Recently, the SEC adopted amendments to its shareholder proposal rule, Rule 14a-8, in order to “facilitate engagement among shareholder-proponents, companies and other shareholders, including preserving the ability of smaller shareholders to access the proxy statements of the companies in which they have demonstrated a continuing interest.” Nevertheless, the amendments serve only to place further requirements on shareholders who would like to have a proposal included in proxy materials.
More specifically, the amendments significantly raise the holding and time requirements that a shareholder must meet to qualify: $2,000 for at least three years; $15,000 for at least two years; or $25,000 for at least one year. In addition to other disclosure and threshold requirements, the amendments, inter alia, prohibit shareholders from aggregating holdings to meet said thresholds and representatives from submitting more than one proposal regardless of how many qualified shareholders are being represented.
Considering the focus on raising thresholds, including the bar on aggregation, it is unclear how these amendments help “smaller shareholders.” What is clear is that these amendments serve as another tool for the managers of public companies to silence dissident owners.
A copy of the final rule can be found here.
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Faruqi & Faruqi, LLP focuses on complex civil litigation, including securities, antitrust, wage and hour, personal injury and consumer class actions as well as shareholder derivative and merger and transactional litigation. The firm is headquartered in New York, and maintains offices in California, Delaware, Georgia and Pennsylvania.
Since its founding in 1995, Faruqi & Faruqi, LLP has served as lead or co-lead counsel in numerous high-profile cases which ultimately provided significant recoveries to investors, direct purchasers, consumers and employees.
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About Michael Van Gorder
Michael Van Gorder's practice is focused on securities litigation. Michael is a Partner in the firm's Delaware office. Prior to joining F&F, Michael served as a law clerk to the Honorable James T. Vaughn, Jr. of the Delaware Supreme Court (2015-16). While attending law school, Michael served as the Editor-in-Chief of the Delaware Journal of Corporate Law and was selected as a Josiah Oliver Wolcott Fellow with the Delaware Supreme Court. Before law school, Michael worked in the private bank of a global financial services firm where he held multiple securities licenses.Michael has authored the following article: Boilermakers v. Chevron: Are Board Adopted Arbitration Bylaws Valid Under Delaware's General Corporation Law?, 39 Del. J. Corp. L. 443 (2014).Michael received his J.D., magna cum laude, from Widener University School of Law (2015). Michael received his B.S., Business Management, 2008; M.B.A., Finance, 2011, from Wilmington University. Michael is licensed to practice law in the state of Delaware and is admitted to the United States District Court of Delaware.