TheCorporateCounsel.net

April 25, 2007

SEC Announces Three Roundtables Regarding Proxy Process

Yesterday, the SEC announced it will hold three roundtables in May (scheduled for May 7, May 24 and May 25), which will consist of panels addressing:

- The federal role in upholding shareholders’ state law rights
- The purpose and effect of the federal proxy rules
- Non-binding and binding proposals under the proxy rules

No word yet on who will serve as the participants in the roundtables…

Huge Settlement Personally Paid by Outside Directors

As noted in this article from Monday’s WSJ, five former outside directors of a bankrupt company – Just for Feet – paid out a combined $41.5 million of their own money to settle allegations that they breached their fiduciary duties to shareholders, easily surpassing the out-of-pocket settlements paid by former outside directors of Enron and WorldCom. This lawsuit was filed in an Alabama court, where filings show that only $100k of liability insurance remained available to the directors, as most of it had already been exhausted by the company’s officers in settling a shareholders’ lawsuit.

NY Times Directors Register 42% Withheld Vote

Yesterday, as noted in this Forbes article, four NY Times directors received a 42% withheld vote, up from a 30% withheld vote last year. The Times is family-controlled, with the remaining nine directors receiving 100% of the vote from holders of the Times’ Class B shares, which are controlled by the Ochs-Sulzberger family.

I bother to blog on this development for two reasons: first, because it is further evidence that voting is “real” these days, even for companies that maintain their plurality structure – and second, family-controlled businesses should be aware that they are not left untouched by the changed governance environment.

SEC: Nasdaq Capital Market Securities as “Covered Securities”

Last week, the SEC finally adopted an amendment to a rule under Section 18 of the ’33 Act to designate securities listed on the Nasdaq Capital Market as “covered securities” for purposes of Section 18, so that they will be exempt from state “blue sky” law registration requirements. The amendments are effective 30 days after publication in the Federal Register.

At the same time, the SEC also cleaned up an issue, as requested by the states and ABA, concerning the availability of the exemption for all markets listed in the SEC’s rule.