Proxy Process Archives - Securities Law Blog

SEC Publishes New C&DI On Proxy Rules

Back in fourth quarter 2023, the SEC published several new compliance and disclosure interpretations on various topics including cyber incident disclosure, proxy and information statements, the inclusion of securities in the filing fee exhibit, and Inline XBRL. As my blog topic list tends to be very long, I am finally getting to this and will cover the various new C&DI topics over the next few weeks.

Proxy Rules

The federal proxy rules can be found in Section 14 of the Securities Exchange Act of 1934 (“Exchange Act”) and the rules promulgated thereunder. The rules apply to any company which has securities registered under Section 12 of the Act. Section 14 of the Exchange Act and its rules govern the timing and content of information provided to shareholders in connection with annual and special meetings with a goal of providing shareholders meaningful information to make informed decisions, and a valuable method to allow them to participate in the shareholder voting

May 28, 2024

SEC Fall 2022 Regulatory Agenda

On January 4, 2023, the SEC published its semiannual Fall 2022 regulatory agenda (“Agenda”) and plans for rulemaking. The Unified Agenda of Regulatory and Deregulatory Actions contains the Regulatory Plans of 28 federal agencies and 68 federal agency regulatory agendas. My favorite Commissioner, Hester M. Peirce, was quiet about the agenda, not issuing a public statement this time. Upon publication of the Spring 2022 Agenda, Commissioner Peirce ripped the Agenda as being disconnected with the SEC’s core mission and as being focused on special interest groups instead of a broad range of market participants. The Agenda is published twice a year, and for several years I have blogged about each publication.

The Agenda is broken down by (i) “Pre-rule Stage”; (ii) Proposed Rule Stage; (iii) Final Rule Stage; and (iv) Long-term Actions. The Proposed and Final Rule Stages are intended to be completed within the next 12 months and Long-term Actions are anything beyond that. The number of items to

January 31, 2023

SEC Issues C&DI On The Use Of Proxy Cards

Days before the universal proxy compliance deadline, the SEC issued 3 new compliance and disclosure interpretations (C&DI) addressing issues raised by the new rules.

BACKGROUND

On November 17, 2021, the SEC adopted final rules requiring parties in a contested election to use universal proxy cards that include all director nominees presented for election at a shareholder meeting (see HERE). The original rules were proposed on October 16, 2016 (see HERE) with no activity until April, 2021, when the SEC re-opened a comment period (see HERE).

The rule adoption came with a flurry of rule amendments, proposals and guidance related to the proxy process, some of which reverses recent rules on the same subject, including amendments to the rules governing proxy advisory firms (see HERE) and additional proposed amendments to Rule 14a-8 governing shareholder proposals (see HERE).

The final rules require dissident shareholders and registrants to provide shareholders with a proxy card that includes the

October 18, 2022

SEC Adopts Amendments To Rules Governing Proxy Advisory Firms

On July 13, 2022, the SEC adopted amendments to the rules governing proxy voting advice, in essence undoing material provisions in the new rules that had been adopted in July 2020. The newest rules were proposed in November 2021 but had effectively been in place since June 2021 when SEC Chair Gary Gensler issued a statement making it clear that the SEC would not be enforcing the 2020 amendments to certain rules governing proxy advisory firms or the SEC guidance on those new rules.

The final rules rescind two of the rules adopted in 2020 and specifically, the conditions to the availability of two exemptions from the proxy rules’ information and filing requirements on which proxy voting advice businesses may rely. Those conditions require that: (i) companies that are the subject of proxy voting advice have such advice made available to them in a timely manner; and (ii) clients of proxy voting advice businesses are provided with a means of

September 6, 2022

The SEC Has Issued New Guidance On Shareholder Proposals And Updated The Rule 14a-8 No-Action Letter Process

On November 3, 2021, the SEC Division of Corporation Finance (“Corp Fin”) issued Staff Legal Bulletin 14L (“SLB 14L”) related to Rule 14a-8, rescinding prior Bulletins 14I, 14J and 14K and effectively destroying four years of interpretative guidance related to the exclusion of ESG related shareholder proposals from proxy statements. SLB 14L also provides interpretative guidance on the use of images in shareholder proponents’ supporting statements, proof of ownership, and the use of email for notices.

Following the issuance of Bulletin 14L, the SEC announced that it was reversing a 2019 policy change related to providing written responses to no-action letter requests in accordance with Rule 14a-8 in the proxy process. The earlier 2019 policy change provided that the SEC no longer had to provide written responses to company’s that sought to exclude a shareholder proposal. Rather, the SEC could inform the company and the proponent of its position (concurs, disagrees or declines to state a view) orally or

January 25, 2022

SEC Adopts The Use Of Universal Proxy Cards

On November 17, 2021, the SEC adopted final rules requiring parties in a contested election to use universal proxy cards that include all director nominees presented for election at a shareholder meeting. The original rules were proposed on October 16, 2016 (see HERE) with no activity until April, 2021, when the SEC re-opened a comment period (see HERE). The rule adoption comes with a flurry of rule amendments, proposals and guidance related to the proxy process, some of which reverses recent rules on the same subject.

The final rules will require dissident shareholders and registrants to provide shareholders with a proxy card that includes the names of all registrant and dissident nominees. The rules will apply to all non-exempt solicitations for contested elections other than those involving registered investment companies and business development companies. The rules will require registrants and dissidents to provide each other with notice of the names of their nominees, establish a filing deadline and

December 21, 2021

SEC Announces It Will Not Enforce Amended Rules Governing Proxy Advisors

On June 1, 2021, SEC Chair Gary Gensler and the SEC Division of Corporation Finance issued statements making it clear that the SEC would not be enforcing the 2020 amendments to certain rules governing proxy advisory firms or the SEC guidance on the new rules.

In particular, in July 2020 the SEC adopted amendments to change the definition of “solicitation” in Exchange Act Rule 14a-1(l) to specifically include proxy advice subject to certain exceptions, provide additional examples for compliance with the anti-fraud provisions in Rule 14a-9 and amended Rule 14a-2(b) to specifically exempt proxy voting advice businesses from the filing and information requirements of the federal proxy rules. On the same day, the SEC issued updated guidance on the new rules. See HERE for a discussion on the new rules and related guidance.

Like all rules and guidance related to the proxy process, the amendments were controversial with views generally falling along partisan lines. On June 1, 2021, Chair

June 15, 2021

SEC Re-Opens Comments On The Use Of Universal Proxy Cards

On April 16, 2021, the SEC voted to reopen the comment period on the proposed rules for the use of Universal proxy cards in all non-exempt solicitations for contested director elections. The original rules were proposed on October 16, 2016 (see HERE) with no activity since. However, it is not surprising that the comment period re-opened, and it is not as a result of the new administration. The SEC’s Spring and Fall 2020 semi-annual regulatory agendas and plans for rulemaking both included universal proxies as action items in the final rule stage. Prior to that, the topic had sat in the long-term action category for years.

In light of the several years since the original proposing release, change in corporate governance environment, proliferation of virtual shareholder meetings, and rule amendments related to proxy advisory firms (see HERE) and shareholder proposals in the proxy process (see HERE), the SEC believed it prudent to re-open a public comment period.

June 1, 2021

SEC Amendments To Rules Governing Proxy Advisory Firms

In a year of numerous regulatory amendments and proposals, Covid, newsworthy capital markets events, and endless related topics, and with only one blog a week, this one is a little behind, but with proxy season looming, it is timely nonetheless. In July 2020, the SEC adopted controversial final amendments to the rules governing proxy advisory firms. The proposed rules were published in November 2019 (see HERE). The final rules modified the proposed rules quite a bit to add more flexibility for proxy advisory businesses in complying with the underlying objectives of the rules.

The final rules, together with the amendments to Rule 14a-8 governing shareholder proposals in the proxy process, which were adopted in September 2020 (see HERE), will see a change in the landscape of this year’s proxy season for the first time in decades. However, certain aspects of the new rules are not required to be complied with until December 1, 2021.

The SEC has

January 19, 2021

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Proxy Process

SEC Publishes New C&DI On Proxy Rules

SEC Issues C&DI On The Use Of Proxy Cards

SEC Adopts Amendments To Rules Governing Proxy Advisory Firms

SEC Adopts The Use Of Universal Proxy Cards

SEC Announces It Will Not Enforce Amended Rules Governing Proxy Advisors

SEC Re-Opens Comments On The Use Of Universal Proxy Cards

SEC Amendments To Rules Governing Proxy Advisory Firms

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