Standards

SEC sets out divergent proposals on proxy access

The US Securities and Exchange Commission (SEC) has released two divergent proposals on proxy access, a move the regulator’s chairman Christopher Cox said was to ensure “as we continue to evaluate the aspects … of all that is involved here, we will continue to have choices”.

The first proposal, which would amend an existing rule, would permit the exclusion from a company’s proxy material of all shareholder-proposed by-laws concerning director nominations.

The second proposal assumes a significantly different approach, allowing shareholders that hold more than 5% of a company’s shares to make proposals that would alter the company’s by-laws. Shareholders would therefore be able to change a company’s by-laws to allow investors to nominate directors.

Speaking before the SEC announced these proposals, the Social Investment Forum (SIF) warned that any efforts by the regulator to limit the rights of investors to participate in the shareholder resolution process would result in the same kind of opposition that defeated a similar proposal in 1997-1998.

Tim Smith, SIF chair, said: “The right of investors to file resolutions and seek investor support when necessary should not be diminished in any way. We are serving notice to the SEC and others today that we will strongly oppose any move to take away shareholder rights to move advisory resolutions”.

August 2007