SEC Proposes Rescission of Shareholder Proposal Rule and Modernization of Proxy Solicitation Rules

The SEC has released a pair of proposed rules that would amend the Securities Exchange Act of 1934 to (1) rescind Rule 14a-8 (which governs shareholder proposal requirements) and (2) modernize the proxy solicitation requirements.

The proposed rule that would rescind Rule 14a-8 is intended to make “the role of shareholder proposals” more a matter of state than of federal law. In addition to rescinding Rule 14a-8, the proposal would amend the Exchange Act to “expand the circumstances under which a company may exercise, with respect to proxies it receives, discretionary voting authority on proposals that will be presented at a shareholder meeting but not included in the company’s proxy materials.”

The other proposed rule aims to modernize requirements related to proxy solicitations Specifically, it would “eliminate the requirement that registrants deliver an annual report to security holders, eliminate the delivery deadline when documents are incorporated by reference into a proxy statement, eliminate the requirement to file soliciting material regarding certain exempt solicitations, and shorten the minimum broker search period for proxy solicitations.”

For more information, see the press release and shareholder rule rescission and proxy solicitation rule fact sheets — as well as the statements by SEC Chairman Paul Atkins and SEC Commissioners Hester Peirce and Mark Uyeda — on the SEC’s Web site.