Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Monday, February 22, 2010

SEC Adopts Measures to Encourage Retail Investors' Voting at Annual Meetings

The SEC's adoption of "notice and access" e-proxy rules has resulted in decreased voting by retail investors.  With the NYSE's elimination of the rule that gave brokers the discretion to vote customers' shares in uncontested elections when the customers did not provide instructions, there is the additional concern that issuers may not have a quorum at annual meetings.  In response, the SEC has launched several initiatives to increase voting by retail investors.  The series of measures include amending the SEC’s e-proxy rules, issuing an Investor Alert, and creating new Internet resources that explain the proxy voting process in plain language.

To support shareholder participation in corporate elections and help educate investors about how the voting process works, the Commission has:

  • Amended the SEC’s proxy rules to clarify and provide additional flexibility when companies and other persons are relying on the “e-proxy rules.” Those rules allow a notice to be sent to shareholders indicating that the proxy materials are online and available upon request, rather than requiring a full package of materials containing a proxy card, annual report and proxy statement be sent. The new rule amendments will, among other things, allow shareholders to be provided with additional materials explaining the e-proxy rules. The Commission issued an adopting release related to the amended rules.
  • Published a new Investor Alert entitled New Shareholder Rules for the 2010 Proxy Season. The Alert provides investors with information related to the recent changes to broker voting rules and the impact of those new rules on proxy voting.
  • Launched a new Spotlight page that provides investors with information on the mechanics of proxy voting, the e-proxy rules, corporate elections and proxy matters generally.

http://lawprofessors.typepad.com/securities/2010/02/sec-adopts-measures-to-encourage-retail-investors-voting-at-annual-meetings.html

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