474 Making Key Strategic Decisions
solicitation of proxies for the voting of shares. The SEC requires filing of this
proxy statement and all related information at the same time they are sent to
stockholders; in the event significant action beyond the typical election of di-
rectors is to be voted on at the annual meeting, the SEC requires advance fil-
ing of proxy materials so that the SEC staff can review and comment on such
materials.
The company will have to consider whether it wishes to attempt to con-
duct its annual meeting online. While substantive state law controls whether a
corporation can accept electronically sent proxies or electronically sent direct
votes, the desire on the part of companies to communicate more completely
with its stockholders will likely push the company to spend more and more
time in producing online annual meetings.
Now that the company is public, the company and its management can have
personal liability if materially incorrect information about the company falls into
the public domain. Indeed, it is the purpose of the various formal SEC filings to
make sure that accurate current information is disseminated. But often events
arise which call for public disclosure on the part of the company, and if the in-
formation contained in such disclosure is both material and not previously con-
tained in an SEC filing or other public announcement, then under SEC
Regulation FD the company must make sure that contemporaneously with the
making of such private disclosure there is also a broad public dissemination.
The annual meeting presents particular problems in the control of com-
pany information. Company officers answering questions at the annual meeting
will have to stick to a recitation of previously announced material facts; in the
event a decision is made to release previously nonpublic material information,
or if such information inadvertently is provided, SEC regulations require
prompt broad dissemination through filing of Form 8-K and through appropri-
ate press releases to the public. In connection with its annual meeting, man-
agement may be briefed by attorneys and PR consultants as to how to answer
questions from the f loor concerning company operations and finances.
Indeed, separate and apart from its annual meeting, the company must
generate some specific policies on the handling of material nonpublic informa-
tion. Dough.com has already placed an ad in the newspaper for a director of in-
vestor relations, to coordinate the need of company investors for accurate
information about the company. It is likely that this function within the com-
pany will grow over time and indeed likely that an outside public relations firm,
experienced in the public relations and disclosure issues of public entities, will
be retained. The company should anticipate adopting a constant policy of
broadly disseminating public press releases about new products, and material
developments in the company.
Particular problems arise in connection with dealing with rumors that
may circulate in the public domain. The company may decide that it will sys-
tematically offer “no comment” with respect to questions about certain kinds
of rumors or misinformation (whether raised at an annual meeting or at other
times). Such a policy is difficult to sustain; once adopted it must be followed