On January 23, the Securities and Exchange Commission’s Division of Corporation Finance (“CorpFin”) published new and revised Compliance and Disclosure Interpretations (“CDIs”) relating to proxy and tender offer rules. The SEC staff thus continued a pattern from 2025 of introducing more flexibility for public companies and their management without the Securities and Exchange Commission (“SEC” or the “Commission”) undertaking notice-and-comment rulemaking. As noted below, these interpretative changes mesh with 2026 policy shifts by the Commission, SEC Chairman Paul Atkins, and staff to alter the balance in the relationship between management and shareholders.
And the staff may be far from finished. On a panel at the annual January Northwestern Securities Regulation Institute, CorpFin Associate Director for Specialized Disclosure Ted Yu welcomed public company feedback on where additional interpretative flexibility or formal rule changes regarding tender offers might be beneficial.
The following are capsule summaries of the higher profile January 2026 CorpFin CDIs:
1. CorpFin creates more flexibility in the time requirements for “broker searches” in connection with shareholder meetings:
What is the “problem” Corp Fin seeks to address?
Current proxy rules (Rule 14a-13 and Rule 14c-7(a)(3)) generally require that public companies commence “broker searches” at least 20 business days prior to the record date of a shareholder meeting in order to determine how many copies of proxy materials must be distributed to beneficial owners of the company’s voting securities. Under Rule 14a-13, the 20 business day requirement is mandatory for annual meetings, with flexibility provided for special meetings. In a new CDI, CorpFin staff acknowledged that technological changes enable companies to make inquiries of brokers, banks, and other intermediaries in a more condensed time frame.
CorpFin’s action may also have been animated by two additional dynamics: (a) a belief that compliance with the 20 business day requirement was uneven given that technology had obviated the need for searches to take that long, and (b) strategic use by activist investors engage in a proxy contest who are tactically looking to delay a shareholder meeting. In this latter dynamic, activists could send a bedbug letter to the SEC staff saying that 14a-13 was not complied with, and often (but not always) the staff would require the company to postpone the meeting to ensure compliance.
What did CorpFin do?
According to new CDI 133.02, “the staff will not object if a registrant commences its “broker search” less than 20 business days before the record date of the shareholder meeting, provided that the registrant reasonably believes that its proxy materials will be timely disseminated to beneficial owners and otherwise complies with Rule 14a-13.”
How do public companies benefit?
The requirement to commence a broker search at least 20 business days prior to the record date for a shareholder meeting had, in certain situations, increased the time required to hold a public company shareholder meeting. Companies seeking to approve a business combination, or seeking urgent approvals required because of company distress, have often found that the 20-business day requirement caused delay for the matters for which they sought approval. The flexibility provided by this CDI will alleviate that problem in the future.
2. CorpFin creates additional flexibility in registering exchange offers on Form S-4 or F-4 following lockups:
What is the “problem” Corp Fin seeks to address?
Corp Fin recognized the “legitimate business reason” that companies seek contractual commitments from their security holders (referred to as lockup agreements) to vote in favor of business combinations, in order to increase deal certainty. Such lockup agreements are often entered into concurrently with, or shortly after, the signing of the business combination agreement (and prior to filing of a registration statement on Form S-4 or F-4). CorpFin has, however, taken the position that lock-ups (and agreements to tender) could constitute a “contract for sale” of securities under the Securities Act of 1933. If the individuals and entities signing lockup agreements have made their investment decision with respect to the business combination prior to the filing of the registration statement, this raises the question of whether the acquiring company should be able to register the issuance of securities in the business combination on a subsequently filed registration statement.
What did CorpFin do?
In 2009, CorpFin first issued two CDIs – Question 139.29 (for business combinations) and 139.30 (for third party exchange offers) -- to create a pathway for acquirors to register business combinations on Form S-4 or F-4 if lockup agreements have been entered into with target shareholders prior to filing of the registration statement. In 2010, CorpFin revised these CDIs. Now, 16 years later, CorpFin further liberalized the ability to register the issuance of securities in a business combination if lockups have been entered into prior to filing of the registration statement .
In the 2026 revisions, CorpFin tweaked the basic conditions that must be met to register the issuance of securities in connection with business combinations and third-party exchange offers when lockups have been entered into prior to filing of the registration statement. However, and this is the major change, even if these basic conditions are not met, the two respective CDIs now provide an alternative pathway to still register the issuance of securities in a business combination or exchange offer. The two CDIs state that the SEC staff will not object to the subsequent registration securities offered in the business combination or exchange offer on Form S-4 or F-4 so long as securities that will be issued to shareholders who have entered into lockup agreements prior to filing of the registration statement are issued in the transaction on a private placement basis (i.e. not on the registration statement) and securities included on the registration statement are only offered and sold to target shareholders who did not execute lockup agreements prior to filing of the registration statement.
CorpFin also continues to remind issuers seeking lock-up agreements (or agreements to tender) from security holders to consider whether such efforts represent the commencement of a tender offer.
3. CorpFin add more leeway for certain cross-border and foreign tender offers.
What is the “problem” CorpFin seeks to address?
Companies engaged in cross-border tender offers often face challenges because of overlaps or conflicts between U.S. and foreign tender offer rules. Rule 14e-5 creates special challenges because it generally prohibits the person making the tender offer from purchasing the subject securities outside the tender offer.
What did CorpFin do?
First, new CDI 166.02 extended the Rule 14e-5(b)(10)exemption to Rule 14e-5 for purchases outside a Tier I cross-border tender offer made after public announcement of the offer but prior to dissemination of the offer documents.
New CDI 166.02 expands the Rule 14e-5(b)(10) exception to 14e-5 for purchases that qualify for a Tier I cross-border tender offer in the time period after the tender offer has been publicly announced but before offering documents are disseminated.
Rule 14e-5(b)(10) permits an offeror to make purchases of a target’s shares outside of the tender offer if the tender offer is eligible for Tier I relief, so long as certain conditions are satisfied. Among other things, the offering documents furnished to U.S. holders must “prominently disclose the possibility of any purchases [outside the tender offer], or arrangements to purchase, or the intent to make such purchases.”
New CDI 166.02 clarifies that this exception also applies to purchases made in connection with a transaction eligible for Tier I cross-border tender offer relief, after announcement of the transaction but prior to launch of the tender offer (and therefore prior to dissemination of tender offer documents disclosing that such purchases may occur). The CDI explains that this position is consistent with the policy behind the Rule 14e-5(b)(10) exception, i.e., “to allow purchases outside of a Tier I tender offer where such outside purchases are permitted by the laws of the subject company’s home jurisdiction and the other conditions of the exception are met.” CDI 166.02 notes that the “offering documents, when disseminated, should disclose that purchases outside the Tier I offer have already occurred and, if true, may continue during the offer.” The CDI also notes this relief also applies to the exception under Rule 14e-5(b)(12)(i)(D) for purchases outside of a Tier II tender offer by an affiliate of the offeror’s financial advisor or by an offeror and its affiliates.
Second, new CDI 166.03 clarifies the Rule 14e-5(b)(12) exception to Rule 14e-5 for purchases outside a Tier II tender offer.
Rule 14e-5(b)(12)(i) permits an offeror (and its affiliates) and an affiliate of the offeror’s financial advisor to make purchases of target shares outside a tender offer eligible for Tier II relief, subject to certain conditions and prohibitions. One of the conditions, set forth in Rule 14e-5(b)(12)(i)(G)(4), states that the purchases or arrangements to purchase subject securities by an affiliate of the offeror’s financial advisor outside the tender offer may not be made to facilitate the tender offer. New CDI 166.03 clarifies that this (G)(4) prohibition does not apply when an affiliate of the offeror’s financial advisor purchases target shares on behalf of the offeror. . In other words, the limitation that purchases outside a tender offer by an affiliate of the offeror’s financial advisor may not facilitate the tender offer only applies when such affiliate is purchasing outside the tender offer on its own behalf (or for any other reason except at the direction of the offeror). The CDI does note that these financial advisor purchases acting as “agent-of-the-offeror” would still “be subject to the other requirements of Rule 14e-5(b)(12), including Rule 14e-5(b)(12)(F), which requires that the tender offer price be increased to match any consideration paid outside of the tender offer that is greater than the tender offer price.”
How do companies benefit?
These new CDIs inject additional flexibility into cross-border and foreign tender offers.
4. CorpFin cracks down on voluntary Notices of Exempt Solicitation
What is the “problem” CorpFin seeks to address?
CorpFin expressed concerns that voluntary Notices of Exempt Solicitation are being used for publicity. In revised CDI 126.06, CorpFin staff observe that “the vast majority of Notices of Exempt Solicitation are now voluntary submissions by persons who do not beneficially own more than $5 million of the class of subject securities, and the voluntary submission of such notices on EDGAR appears to be primarily a means to generate publicity.” In practice, these are often used by shareholder proponents or those who support shareholder proposals related to ESG matters and a significant number of these notices originate from a concentrated number of individuals or groups.
Under Exchange Act Rule 14a-6(g)(1), these Notices of Exempt Solicitation must be filed by any person engaging in a solicitation pursuant to Exchange Act Rule 14a-2(b)(1) who beneficially owns over $5 million of the class of securities that is the subject of the solicitation. Immediately before this new CDI, persons who owned less than this threshold amount could file a Notice of Exempt Solicitation on a voluntary basis. (This was thanks to an earlier version of the CDI issued in 2018 that stated the staff would not object to voluntary filings. This earlier position was actually intended to yield some benefits for public companies in that it made certain activist views more public and centralized, to which a company could theoretically respond more easily. However, ESG activist adaptation to the earlier version of the CDI led to CorpFin’s 2026 response.)
CorpFin now appears concerned that these voluntary Notices are being abused to disseminate views about the relevant company through the SEC’s EDGAR system.
What did CorpFin do?
In revised CDI 126.06, CorpFin staff reversed from “not objecting” to “objecting” to voluntary Notices of Exempt Solicitation. When the staff writes that it “will object to a voluntary submission of a Notice of Exempt Solicitation,” it is using the strongest language short of threatening to recommend an enforcement action.
How do companies benefit?
This new position will curb the ability of shareholders with smaller shareholdings to express views about the relevant company through voluntary Notices of Exempt Solicitation on EDGAR.
For lock ups in business combinations, the basic conditions now read as follows:
- the lock-up agreements (or agreements to tender) are executed only by accredited investors or qualified institutional investors;
- the persons executing the lock-up agreements (or agreements to tender) collectively own less than 100% of the subject securities;
- the exchange offer will be made to all holders of the subject securities; and
- all security holders eligible to participate in the exchange offer are offered the same amount and form of consideration.
For lock ups in third party exchange offers, the basic conditions now read as follows:
- the lock-up agreements (or agreements to tender) involve only executive officers, directors, affiliates, founders and their family members, and holders of 5% or more of the subject securities of the target company (“target company insiders”);
- the persons executing the lock-up agreements (or agreements to tender) collectively own less than 100% of the subject securities of the target company;
- the exchange offer will be made to all holders of the subject securities of the target company; and
- all holders of the subject securities of the target company eligible to participate in the exchange offer are offered the same amount and form of consideration.
For lockups in the context of business combinations, the additional conditions are:
- the accredited investors or qualified institutional investors who executed the lock-up agreements (or agreements to tender) will be offered and sold securities only in an offering made pursuant to a valid Securities Act exemption; and
- the securities registered on the Form S-4 (or Form F-4) will be offered and sold only to those security holders who did not execute lock-up agreements (or agreements to tender).
For lockups in the context of third-party exchange offers, the additional conditions are:
- the target company insiders who executed the lock-up agreements (or agreements to tender) will be offered and sold securities only in an offering made pursuant to a valid Securities Act exemption; and
- the securities registered on the Form S-4 (or Form F-4) will be offered and sold only to those security holders who did not execute lock-up agreements (or agreements to tender).
