UK: August 8, 2016 Corporate News Update: SEC's Revised Guidance For Companies With Corporate Selling Shareholders And No Action Guidance Signifying Cutback In Rights To Exclude Shareholder Proxy Access Proposals, And New EPA Rules Intended To Reduce For
This week's Corporate news roundup includes information
regarding the SEC's new guidance for companies with corporate
versus individual selling stockholders and its no action guidance
effectively cutting back on companies' right to exclude proxy
access shareholder proposals, and the new EPA rules intended to
reduce formaldehyde vapor offgassing from specified wood
SEC ISSUES NO-ACTION LETTER CUTTING BACK ON COMPANY RIGHT TO
EXCLUDE PROXY ACCESS SHAREHOLDER PROPOSAL
On July 21, 2016, the SEC issued a no-action letter denying a
company's request to exclude from the company's proxy
materials a shareholder proposal that the company amend its proxy
access bylaws. The company had relied on Exchange Act Rule
14a-8(i)(10) in its assertion that it had already substantially
implemented the proposal by adopting its own proxy access bylaw,
but the SEC rejected that argument because it was unable to
conclude that the company's proxy access bylaws compared
favorably with the shareholder proposal's guidelines so as to
meet the test for exclusion. Following the SEC's October 2015
issuance of a Staff Legal Bulletin limiting companies' ability
to exclude shareholder proposals, the SEC had issued a string of
no-action letters in February 2016 allowing companies to rely on
Exchange Act Rule 14a-8(i)(10) in their assertion that their own
proxy access bylaws fulfilled a shareholder proposal's
essential objectives and therefore the proposal was already
substantially implemented. This recent no-action letter appears to
cut back companies' ability to rely on their own proxy access
bylaws to exclude shareholder proxy access proposals. For more
information, click here.
EPA ISSUES RULE INTENDED TO REDUCE FORMALDEHYDE VAPORS FROM
On July 27, 2016, the EPA issued a rule intended to reduce
exposure to formaldehyde vapors from wood products that are
produced domestically or imported into the United States.
Formaldehyde is used as an adhesive in a variety of products made
from hardwood plywood, medium density fiberboard and particleboard
as well as household and other finished goods containing these
products, and exposure to formaldehyde may cause adverse health
effects. The EPA will issue testing requirements to ensure that
products comply with the new standards as well as establishing
eligibility requirements for third-party certifiers who will need
to be EPA-accredited in order to test products. The EPA also
ensured that the new rule is consistent with the California
requirements for composite wood products. For more information, click here.
SEC REVISES C&DI RELATING TO SELLING SHAREHOLDER
The SEC recently revised its Regulation S-K Compliance and
Disclosure Interpretations (C&DIs) to clarify that, as to
selling shareholder entities, a company must disclose material
relationships between it and the selling shareholder entity, as
well as information about any entities or natural persons that have
control over the selling shareholder or had a material relationship
with the company (or any of predecessors or affiliates thereof)
within the past three years. The disclosure must identify each
person or entity and describe the nature of any relationships. The
C&DI previously provided that, as to a selling shareholder
entity, the company's required disclosure was limited to the
identity of any persons who had voting or investment control over
the company's securities owned by the entity, a less burdensome
disclosure than the current requirement. For more information, click here.
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