SEC Allows Exclusion of Conflicting Proposals on Special Meeting Thresholds – With a Twist

Late last year, the SEC’s Division of Corporation Finance issued a no-action letter in which it agreed that a proposal seeking to lower the threshold for calling a special meeting from 25 percent to 10 percent of the outstanding shares directly conflicted with a company proposal to ratify its existing bylaw with the 25 percent threshold.  The AES Corporation, December 19, 2017.  In the staff’s view, a reasonable shareholder could not logically vote in favor of both proposals, which is the standard it enunciated for Rule 14a-8(i)(9) in Staff Legal Bulletin 14H issued in October 2015.  The letter was … Read more

Excluding Shareholder Proposals: When Ratification Creates a Direct Conflict

The annual scrum between companies and shareholders seeking to have their proposals included in the company’s annual proxy statement is well underway.  One of the bases upon which a company may exclude a shareholder proposal from its proxy statement is if it “directly conflicts with one of the company’s own proposals to be submitted to shareholders at the same meeting.”  After some controversy in 2015 over the scope of what it means to “directly conflict,” the SEC staff issued Staff Legal Bulletin (SLB) 14H, which said that proposals conflict only “if a reasonable shareholder could not logically vote in favor … Read more

Ropes & Gray Discusses U.S. Treasury’s Report on Capital Markets

On Friday, October 6, the Treasury Department issued a report to the President on streamlining and reforming U.S. capital market regulation. The report covers recommendations on nine topics across the U.S. financial regulatory system. One of the topics – Access to Capital – includes many recommendations of interest to participants in public and private company capital markets. Without dwelling on why Treasury would issue such a report on the Friday before a holiday weekend, let’s dive into the substance of this section of the report.

The report starts with frequently cited statistics chronicling the decline in the number of listed … Read more

Is It Time to Retire Securities Act Form S-8?

Every securities lawyer knows that offers and sales of securities must either be registered under the Securities Act of 1933 (Securities Act) or made pursuant to an applicable exemption.  This rule is so fundamental that we often neglect to think about its purpose: investor protection.  We spend countless hours analyzing whether some instrument or another is a security and, if it is, whether an offer or sale is taking place.  These are often difficult questions, to be sure, but I often wonder whether we approach them more as intellectual explorations into the metaphysics of the Securities Act than as important … Read more