The SEC issued staff guidance for financial institutions filing proxy statements for securities purchases under the government?s financial bailout package, known as the Troubled Asset Relief Program.

Under the Treasury Department?s Capital Purchase Program, announced in October, financial institutions seeking to issue securities may be required to solicit and obtain shareholder approval for the authorization of the securities. To solicit shareholder approval, a financial institution must comply with the federal securities laws and any applicable state laws. The federal securities laws require certain financial institutions to file a proxy statement on Schedule 14A when soliciting shareholder approval.

Because the Treasury Department is injecting capital directly into banks through the purchase of preferred shares, companies without preferred stock plans in place have to get shareholder approval before they get aid.