Stinson Leonard Street Dodd Frank

MAKING SENSE OF DODD-FRANK

The Dodd-Frank Act has broad and deep implications that will touch every corner of financial services and multiple other industries. This site, developed and maintained by attorneys at Stinson Leonard Street, is dedicated to making sense of this complex legislation and helping businesses understand how it will affect them specifically. Our Bloggers »

Dodd-Frank

Draft Financial Choice Act 2.0 Prohibits Universal Proxy and Restricts Shareholder Proposals

by   |   April 20, 2017

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.

You can find an extract of the two provisions discussed above here. The full 593 pages of the discussion draft can be found here. It’s worth a look.