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Key Takeaways from New Universal Proxy Rules Webinar

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By Jay Knight & Scott Bell on February 28, 2022
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Late last year, the Securities and Exchange Commission (SEC) approved amendments to the federal proxy rules to, among other things, mandate the use of a universal proxy card in public solicitations involving director election contests. On February 24, we hosted a webinar to discuss issues relating to universal proxy rules. Access the recording of the webinar here.

We provided an overview of the universal proxy requirement and proxy contests under the new regime during the webinar. We also discussed universal proxy’s influence on activist strategies and tactics and provided practical guidance on what companies should prepare now. Key insights from the discussion are highlighted below.

Summary of Universal Proxy Rule Changes

  • New Rule 14a-19 applies in contested director elections. It requires both the company and the dissident to name on their respective proxy cards all duly nominated director candidates, including its nominees, the other’s nominees, and any proxy access nominees. The universal proxy card allows shareholders to vote for any combination of duly nominated candidates rather than being limited to voting for nominees named only on the company’s slate or the dissident’s slate – not previously an option when voting by proxy.
  • The new rule provides nomination notices and filing deadlines for proxy statements, amends the bona fide nominee rule and eliminates the “short slate” rule.
  • These rules are effective for shareholder meetings held after August 31, 2022.

Proxy Access vs. Universal Proxy

How does this new universal proxy rule differ from the existing proxy access? The chart below provides a breakdown.

 

Key Actions Companies Should Take Now

  • Provide director education on these new rules in light of sea change from the existing framework.
  • Assess vulnerability to current activist campaigns, combined with ongoing shareholder outreach to maintain strong relations/credibility with the shareholder base and minimize the risk of potential dissidents.
  • Review advance notice bylaws to ensure robust safeguards and consider whether additional protections are warranted.

We welcome the opportunity to discuss any of these takeaways with you or other topics of interest. Should you have any questions or suggestions for future webinar topics, please feel free to reach out to one of our speakers.

Photo of Jay Knight Jay Knight

Jay Knight is head of the firm’s Capital Markets Subgroup. His practice focuses on securities offerings, mergers and acquisitions, real estate capital markets, structured finance, and the general representation of public companies and underwriters. Since his return to private practice in 2012 after…

Jay Knight is head of the firm’s Capital Markets Subgroup. His practice focuses on securities offerings, mergers and acquisitions, real estate capital markets, structured finance, and the general representation of public companies and underwriters. Since his return to private practice in 2012 after having served five years in the Securities and Exchange Commission’s (SEC) Division of Corporation Finance, Jay has represented both issuers and underwriters in connection with initial public offerings (IPOs), follow-on and secondary offerings, at-the-market (ATM) programs, tender offers, SPACs, de-SPACs, and mergers and acquisitions, involving companies in a wide range of industries, including healthcare, real estate (REITs), retail, life sciences, defense and restaurant, among others.

Read more about Jay KnightEmail
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  • Posted in:
    Corporate & Commercial, Corporate Finance, Featured Posts
  • Blog:
    Securities Law Exchange
  • Organization:
    Bass, Berry & Sims PLC
  • Article: View Original Source

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