SEC Adopts Universal Proxy Rules and Proposes Proxy Advisor Changes
By George Wilson
On November 17, 2021, the SEC took two proxy-related actions. The Commission:
1. Adopted a Final Rule that requires the use of universal proxy cards in contested director elections.
2. Proposed rules that would rescind two 2020 rules applicable to proxy voting advice.
Universal Proxy Final Rule
In a 4 to 1 vote the Commission adopted a Final Rule that requires all parties in a contested director election to use a universal proxy card, that is, a card that includes all director nominees. In the related Press Release Chair Gensler said:
"These amendments address concerns that shareholders voting by proxy cannot vote for a mix of dissident and registrant nominees in an election contest, as they could if voted in person SEC. Today’s amendments will put these candidates on the same ballot. They will put investors voting in person and by proxy on equal footing. This is an important aspect of shareholder democracy."
You can read more about the requirements for universal proxy cards and related procedural changes in this Fact Sheet and the related Final Rule. The rules will be effective for contested director elections held after August 31, 2022.
Proxy Voting Advice Rules
The Commission voted to propose rules that would rescind two 2020 rules related to proxy voting advice. The proposed rules would rescind, for proxy advisory firms, conditions to the availability of two exemptions from informational and filing requirements in the proxy rules.
According to the related Press Release:
“Investors and others have expressed concerns that these conditions will impose increased compliance costs on proxy voting advice businesses and impair the independence and timeliness of their proxy voting advice.”
As always, your thoughts and comments are welcome!