What is a SEC Form DFAN14A
SEC Form DFAN14A is a filing made with the Securities and Exchange Commission (SEC) for non-management proxy solicitations not supported by the registrant. SEC Form DFAN14A covers "Additional Definitive Proxy Solicitation Materials Filed by Non-Management."
BREAKING DOWN SEC Form DFAN14A
SEC Form DFAN14A identifies the party taking action, what the investment position is in the company, the action to be taken and the desired result of such action. The purpose of the form is to ensure that timely information is distributed to all interested parties since it's intended result is to force a change not proposed by the company.
SEC Form DFAN14A versus SEC Form DEF 14A
SEC Form DFAN14A is a subset of SEC Form DEF 14A, which is a required filing with the SEC when a shareholder vote is required, per section 14(a) of the Securities Exchange Act of 1934. SEC Form DEF 14A is the key document that lays out the info about the company’s board of directors. It also contains info about the shareholder meeting, including time, date and place.
SEC Form DFAN14A filing can happen when someone other than company management is nominating members for the board. This generally happens when investors, notably activist investors, are looking for board representation, feeling the board is failing at its job. They may feel management oversight is lacking, hence, an investor might ask that shareholders vote new members onto the board.
These board nominees can be direct members or affiliates of the activist investor or individuals that the investor thinks could bring value to the board. Nominees that don’t have a direct relationship with the activist investor are considered independent board nominees.
SEC Form DFAN14A Filers
Voting for board nominees is done at the annual shareholder annual meeting, hence the fact that SEC Form DFAN14A is a subset of Form DEF 14A. Activist investors may file this form when looking to get board representation or push through another action that might not be supported by the company.
SEC Form DFAN14A contains information about the nominees and shareholder meeting, but also about the filer. For example, if a hedge fund files SEC Form DFAN14A it will include information about the fund, including background and its reasoning for the filing.
Proxy Fights and SEC Form DFAN14A
A proxy fight is a term used to describe a battle between a company and shareholder or group of shareholders to win a shareholder vote. SEC Form DFAN14A can signal a proxy fight for board control or another initiative, such as changing management compensation or rejecting a takeover bid.
In terms of board control, activists may seek this for a variety of reasons, including looking to replace management or force a sale of the company. The proxy materials in the SEC Form DFAN14A are meant to help persuade shareholders to vote in favor of the activist’s board nominees or initiatives.