Developments involving shareholder access and proxy statement disclosure


The US Securities and Exchange Commission (SEC) has called the recent, and continuing, recession ‘one of the most serious economic crises of the past century’.1 The actions taken by many companies leading up to the economic crisis raised serious doubts among investors regarding the accountability and responsiveness of corporate management to the interests of shareholders.

The resulting loss in investor confidence, stemming from perceived bad corporate behaviour, emboldened the SEC to increase its focus on corporate accountability and disclosure by overhauling the federal proxy solicitation and disclosure processes. The SEC’s original goal in issuing the federal proxy rules was to improve the corporate proxy process so that it would function, as nearly as possible, as a replacement for an actual in-person meeting of shareholders. The SEC also sought to protect the rights of shareholders, as those rights were traditionally protected under state law. Pursuant to these goals, the SEC initiated a re-examination of the existing proxy rules to ensure that the rules were not overly burdensome and that the rights of shareholders were being properly protected. The SEC also wanted to ensure that shareholders were not being unnecessarily impeded or affected by the existing proxy process and that proxy disclosures Developments involving shareholder access and proxy statement disclosures contained sufficient information for shareholders to make informed voting and investment decisions. In addition to the SEC, Congress has also stepped up its efforts to protect shareholders by introducing the Shareholder Bill of Rights Act 2009 (the ‘Shareholder Bill of Rights Act’).2

Excerpted from Journal of Securities Law, Regulation & Compliance, Volume 3, Number 3, April 26, 2010. To read the full article, click on the PDF linked below.
1 See Facilitating Shareholder Director Nominations, 74 Fed. Reg. 29,205 (18th June, 2009).
2 Shareholder Bill of Rights Act of 2009, S. 1074, 111th Cong. (2009).

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