The SEC reopened the comment period on a 2016 proposed rule that would require the use of universal proxy cards in all non-exempt solicitations for contested director elections.

In the discussion section on the comment period reopening, the SEC cited "important developments in proxy contests, corporate governance, and shareholder activism." The SEC noted that there has been (i) increased use of virtual shareholder meetings and adoption of proxy access bylaws, and (ii) significant developments in corporate governance matters affecting funds (citing, in particular, governance matters impacting registered closed-end funds and business development companies).

As previously covered, the 2016 proposed amendments would, among other things:

  • revise the definition of a "bona fide nominee" under SEA proxy requirement Rule 14a-4(d)(1);
  • eliminate the "short slate rule" under SEA Rule 14a-4(d)(4);
  • create new Rule 14a-19, which would require a universal proxy card (a proxy card that includes the names of both management and dissident nominees) in all non-exempt solicitations in contested elections;
  • provide for procedural obligations for dissidents and registrants to notify each other of their director nominees; and
  • require proxy directors to notify each other of their respective director candidates.

In the Notice, the SEC sought comment on, among other things:

  • the percentage of the voting power dissidents should be required to solicit;
  • whether the proposed universal proxy card requirements should apply to registered closed-end funds and business development companies; and
  • what developments since 2016 the SEC should consider in its assessment.

Comments on the rule amendments must be submitted within 30 days of the notice's publication in the Federal Register.

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