CII Rebukes SEC Rule Proposals That Undercut Investor RightsSEC commissioners proposed two new rules November 5 that CII believes would impair the independence of proxy advisory firms and restrict shareholder proposals. Both proposals, approved on a 3-2 vote along party lines, would undercut critical shareholder rights and stifle investors’ voice at public companies in which they invest, CII said in a statement. The commission backed a new regulatory structure that would require proxy advisory firms to let public companies review their reports twice before sending the reports to institutional investors, their paying clients. The firms also would have to include in their reports hyperlinks to company rebuttal if management requested. If adopted, the proposal would pressure proxy advisory firms to take a more management-friendly approach in their reports and vote recommendations, and make it more difficult for shareholders to cast informed votes on time. CII also objected to SEC proposals to raise ownership and resubmission thresholds for shareholders to place their own resolutions on company ballots. This will restrict the ability of some investors, especially small holders, to submit shareholder proposals and impede future new social and environmental proposals, since those generally take time to gain traction.
ISS Sues SEC Over Interpretation that Policy Advice is SolicitationInstitutional Shareholder Services (ISS), a leading proxy advisory firm, filed a lawsuit against the SEC, seeking to overturn the commission’s August 21 guidance that voting advice is solicitation under federal proxy rules and the regulatory regime the SEC plans to put in place as a result of that determination. The complaint filed in U.S. District court for the District of Columbia contends that the SEC’s determination was unlawful and should be set aside. ISS contends that providing proxy advice is not solicitation, the SEC should have sought public comment on the proposed guidance and the determination was arbitrary and capricious.
CII Files Amicus Brief in Forum Selection CaseCII has filed an amicus brief with the Delaware Supreme Court in a case involving Blue Apron, Stitch Fix and Roku. CII supports a Delaware Chancery Court decision finding that adoption of forum selection provisions governing federal securities claims are invalid under Delaware law. A board “lacks authority…to govern matters beyond the corporation-stockholder relationship defined by state corporate law,” says the brief. A forum selection provision limits certain litigation to particular judicial forums, and in this context limits shareholder rights.
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News & Highlights
- November 12 - Regulator Considers Adjusting Rules Guiding Audit Firms on Quality Control
- November 12 - Investment Giants Raise Voices in Debate Over Their Impact on Competition
- November 12 - The SoftBank Effect: How $100 Billion Left Workers in a Hole
- November 11 - Shareholders, Proxy Advisers Roiled by SEC
- November 11 - ESG Funds Enjoy Record Inflows, Still Back Big Oil and Gas
- November 10 - WeWork Was Wrestling With SEC Over Key Financial Metric Just Before It Scrapped IPO
- November 8 - Why the Fed, Long Reticent, Has Started to Talk About Climate Change
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