SEC Staff Issues Guidance on Describing Shareholder Proposals on Proxy Cards

Mar 29, 2016

Reading Time : 1 min

Exchange Act Rule 14a-4(a)(3) requires that the form of proxy “identify clearly and impartially” each separate matter intended to be voted on, “whether proposed by the registrant or by security holders.”  Accordingly, the C&DI notes that, just as it would not be appropriate to describe a management proposal to amend a company’s articles of incorporation to increase the number of authorized shares of common stock as “a proposal to amend our articles of incorporation,” it would be equally as inappropriate to describe a shareholder proposal to amend a company’s bylaws to allow shareholders holding 10 percent of the company’s common stock to call a special meeting as “a shareholder proposal on special meetings.” 

The C&DI also highlights additional descriptions of shareholder proposals that would not satisfy Rule 14a-4(a)(3):

  • a shareholder proposal on executive compensation
  • a shareholder proposal on the environment
  • a shareholder proposal, if properly presented
  • shareholder proposal #3.

While the C&DI specifically addresses the level of detail that must be used when describing a shareholder proposal on the company’s proxy card, it follows that the Staff would hold similar views with respect to a company’s Notice of Internet Availability, which must contain a “clear and impartial identification of each separate matter intended to be acted on,” per Exchange Act Rule 14a-16(d)(6). Similarly, to the extent practicable, companies should cause brokers to conform the description of a shareholder proposal on the voting instruction form (“VIF”) that is distributed to street name shareholders to the description on the company’s proxy card (notwithstanding that the VIF technically is not subject to Rule 14a-4).

Share This Insight

Previous Entries

Akin Deal Diary

April 12, 2023

Read More

Akin Deal Diary

2022-12-15

On December 14, 2022, the Securities and Exchange Commission (SEC) adopted amendments regarding Rule 10b5-1 insider trading plans and related disclosures. The amendments aim to strengthen investor protections concerning insider trading and to help shareholders understand when and how insiders are trading in securities for which they may at times have material nonpublic information (MNPI). In light of these amendments, issuers should review and revise, if needed, their insider trading policies and equity grant policies.

Read more.

...

Read More

© 2024 Akin Gump Strauss Hauer & Feld LLP. All rights reserved. Attorney advertising. This document is distributed for informational use only; it does not constitute legal advice and should not be used as such. Prior results do not guarantee a similar outcome. Akin is the practicing name of Akin Gump LLP, a New York limited liability partnership authorized and regulated by the Solicitors Regulation Authority under number 267321. A list of the partners is available for inspection at Eighth Floor, Ten Bishops Square, London E1 6EG. For more information about Akin Gump LLP, Akin Gump Strauss Hauer & Feld LLP and other associated entities under which the Akin Gump network operates worldwide, please see our Legal Notices page.