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unless we had permitted such declaration to become effective. The order also gave notice of a hearing to consider any declaration filed in accordance with such order.

On February 19, 1959, Union filed a declaration pursuant to our order. J. Raymond Dyer and his daughter, Nancy Corinne Dyer (hereinafter collectively referred to as Dyer), Union stockholders, filed a statement of objections to Union's declaration and were granted leave by the hearing examiner to be heard pursuant to Rule XVII (b) of our Rules of Practice. Upon the conclusion of the hearing Union, Dyer and our Division of Corporate Regulation (“Division”) filed proposed findings, exceptions and briefs, and we heard oral argument. Our findings are based upon an independent review of the record.

Dyer submitted to Union, with the request that they be included in Union's proxy statement and proxy form, eleven proposals which Dyer intends to present at the stockholders' meeting, and Union has included 2 of such proposals in its proposed proxy solicitation material and omitted the other 9. Dyer objects to that omission and also to certain statements of the management in opposition to the 2 proposals which have been included and to certain other statements in, and omissions from, the proxy statement and form of proxy. The Division has taken the position that 1 of the Dyer proposals included in Union's proxy material should be excluded therefrom. It has also taken exception to 2 statements in the proxy statement.

As indicated in prior proceedings involving Union and Dyer, we have recognized that the provisions of Regulation X-14 (17 CFR 240.14a et seq.) promulgated under the Securities Exchange Act of 1934 (“Exchange Act”), which set forth this Commission's general policies and requirements regarding proxy solicitations, should be applied in proceedings subject to Rule 62, except to the extent that special circumstances may require the imposition of different or

mission deems necessary or appropriate in the public interest or for the protection of investors or consumers or to prevent the circumvention of the provisions of this

title or the rules, regulations, or orders thereunder." 3 Rule 62 under the Holding Company Act (17 CFR 250.62) provides in pertinent part:

“No solicitation of any authorization, regarding any security of a registered holding company or a subsidiary company thereof, in connection with any reorganization subject to the approval of the Commission, or in connection with any other transaction which is or will be the subject of an application or declaration filed with the Commission, shall be made except pursuant to a declaration with respect to such solicitation which has become effective in the manner prescribed in para

graph (d) of this rule." 4 We denied Dyer's request for intervention as a party, finding that the public interest and his interests would be adequately protected in view of the rights accorded him as a participant by the hearing examiner, including the right to cross examine and to present evidence of his own.

additional requirements. We now consider the questions raised with respect to Union's proposed solicitation material. PROPOSALS SUBMITTED BY DYER

1. Union initially consented to include in its proxy material a resolution submitted by Dyer which would censure all of the present members of Union's board of directors, who are also management nominees for re-election at the 1959 meeting, and declare all of them disqualified for re-election to office. The Division contends that this relates to elections to office and is therefore not within the scope of Rule 14a-8, which requires management under certain circumstances to include in its proxy material certain proposals submitted by a security holder but which specifically provides that it shall not apply to elections to office. The Division argues further that the proposal would constitute a solicitation in opposition to the election of directors within the meaning of Rules 14a-1 and 14a-116 and therefore could be made only by use of a proxy statement filed with us by Dyer and containing the information required by Schedule A of Regulation X-14, including the additional information required in cases of election contests. It also argues that such a proposal could be made only after the filing by Dyer of the statements required by Rule 14a-11 in election contests. The Division accordingly contends that the inclusion in the management's solicitation material of what is in effect a counter-solicitation by Dyer would be inconsistent with Regulation X-14 and cannot be permitted.

Counsel for Union has indicated that, in consenting to include this proposal by Dyer in its proxy material, the management did not consider whether the proposal was outside the scope of Rule 14a-8 entirely. Union has stated that it does not consent to the inclusion of this proposal if we find that Rule 14a-8 does not apply to it.

Dyer contends that he is not requesting stockholders to refrain from voting for the re-election of Union's directors but is simply requesting that they declare the directors disqualified for office. We think such a distinction cannot validly be drawn, since a stockholder could not logically vote for the Dyer proposal and at the same time vote for re-election of the present directors. The submission of this proposal of necessity would constitute an attempt to dissuade stockholders from voting in favor of management's nominees. Accordingly, we find that the proposal involves elections to office, that Rule 14a-8 therefore does not apply to the proposal and that management may omit it from its proxy material.

5 Union Electric Company, 37 S.E.C. 721, 724 (1957), petition for review dismissed as moot, Dyer v. S.E.O., 251 F. 2d 512 (C.A. 8, 1958), petition for writ of certiorari pending in the Supreme Court of the United States, No. 67, October Term 1958; Union Electric Company, Holding Company Act Release No. 13710, page 3 (March 21, 1958), appeal pending, Dyer v. 8.E.C. (C.A. 8, No. 15989), stay pending appeal denied, April 18, 1958.

6 Rule 14a-1 defines solicitation to include any request not to execute, or to revoke, a proxy, or the furnishing of any communication under circumstances reasonably calculated to result in the withholding or revocation of a proxy. Rule 14a-11 contains special requirements applicable to solicitations in election contests.

2. Union proposes to omit from its proxy material proposals submitted by Dyer to (1) require approval by the board of directors of lobbying expenditures, (2) create a stockholder relations office, and (3) reduce the vote necessary to amend the by-laws to a majority of the shares present and voting. Union justifies omission of these 3 proposals on the ground that it included in its proxy soliciting material in 1957 and 1958 substantially similar proposals submitted by Dyer, and that such proposals received less than the minimum vote specified in Rule 14a-8(c)(4) as a pre-requisite to the proponent's right to require subsequent inclusion of similar proposals in management's proxy material.?

Since these 3 proposals failed on previous submissions to stockholders in management's proxy material to receive the requisite vote to qualify them under Rule 14a-8(c) (4) for resubmission in management's 1959 proxy material, Union is not required to include them in its proxy material. Dyer has contended that many of the proxies voted against the proposals in prior years were invalid since they were "unmarked,” that is to say, the forms of proxy contained boxes in which the signing stockholder might indicate by a check mark a vote for or against each proposal and no check mark was made in either box. Management voted the proxies against the proposals pursuant to the express authorization on the face of the form of proxy in boldface type that if a choice for or against was not specified the proxy would be voted against the Dyer proposals. Rule 14a-4(b) specifically permits such a proviso and we find nothing in the circumstances of this case to require a different result here. We must therefore reject Dyer's contention, as we have twice before rejected similar contentions by him.8

7 Rule 14a-8(c)(4) provides that a stockholder's proposal need not be included in management's proxy material if substantially the same proposal had been submitted to security holders in management's proxy material within the previous 5 years and received less than 3% of the votes cast on the first such submission or less than 6% on the second submission. Dyer's proposal relating to lobbying expenditures was included in management's material in both 1957 and 1958, the proposal regarding the vote required for amendment of the by-laws was included in 1957, and the one regarding stockholder relations was included in the 1958 management material.

8 See Union Electric Company, 37 S.E.C. 721, 729 (1957); Union Electric Company, Holding Company Act Release No. 13710, pp. 8-9 (March 21, 1958). Dyer contends that since he is attacking the validity of Rule 14a-4 in proceedings to review our 1957 and 1958 orders which are still pending in the courts, we have no jurisdiction to base any action on that rule. We find no merit in this contention. The exclusive jurisdietion of the Court of Appeals “to affirm, modify, or set aside" our previous orders does not mean that we must suspend application of our proxy rules in cases arising in the

3. Another Dyer proposal which Union has omitted seeks to prohibit the counting of proxies unless they are specifically marked for or against a matter voted upon. Dyer's proposals reads as follows:

Resolved, that the By-Laws be amended so as to provide that marked proxies only may be taken into consideration when the tabulation is made 'For' or 'Against a proposal, and so as to provide that unless the stockholder executing the proxy checks the 'For' or 'Against box which is placed immediately before each proposal listed on the proxy ballot, no vote cast by the

proxy agent on that proposal may be counted.” At the oral argument Dyer, to meet objections of Union, offered an amendment of the above language so as to insert after the words "a proposal" the words "listed on the proxy ballot."

Union contends that this proposal comes within the provision of Rule 14a-8(c)(1) that management may omit from its proxy material a proposal which is not a proper subject of stockholder action under the laws of the issuer's domicile. Union points out that Missouri statutes provide that a stockholder shall have the right to "vote either in person or by proxy" and that by-laws shall be "not inconsistent with law.” Union argues that the by-law proposed by Dyer would eliminate the right of the stockholder to vest discretion in his proxy, and has presented an opinion of counsel that the bylaw would be illegal as restricting the statutory right to vote by proxy.

The proposal, both as submitted and as Dyer would amend it, would have the effect of prohibiting the counting of any but marked ballots on any proposal listed in management's form of proxy and would thus prevent the voting of unsolicited discretionary proxies on proposals listed in the solicited proxy forms. The proposed bylaw would accordingly curtail the right of an individual to give his agent an unsolicited discretionary proxy to vote on all matters presented at a meeting, in contravention of the Missouri statute. We conclude that the proposal is therefore not a proper subject of

period that those orders are pending before the Court. In fact, as Section 24(b) of the Holding Company Act specifically provides, the commencement of review proceedings does not even operate as a stay of the orders being reviewed unless so ordered by the Court, and in both 1957 and 1958 the Court of Appeals declined to grant Dyer's requests for stays.

Dyer also contended that the 1957 and 1958 proxies were invalid on the ground that they were obtained by false advertising and false communications to stockholders. The hearing examiner rejected an offer of proof by Dyer of certain newspaper advertisements and communications with stockholders by Union in November 1956 and June and September 1957 which Dyer contends were false and misleading. We sustain the examiner's ruling. We ind no basis for treating those advertisements and communications as a part of the solicitation of proxies for either the 1957 or the 1958 annual meeting of Union's stockholders; accordingly we do not consider the question of their accuracy to be relevant to the issues before us in these proceedings.

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stockholder action under Missouri law, and that its omission by Union is not contrary to the proxy rules.

4. Another proposal by Dyer which Union has omitted is in the form of a proposed amendment to the articles of incorporation giving preemptive rights to Union's stockholders increasing the company's authorized common stock. Union has submitted an opinion of counsel to the effect that a proposal to amend the articles may not be submitted by a stockholder directly to the other stockholders for their vote, because the applicable Missouri statute provides that amendments to the articles shall be made in the following manner:

“(1) The board of directors shall adopt a resolution setting forth the proposed amendment and directing that it be submitted to a vote at a meeting of shareholders, which may be either

an annual or a special meeting; In view of this statutory provision we agree that the proposal is not in proper form for submission for action of security holders and may be omitted. We note that Dyer has submitted, and management proposes to include in its solicitation material, & related proposal in the form of a resolution calling on the board of directors to adopt and submit to the stockholders an amendment to the articles to restore preemptive rights.

5. Union has omitted from its solicitation material 4 proposals substantially the same as those which Dyer submitted in past years and which we previously found omissible under Rule 14a-8(e) (1) or (5). One proposal would permit a minor stockholder to vote by proxy. Union has submitted an opinion of counsel indicating that under Missouri law a minor may not appoint an agent. The second proposal would require the company to accord to the parent or guardian of a minor stockholder all rights incident to the ownership of stock. The opinion of Union's counsel indicates that such rights may not in all instances legally be exercisable by the parent or guardian. Dyer has presented nothing which persuades us that such opinions of counsel are not correct and we find that these 2 proposals may be omitted under Rule 148–8(c)(1).

The remaining two proposals would prohibit false advertising and false communications with stockholders by the company. Union's counsel states again, as in prior years, that false advertising and communications are not lawful and that the officers and directors have no authority to expend corporate funds for such purpose. We have previously held that similar proposals by Dyer might properly be omitted under Rulo 14a-8(c)(5) as relating to the conduct of the ordinary business operations of the company. We observe nothing in the record now before us which justifies a different

9 R.8. Mo. 1949, Sec. 851.090.

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