September 07, 2009
Nine Investor Law Firms Support SEC Efforts to Ensure Shareowner Rights
by Robert Kropp
Letter from nine securities and corporate governance law firms supports the rights of shareowners
to vote on board nominees, and argues against permitting companies to opt out of disclosure
Nine securities and corporate governance law firms have sent a letter to the Securities and
Exchange Commission (SEC), supporting a proposal by the SEC that would require companies to permit
shareowner votes on nominees for boards of directors.
The proposal, entitled Facilitating Shareholder Director
Nominations, intends to "remove impediments to the exercise of shareholders' rights to nominate
and elect directors to company boards of directors." The proposal would do so by requiring
companies to include in their proxy materials the nominees by shareowners for directors.
According to the SEC, "one of the most serious economic crises of the past century…has led many
to raise serious concerns about the accountability and responsiveness of some companies and boards
of directors to the interests of shareholders, and has resulted in a loss of investor confidence."
Among the concerns addressed by the proposal are appropriate board oversight of management,
appropriate focus of boards on shareowners' interests, and the accountability of boards on
decisions regarding executive compensation and risk management.
Letter from the nine law firms seeks to address comments in a letter to the SEC from seven law
firms representing various corporate interests. That letter, while indicating support for
the SEC proposal for shareowner proxy access, requests that the SEC not adopt proxy access rules
until "there has been sufficient experience…to make a more informed decision as to whether a
prescriptive rule governing proxy access is necessary and desirable."
Arguing that the
SEC proposal "would establish reasonable and appropriate disclosure requirements for corporations,
would encourage director accountability, and would facilitate the ability of shareholders to
exercise their rights under state law as the owners of corporations," the letter from the nine
securities and corporate governance law firms requests that the SEC proposal be adopted without
permitting companies to opt out of disclosure requirements.
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