SEC Proposes Proxy Reform

The Securities and Exchange Commission (SEC) has proposed recission of Rule 14a-8, the shareholder proposal rule, to leave determinations of when companies must include shareholder proposals in their proxy materials to state law. According to a press release, proposed amendments to Rule 14a-4(c) would provide companies with greater flexibility to seek discretionary voting authority regarding shareholder proposals submitted outside of Rule 14a-8 and would provide shareholders with the ability to elect to prevent the company from exercising such authority with respect to their individual shares.

The SEC separately proposed rule amendments to modernize the proxy solicitation process. Reflecting advancements in technology and current realities of shareholder communications, those amendments would:

• Eliminate the requirement that companies deliver an annual report to security holders.

• Eliminate the delivery deadline when documents are incorporated by reference into a proxy statement.

• Eliminate the requirement and the ability to submit Notices of Exempt Solicitation.

• Shorten the minimum broker search period from 20 business days to five business days.

Comments are due within 60 days of publication in the Federal Register.