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Royale: Notice Of Special Meeting Of Shareholders Royale Energy, Inc.

The following excerpt is from the company's SEC filing.

November 19, 2015

PLACE:

Royale Energy, Inc.

3777 Willow Glen Dr.

El Cajon CA 92019

Matters to be Voted on:

An amendment to our amended and restated articles of incorporation to increase the number of authorized shares of our common stock from 20,000,000 to 30,000,000;

An amendment to our amended and restated articles of incorporation to effect, at the discretion of the board of directors, a reverse stock split of all of the outstanding shares of our common stock at a ratio of not less than 1-for-1.5 and not greater than 1-for-5 shares; and

T he transaction of such other business as may properly come before the meeting and any adjournment thereof.

Who May Attend and Vote at the Meeting

Shareholders of record at the close of business on September 30, 2015, and valid proxy holders may attend and vote at the meeting. If your shares are registered in the name of a brokerage firm or trustee and you plan to attend the meeting, please obtain from the firm or trustee a letter or other evidence of your beneficial ownership of those shares to facilitate your admittance to the meeting.

This proxy statement and the accompanying proxy form are being mailed on or about October 16, 2015, to shareholders entitled to vote at the meeting.

By Order of the Board of Directors,

Jonathan Gregory

Chief Executive Officer

Date: October 16, 2015

PROXY STATEMENT

Royale Energy’s board of directors solicits your proxy, using the enclosed proxy card, for use at the special meeting of shareholders to be held November 19, 2015, and at any adjournment thereof. This proxy statement has information about the special meeting and was prepared by Royale Energy’s management for the board of directors. Your vote at the special meeting is important to us. Please vote your shares of common stock by completing the enclosed proxy card and returning it to us in the enclosed envelope.

As used in this proxy statement, “Royale Energy,” “Royale,” “the Company,” “we,” “our” and “us” refer to Royale Energy, Inc., a California corporation.

GENERAL INFORMATION

The only items of business which management intends to present at the meeting are listed in the preceding Notice of Special meeting of Shareholders and are explained in more detail on the following pages. By returning your signed proxy, you authorize management to vote your shares as you indicate on these items of business and to vote your shares in accordance with management’s best judgment in response to any proposals initiated by others at the meeting.

Changing or Revoking Your Proxy Vote

You may revoke your signed proxy at any time before it is exercised at the special meeting. You may do this by advising Royale Energy’s secretary in writing of your desire to revoke your proxy, or by submitting a duly executed proxy bearing a later date. We will honor the proxy card with the latest date. You may also revoke your proxy by attending the special meeting and indicating that you wish to vote in person.

Who may Vote

Each shareholder of record at the close of business on September 30, 2015, is entitled, for each share then held, to one vote on each proposal or item that comes before the special meeting. On

September 21, 2015, Royale Energy had outstanding

15,525,483

shares of common stock and 46,662 shares of Series AA convertible preferred stock entitled to vote at the meeting.

Voting

in Person

Although we encourage you to complete and return your proxy to ensure that your vote is counted, you can attend the special meeting and vote your shares in person.

4) Voting by Street Name Holders

If your shares are held in a brokerage account or by another nominee, you are considered the “beneficial owner” of shares held in “street name,” and these proxy materials are being forwarded to you by your broker or nominee (the “record holder”) along with a voting instruction card. As the beneficial owner, you have the right to direct your record holder how to vote your shares, and the record holder is required to vote your shares in accordance with your instructions. If you do not give instructions to your record holder, the record holder may vote on “routine” matters but may not vote on non-routine matters. We believe that Proposal 2 to amend the Company’s Articles of Incorporation to effect a reverse stock split is considered a routine matter. If you do not give instructions to your record holder by 11:59 pm on November 18, 2015, the record holder will not be able to vote your shares on Proposal 1, and your shares will be considered a “broker non-vote” on that proposal.

As the beneficial owner of shares, you are invited to attend the special meeting. Please note, however, that if you are a beneficial owner, you may not vote your shares in person at the meeting unless you obtain a “legal proxy” from the record holder that holds your shares.

5) How your Votes are Counted

We will hold the special meeting on November 19, 2015, if holders of a majority of the shares of common stock entitled to vote either sign and return their proxy cards or attend the meeting. If you sign and return your proxy card, your shares will be counted to determine whether we have a quorum even if you abstain or fail to vote on any of the matters listed on the proxy card.

If you mark “Abstain” with respect to any proposal on your proxy, your shares will be counted in the number of votes cast, and will have the effect as votes counted against the proposals.

If a broker or other nominee holding shares for a beneficial owner does not vote on a proposal, the shares will not be counted in the number of votes cast.

6) Votes Required to Approve Proposals

Each proposal is subject to the approval of the holders of a majority in voting power of the outstanding common stock and Series AA preferred stock entitled to vote on the Proposals.

ITEMS OF BUSINESS

PROPOSAL 1: AMENDMENT TO OUR AMENDED AND RESTATED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF OUR COMMON STOCK FROM 20,000,000 TO 30,000,000

As of September 21, 2015, Royale Energy had authorized 20,000,000 shares of no par value common stock and had 15,525,483 shares issued and outstanding. On that date, Royale Energy also had authorized 10,000,000 shares of no par value preferred stock and had 46,662 shares of Series AA preferred stock issued and outstanding.

Stockholders are being asked to approve an amendment to Royale Energy’s Amended and Restated Articles of Incorporation providing for a ten million share increase in the number of authorized shares of common stock in order make additional shares available for capital formation by means of equity investments in the Company.

On April 7, 2015, NASDAQ notified Royale Energy, by letter that Royale is not currently in compliance with the requirement that companies listed on the NASDAQ Capital Market are required by Marketplace Rule 4450(a)(3) to maintain a minimum of $2.5 million in stockholders’ equity for continued listing. Royale’s Form 10-K for the year ended December 31, 2014, reported stockholders’ equity at December 31, 2014, of ($1,141,227). In response, the company has filed with NASDAQ a plan to increase stockholders equity by selling additional shares of common stock.

On June 4, 2015, NASDAQ granted Royale Energy an extension through October 5, 2015, to file financial statements demonstrating compliance with the minimum stockholders’ equity requirement. The fulfillment of this plan will allow Royale Energy’s stock to continue trading on the NASDAQ Capital Market. Royale Energy plans to sell additional shares of common stock as part of its plan to increase stockholders’ equity, and it may need authority to issue additional shares which exceed the current 20 million share authorization.

On May 20, 2015, a registration statement on Form S-3, filed by the Company to sell common stock sufficient to raise net stockholder’s equity to a level above $2.5 million, became effective with the SEC. Also on May 20, 2015, the Company, entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (“Roth”), under which the Company may issue and sell shares of its common stock for aggregate consideration of up to $7,726,103, from time to time in an at the market equity offering program with Roth acting as the Company’s sales agent (the “Offering”). From May 20 until September 21, 2015, the Company has sold 579,694 shares of its common stock pursuant to the Offering and has received net offering proceeds of $106,701 from these sales.

The additional shares of common stock will, if and when issued, be identical to the shares of the Company’s common stock now authorized and outstanding. The holders of the Company’s common stock do not have preemptive rights to purchase shares of stock in the event of a sale or issuance of stock by the Company.

shares will not affect the rights of current stockholders, but issuance of the shares could decrease each existing stockholder's proportionate equity ownership. In addition, Royale Energy is considering the possibility of acquiring additional oil and gas properties, either directly or by way of a merger or share exchange with other oil and gas producers, and the company may need to issue shares in excess of the current 20 million share authorization to accomplish those acquisitions. As of the date of this proxy statement, no specific target companies or properties have been identified for acquisitions.

After shareholder approval of the proposed increase in authorized shares, the additional shares can be issued by the board without further stockholder action except as required by law or stock exchange regulations. The board believes that this flexibility is in the best interests of the Company and its stockholders.

An amendment to the Company’s Amended and Restated Articles of Incorporation is required to increase the number of authorized shares. The text of the proposed amendment is attached to this proxy statement as Appendix A. The affirmative vote of the holders of a majority of Royale Energy’s Common Stock is required to approve the proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF THE AMENDMENT TO OUR AMENDED AND RESTATED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF OUR COMMON STOCK FROM 20,000,000 TO 30,000,000.

PROPOSAL 2: AMENDMENT TO OUR AMENDED AND RESTATED ARTICLES OF INCORPORATION TO EFFECT, AT THE DISCRETION OF OUR BOARD OF DIRECTORS, A REVERSE STOCK SPLIT OF OUR COMMON STOCK AT A RATIO OF NOT LESS THAN 1-FOR-1.5 AND NOT GREATER THAN 1-for-5

Our Board has adopted a resolution declaring advisable, and recommending to our stockholders for their approval, an amendment to Article III of our Articles of Incorporation authorizing a reverse stock split of all of the outstanding shares of our Common Stock at a ratio of not less than 1-for-1.5 and not greater than 1-for-5, with the exact ratio to be established at the discretion of the Board (a “Reverse Stock Split”), and granting the Board the discretion to file a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of the State of California. The form of the proposed amendment is attached to this proxy statement as Appendix B (the “Reverse Stock Split Amendment”).

If this Proposal is approved, the Board would have the sole discretion to elect to effect the Reverse Stock Split, or not to effect the Reverse Stock Split if they concluded it was not in the best interest of the stockholders of the Company. Providing this authority to the Board rather than mere approval of an immediate Reverse Stock Split, as well as the availability of a range of Reverse Stock Split ratios, would give the Board flexibility to react to market conditions and act in the best interests of the Company and our stockholders. The Company believes that giving the Board the authority, but not the mandate, to execute the Reverse Stock Split will provide it with the flexibility to implement the Reverse Stock Split, if it does at all, in a ratio and at a time that it believes would be advantageous for the Company and its stockholders. In determining which Reverse Stock Split ratio to implement, the Board may consider, among other things, factors such as:

the listing requirements of the NASDAQ Capital Market and other stock exchanges;

the approval by our shareholders to grant the Board authority to effect a Reverse Stock Split;

the historical trading price and trading volume of our Common Stock;

the number of shares of our Common Stock outstanding;

the then-prevailing trading price and trading volume of our Common Stock and the anticipated impact of the Reverse Stock Split on the trading market for our Common Stock;

the likely effect on the market price of our Common Stock; and

prevailing general market and economic conditions.

If the Board determines to effect the Reverse Stock Split, the Company would file an amendment to our Articles of Incorporation with the California Secretary of State, which would be substantially in the form of the Reserve Stock Split Amendment attached to this proxy statement as Appendix B. The Company would also obtain a new CUSIP number for the Common Stock at the time of the Reverse Stock Split. The Company must provide the Financial Industry Regulatory Authority with at least ten (10) calendar days advance notice of the record date of the Reverse Stock Split in compliance with Rule 10b-17 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

a) Reasons for the Reverse Stock Split Amendment

On the date of the mailing of this proxy statement, our common stock was listed on the Nasdaq Capital Market under the symbol “ROYL.” The continued listing requirements of the Nasdaq Capital Market provide, among other things, that our common stock must maintain a closing bid price in excess of $1.00 per share. Our common stock has not maintained a minimum bid price of $1.00 per share since July 17, 2015. A failure to meet the continued listing requirement for minimum bid price will be determined by Nasdaq to exist if the deficiency continues for 30 consecutive business days, following which we would expect to receive a notice of non-compliance from Nasdaq. If we fail to achieve compliance within 180 calendar days from the date of such notification, we may be delisted.

Our Board has determined that the continued listing of our common stock on the Nasdaq Capital Market is beneficial for our stockholders. If our common stock is delisted from the Nasdaq Capital Market, the Board believes that the trading market for our common stock could become significantly less liquid...


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