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SEC Press Releases·

SEC Proposes Rescission of Shareholder Proposal Rule and Reforms to Proxy Solicitation Process

  • The SEC proposed rescinding Rule 14a-8, citing that it exceeds statutory authority & intrudes into state law matters.
  • The rule is claimed to have had unintended consequences, including discouraging states from developing their own shareholder proposal laws.
  • Rescinding the rule would shift determinations regarding shareholder proposals to state law & company governing documents.
  • SEC Chairman Paul S. Atkins stated the proposals focus on avoiding improper state law intrusion & updating rules for market practice & technology.
  • The Commission proposed amendments to Rule 14a-4(c) to provide companies greater flexibility & shareholders more control over discretionary proxy voting.
  • Proposed modernization of proxy solicitation rules includes eliminating the requirement to deliver annual reports to security holders.
  • The amendments would remove the delivery deadline when documents are incorporated by reference into a proxy statement.
  • The ability to submit Notices of Exempt Solicitation would be eliminated under the new proposals.
  • The minimum broker search period would be shortened from 20 business days to five business days.
  • The public comment period will remain open for 60 days following the publication of the proposing releases in the Federal Register.