TheCorporateCounsel.net

Today, the Division of Corporation Finance delivered its report to the SEC on shareholder access – and should be commended for making its report public. The 33 page report is well-written and organized, with a series of pros and cons for the 5 alternatives presented – and a series of questions for the Commission to consider when it puts together an official proposal. See the staff report at http://www.sec.gov/news/studies/proxyreport.pdf. There is also a 55 page summary of comments at
http://www.sec.gov/news/studies/proxycomsum.pdf.

I have yet to fully digest the report – but at first glance, it appears clear that the staff has considered the state law issues involved in what could be a complicated rulemaking project. Obviously, the Commission has the authority to require enhanced disclosure – and has some room to maneuver under the proxy rules regarding the nomination process.

However, state law dictates most of the nominating process – and the tension between those state laws and the staff’s alternatives that would allow major, long-term shareholders to nominate directors that will come under close scrutiny.

For TheCorporateCounsel.net subscribers, we have posted an interview with Tom Hanley of Pepper Hamilton on Impact of Nasdaq’s Proposed Shareholder Approval Rules on PIPEs at http://www.thecorporatecounsel.net/member/InsideTrack/07_14_03_Hanley.htm.