Public companies face ongoing SEC reporting requirements designed to promote transparency and protect investors. When a company takes a material corporate action approved by majority holders (often by written consent) but does not solicit proxies, a Schedule 14C information statement is commonly required to inform all shareholders of what was approved, why it was approved, and how it may affect them.
This practical guide walks through each Schedule 14C item number (Items 1 through 5), highlights disclosure best practices, and flags common challenges that can derail timelines or trigger SEC comments.
What is Schedule 14C?
Schedule 14C is an information statement used to disclose significant corporate actions when shareholder votes are not being solicited through proxies. Even without a proxy solicitation, SEC reporting requirements still expect robust, decision-useful disclosure so minority shareholders understand what happened, who approved it, and what it means for the company and their investment.
Common actions that often lead to a Schedule 14C include charter amendments (for example, increasing authorized shares), mergers or reorganizations, changes in control, material asset sales, and approvals or amendments to equity compensation plans.
Timeline planning: the 20-day distribution window
A frequent Schedule 14C failure point is timing. The information statement must be filed and distributed with enough lead time to satisfy SEC rules, and internal drafting often takes longer than expected when financial statements, pro forma information, or complex conflicts disclosures are needed. Build a backwards calendar that includes drafting, board approvals, EDGAR logistics, and distribution mechanics before the action becomes effective.
Schedule 14C Item-by-Item: best practices and common challenges
Item 1. Information required by applicable items of Schedule 14A
What it covers: Item 1 effectively imports many proxy-style disclosures by requiring information called for by applicable Schedule 14A items, with certain exclusions. This is where most of the substantive disclosure work lives.
Best practices: (1) Start with a disclosure map tied to the specific corporate action (charter amendment, merger, equity plan, control transaction). (2) Explain the business rationale in plain English, not just the legal mechanics. (3) Present the action terms clearly and consistently (before and after cap table impacts, voting power changes, dilution, consideration, conditions, and timing). (4) Where financial statements or pro forma information are required, align early with finance and auditors to avoid last-minute delays.
Common challenges: (1) Treating the 14C like a short notice instead of a full disclosure document. (2) Missing required cross-references or omitting material terms. (3) Underestimating the time needed to prepare transaction-related financial disclosures, especially in reorganizations or acquisitions.
Item 2. Required front-page legend (no proxy solicitation)
What it covers: The first page must include the bold legend stating that the company is not asking for a proxy and shareholders are requested not to send a proxy.
Best practices: Place the legend prominently on page one, keep the wording exact, and scrub the draft for proxy-solicitation phrasing that conflicts with the legend. If you reuse a Schedule 14A template, review headings and callouts so nothing implies that shareholders can vote.
Common challenges: (1) Formatting mistakes (legend not bold, not on the first page, or altered wording). (2) Mixed messaging from recycled proxy language such as ‘vote’ or ‘return your proxy.’
Item 3. Interest in the matter to be acted upon (and golden parachute disclosures when applicable)
What it covers: Disclose any substantial direct or indirect interests of directors and executive officers in the matter. In applicable change-in-control contexts, include required golden parachute compensation information.
Best practices: Create a single ‘Interests of Certain Persons’ section that is easy to find. Quantify interests where possible (equity holdings, acceleration, retention, consulting arrangements, side letters). For control changes or M&A deals, run a structured questionnaire for officers and directors so indirect interests do not get missed.
Common challenges: (1) Omitting indirect benefits (accelerated vesting, rollover equity, employment or consulting agreements). (2) Burying conflicts disclosures in dense deal descriptions. (3) Inconsistent numbers across the cap table, beneficial ownership, and compensation sections.
Item 4. Security holder proposals
What it covers: If a shareholder has submitted a proposal with notice of intent to present it, the information statement must address the proposal and the company’s intended disposition.
Best practices: Maintain a clean log of proposal receipt dates, correspondence, and board responses. If the company plans to exclude a proposal, involve counsel early to manage procedural steps and communications reflected in SEC guidance.
Common challenges: (1) Timing mistakes due to compressed transaction schedules. (2) Incomplete summary of the proposal or unclear description of how it will be handled.
Item 5. Householding and delivery logistics
What it covers: If the company uses householding (sending a single set of materials to multiple shareholders sharing an address), Schedule 14C requires disclosures explaining householding and how shareholders can request separate copies.
Best practices: Coordinate early with the transfer agent and mailing vendor. Include a short, plain-English householding paragraph with a phone number, email or mailing address, and clear instructions for requesting separate copies.
Common challenges: (1) Omitting householding disclosures entirely. (2) Providing outdated contact information or instructions that do not match the transfer agent process.
Common Schedule 14C compliance challenges under SEC reporting requirements
Managing sensitive information: Companies must disclose enough detail for shareholders to understand the action while avoiding unnecessary competitive harm. Drafting solutions include focusing on material terms and decision drivers, clearly defining any redactions, and avoiding vague, conclusory statements.
Clarity and organization: A Schedule 14C is often read by retail investors. Use descriptive headings, short paragraphs, defined terms sparingly, and a logical flow from ‘what was approved’ to ‘why it matters.’
Avoiding preventable SEC comments: Most issues are avoidable with a disciplined disclosure checklist, internal fact verification, and consistency checks across ownership, capitalization, and transaction sections.
Best practices checklist for a clean Schedule 14C filing
- Build a disclosure map for Items 1 to 5 and the applicable Schedule 14A cross-references.
- Lock the timeline early and account for drafting, EDGAR filing, and distribution lead time.
- Run a conflicts and interests questionnaire for directors and executive officers.
- Reconcile cap table and beneficial ownership numbers across the entire document.
- Confirm householding and distribution logistics with your transfer agent.
- Perform a final readability pass focused on plain English and internal consistency.
Work with experienced SEC counsel
Schedule 14C filings can look straightforward, but the incorporated proxy-style disclosures and tight timing requirements often create hidden complexity. Securitieslawyer101 (Hamilton & Associates Law Group, P.A.) helps companies meet SEC reporting requirements, manage disclosure risk, and execute EDGAR filings efficiently.
Contact us to discuss your Schedule 14C, Schedule 14A, or broader SEC reporting and disclosure needs.
Additional reading and resources
Securitieslawyer101 resources: SEC Proxy and Information Statements (Schedule 14C); SEC Reporting Requirements; SEC reporting requirements after Form S-1 effectiveness; SEC periodic reporting (Forms 10-K, 10-Q, 8-K)
SEC resources: Proxy Rules and Schedules 14A/14C Compliance and Disclosure Interpretations; EDGAR Filer Manual; Submit Filings (EDGAR)
Disclaimer: This article is for general informational purposes and does not constitute legal advice.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes. Hamilton & Associates | Securities Lawyers Brenda Hamilton, Securities Attorney 101 Plaza Real South, Suite 202 North Boca Raton, Florida 33432 Telephone: (561) 416-8956 Facsimile: (561) 416-2855 www.SecuritiesLawyer101.com
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.SecuritiesLawyer101.com