California companies have, as a practical matter, been unable to take advantage of the time and cost savings of the SEC’s new electronic proxy delivery rules. California law has historically required a California company to mail a hard copy of its annual report to each of its shareholders

unless the company has received consent from the shareholder to deliver the annual report in electronic form. Securing these shareholder consents has proven to be expensive and impractical for companies. As a result, even though the proxy materials themselves could be delivered

electronically to shareholders of California companies, the requirement of a separate mailing of a hard copy of the annual report, which must precede or accompany the proxy materials for annual meetings (or special meetings in lieu of annual meetings), has rendered illusory the time and cost

savings from electronic delivery of the other shareholder meeting materials.

What Changed.

On July 22, 2008, for companies with an outstanding class of securities registered under the Securities Exchange Act of 1934 that comply with the federal e-proxy rules, the California legislature eliminated the requirement of shareholder consent necessary to provide an electronic copy of a company’s annual report to shareholders. As a result, these California companies can now take full advantage of the time and cost savings of the federal e-proxy rules.

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