosures found in a Schedule 14A proxy statement. This includes details about the interests of directors and officers in the matters being acted upon. If a merger or acquisition is involved, it may also contain information regarding “golden parachute” compensation arrangements for executives.

The Filing and Distribution Process

The process begins with the company filing a preliminary version of the information statement, known as a PRE 14C, with the SEC. This preliminary filing must be submitted at least 10 calendar days before the company can send the final version to shareholders. This period allows the SEC staff to review the document for completeness and accuracy, and the SEC may provide comments which the company must address.

Once the preliminary review is complete, the company files the definitive information statement, or DEF 14C, with the SEC and distributes it to shareholders. According to SEC Rule 14c-2, this definitive statement must be sent to shareholders at least 20 calendar days before the corporate action can be taken. This 20-day waiting period provides non-consenting shareholders with adequate notice of the impending changes.

Distribution of the Schedule 14C can be done through traditional mail or electronically for shareholders who have consented to electronic delivery. The company must send the statement to all shareholders of record, even though their vote is not being requested, to ensure all owners are informed about significant corporate events.