Matching Proponent’s Ownership Threshold Appears to Be Key in Obtaining No-Action Relief
On February 12, 2016, the SEC Staff granted no-action relief to 15 companies that had sought to exclude shareholder proxy access proposals from their 2016 proxy statements on the grounds that they had been “substantially implemented” by the company. The SEC Staff granted no-action relief under Exchange Act Rule 14a-8(i)(10) to those companies, each of which adopted its own proxy access bylaw with an ownership threshold mirroring the threshold requested by the proponent (3% of the outstanding common stock), even though the terms of the company-adopted proxy access bylaws differed from the specific terms of the shareholder proxy access proposals in various other respects (e.g., nominating group size limitations, percentage of board seats subject to proxy access). On the same day, the SEC Staff denied no-action relief to three companies that implemented proxy access with a different ownership threshold (5%) than that sought by the proponent (3%). These developments suggest that companies will have some flexibility to adopt proxy access bylaws tailored to their particular circumstances so long as the ownership threshold matches the proposal’s.
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Claire H. Holland
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Sidley Corporate Governance and Executive Compensation Practice
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