Federal Securities Law Source

Tag Archives: shareholder

SEC’s updated guidance on changing the date, time or location of annual shareholders’ meeting

On March 13, 2020, in response to the recent outbreak of the coronavirus disease (COVID-19), the Securities and Exchange Commission released guidance providing regulatory flexibility to reporting companies seeking to change the date, time, or location of annual shareholder meetings and use new technologies, such as “virtual” shareholder meetings, that avoid the need for in-person meetings. Given the public health and safety concerns related to COVID-19, the Commission provided guidance for reporting companies on how to meet their obligations under the federal proxy rules.…

Virtual shareholder meetings: advantages, disadvantages and practical considerations

As spring approaches, so do annual shareholder meetings for many public companies. Traditionally, these meetings were held in-person. However, due to fairly recent advances in technology, companies now have the option to hold these meetings exclusively online or by providing for online participation, which both offer advantages and disadvantages to shareholders and company leaders. Furthermore, not all state corporate statutes permit a virtual component, and those that do may impose specific requirements. With an increasing amount of public companies adopting virtual components, key stakeholders in today’s public companies should understand the advantages, disadvantages and any important practical and legal considerations to take into account- before deciding to take the virtual leap.…

Shareholder Proposal Technicalities

The division of corporate finance of the SEC released a new staff legal bulletin on Friday dealing with shareholder proposals on company proxy statements.  One aspect of the bulletin concerns a hypothetical shareholder proposal that requires the board of directors to amend the company’s charter.  The question at hand is whether the proposal can be excluded from the proxy statement if applicable state law requires that a charter can only be amended if the amendment is initiated by the board of directors and subsequently approved by the shareholders.

This sounds like excluding a proposal based on a technicality.  Is the applicable state law really designed to discourage shareholder input preceding a charter amendment?  If a large shareholder suggests a charter amendment to the board, and the board studies the issue and comes to the same conclusion, should the amendment be considered board-initiated?

Interestingly, the staff bulletin answers with a technicality of its own.  The staff concedes there is some basis for excluding such a proposal based on state law; however, the proponent should be permitted to revise the proposal to urge the board of directors to “take the steps necessary” to amend the charter.

According the SEC’s website, staff legal bulletins represent the views and policies of the staff but are not legally binding. The last such bulletin was issued in June of 2005.  …