Draft Financial Choice Act 2.0 Prohibits Universal Proxy and Restricts Shareholder Proposals
The House Financial Services Committee has released a discussion draft of a revised Financial Choice Act. The Committee will hold a hearing on the Act on April 26, 2017.
Section 845 of the Act would prohibit the SEC from requiring the use of a universal proxy. It states “The Commission may not require that a solicitation of a proxy, consent, or authorization to vote a security of an issuer in an election of members of the board of directors of the issuer be made using a single ballot or card that lists both individuals nominated by (or on behalf of) the issuer and individuals nominated by (or on behalf of) other proponents.”
Section 844 of the Act would drastically alter the shareholder proposal rules. The Act would require the SEC to eliminate the option to satisfy the holding requirement by holding a certain dollar amount, require the shareholder proponent to hold one percent of the issuer’s voting securities and increase the holding period from one year to three years. It would also increase thresholds for resubmission of proposals.
Interestingly, the Act would prohibit the common practice of having a proxy submit a proposal on behalf of a shareholder. One would hope, if passed, coaching from the sidelines by those frequently granted proxies today would be interpreted as the unauthorized practice of law.
Contact Steve Quinlivan for more information.