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
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
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.
