If you followed the SEC’s recent proxy process roundtables, you heard a bit of debate over the electronic shareholder forum idea. This is an idea that has been floated for a while – and even tried a few years back at MCI, as forced upon that company by the Breeden Report and called a “Town Hall.” This idea is described in this SEC roundtable briefing paper.
A Verizon shareholder/retiree recently created an electronic shareholder forum for that company to facilitate a discussion of that company’s pay-for-performance policies. This development was written up in Sunday’s NY Times.
The idea that all-year-round forums can replace the existing Rule 14a-8 shareholder proposal process was criticized by some during the SEC’s roundtables, by both management and investor representatives. In my mind, companies shouldn’t like the idea because of the expense – and manpower necessary to – maintain and respond to shareholder initiatives all year round. Investors shouldn’t like it because many proposals are submitted as part of a broader strategy that involves getting management behind closed doors.
[Another Corp Fin Retirement: Madeline Booker ends decades of service this week as the principal administrative contact in the Division. Thanks for everything Madeline!]
Catching Up to Nasdaq’s Changes
Keith Bishop notes: Transitions are always tough, but it seems that the regulators don’t want to catch up with the name and other changes at the Nasdaq Stock Stock Market, Inc. In a recent blog, you noted that the SEC has amended Rule 146 to include the Nasdaq Capital Market as a “covered security” for purposes of Section 18 of the Securities Act of 1933. The SEC also said that it was amending Rule 146 to reflect the name change of the National Market System of the Nasdaq Stock Market LLC. Nasdaq renamed the National Market to the Global Market on July 1, 2006. At the same time, Nasdaq created the Global Select Market as a segment within the Global Market. Despite the SEC’s stated intent to reflect the name changes at Nasdaq, the rule still refers to the “National Market System of the Nasdaq Stock Market”, which it incongruously now defines as the “Nasdaq/NGM”.
I am embarrassed to say that the California Department of Corporations still hasn’t reacted to the conversion Nasdaq and the renaming of its markets. As Broc blogged way back in August, California has an exemption for listed securities that includes any warrant and other right to purchase the listed security. Corp. Code Section 25100(o). The statute refers to securities listed on a national securities exchange or the “National Market System of the Nasdaq Stock Market” if the exchange or Nasdaq Stock Market (or its successor) has been certified by rule or order of the Commissioner of Corporations. Corporations Code Section 25101(a) contains a similar exemption with respect to nonissuer transactions for listed securities if certified by the Commissioner. Finally, California has a usury exemption in Corporations Code Section 25117 that is dependent upon the Commissioner’s certification of the exchange.
It should be noted that the addition of the Nasdaq Capital Market to the list of “covered securities” in Rule 146 doesn’t mean that the California exemptions discussed above are now available to Nasdaq Capital Market securities. In particular, the NSMIA did not clearly preempt state qualification requirements for options or warrants to acquire covered securities, as discussed in May-June 2003 issue of The Corporate Counsel. Cal. Corp. Code Section 25100(o) provides an exemption for listed securities but only if the securities are listed on a certified exchange. While the Nasdaq Global Market is the successor to the Nasdaq National Market, the Nasdaq Capital Market is not.
May-June 2007 Issue: The Corporate Counsel
We just mailed the May-June 2007 issue of The Corporate Counsel. Try a no-risk trial for half-price for the rest of the year.
The May-June issue includes analysis of:
– Deep (1933 Act) Thoughts on Google’s TSO Program
– The CDI—The Staff’s New Guidance Format
– The Coming Internal Control Disclosures by Non-Accelerated Filers—Staff Clarifies Scope and Effective Date of 10-Q Temporary Item 4T
– Issuer Private Placement While There is Undisclosed Material Information—Rule 10b-5 Concerns (Waiver?)
– Goldman Sachs Belatedly Adds Shareholder Proposal to Annual Meeting
– Why So Many Forms 4 Cluttering Edgar?
– Internet Proxy Solicitation—State Law Compliance?
– S-K Item 403 Follow-Up—Staff Now Says Deceased NEO May Be Excluded Completely From Beneficial Ownership Table
– Reporting Standalone Stock Appreciation Rights in the Beneficial Ownership Table—What Number of Shares?
– Post-Termination Rule 144 Cutoff for Control Stock—Waiting Period!@#$%
– Staff No Longer Allows Adding Shares to Form 144 by Amendment—Ramifications
– New Backdating Investigation Numbers
– Broc Romanek