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GOVERNANCE

SEC proposes rule change for universal proxy-voting cards

The Securities and Exchange Commission on Wednesday proposed rule changes to require so-called universal proxy-voting cards that would include the names of all management and dissident nominees to corporate of boards of directors, according to a SEC news release.

A 60-day public comment period will begin as soon as the proposal is published in the Federal Register.

The SEC hasn’t set a date on voting to adopt the proposal.

The Council of Institutional Investors “welcomes the SEC’s proposed rule changes,” the group said in a statement. “CII has long supported the use of universal proxy cards, and petitioned the SEC in 2014 to amend its rules to require them,” it said.

“Currently, when there is a contest, investors voting by proxy are effectively disenfranchised because they have no practical ability to vote for the combination of management and dissident nominees they believe best serve their economic interests” “Ken Bertsch, CII executive director, said in the statement. “Universal proxy cards level the playing field for investors voting by proxy, so they have the freedom of choice to vote for the director candidates they prefer.”

Currently, corporations and shareholder activists putting forth dissident candidates now issue separate proxy-voting cards, each with their own nominees. Shareholders vote one card or the other and cannot vote for a combination of nominees from both cards. Only shareholders voting in person at annual meetings have cards with all nominees.

“In addition, the proposed rules would require management and dissidents to provide each other with notice of the names of their nominees, establish a filing deadline and a minimum solicitation requirement for dissidents, and prescribe presentation and formatting requirements for universal proxy cards,” the SEC release said.

Under a current rule, management and activists are banned from including each other’s nominees on its proxy card without the other’s permission, which is rarely provided, the release said.

“The proposed changes would allow shareholders to vote by proxy in a manner that more closely replicates how they can vote in person at a shareholder meeting,” Mary Jo White, SEC chairwoman, said in the release. “This change would allow shareholders through the proxy process to more fully exercise their vote for the director nominees they prefer.”