SEC Group to Mull Recommendations on Shareholder Vote Disclosure Impartiality

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Sept. 22 — The Securities and Exchange Commission's Investor Advisory Committee Oct. 9 will vote on a subcommittee's recommendations to help ensure that preliminary votes from shareholder meetings are disclosed in an impartial manner.

The SEC posted the recommendations on its website Sept. 19.

The first recommendation is that the SEC staff take steps to ensure that brokers—when relying on the exemption in 1934 Securities Exchange Act Rule 14a-2(a)(1)—act in an impartial and ministerial fashion throughout the proxy process, including when disclosing preliminary vote tallies.

The rule exempts from the SEC's proxy solicitation requirements any solicitation that, among other measures, “does no more than impartially instruct the person solicited to forward a proxy to the person, if any, to whom the person solicited desires to give a proxy, or impartially request from the person solicited instructions as to the authority to be conferred by the proxy and state that a proxy will be given if no instructions are received by a certain date.”

The second recommendation is that the staff take the position that any broker relying on the exemption that uses an intermediary to fulfill the rule's impartiality requirements “take reasonable steps to verify” that the intermediary will act in an impartial manner.

The IAC Investor as Owner Subcommittee said it advanced the recommendations because of concerns raised “over the lack of impartiality and the failure to act in a ministerial fashion in connection with disclosure of voting results during an exempt solicitation.”

There is a pending request by the Council of Institutional Investors for SEC guidance or rule amendments to address the “arbitrary and biased disclosure of interim vote tallies and the role of proxy distributors in that process.”

The recommendations are available at

Request Corporate on Bloomberg Law