U.S. SEC allows investors to cherrypick candidates in contested corporate elections

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FILE PHOTO: Signage is seen at the headquarters of the US Securities and Exchange Commission (SEC) in Washington, DC, US May 12, 2021. Businesshala/Andrew Kelly/File photo
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WASHINGTON (Businesshala) – The US Securities and Exchange Commission (SEC) voted on Wednesday in favor of allowing investors who are contesting corporate board elections more freedom to choose their candidates, as the agency’s The Democratic leadership wants to strengthen voting rights. shareholder.

Until now, shareholders voting remotely in contested elections had to choose from a full slate of board directors nominated by management or a competing group of nominees provided by an active investor.

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Unlike countries such as Canada and Australia, investors in the United States could not mix and match these competing lists unless they sent a representative to vote in person at the annual meeting. The vast majority of corporate votes are cast remotely.

The SEC rule requires a “universal” proxy card listing all duly nominated director candidates, allowing shareholders to mix and match effectively.

Investor advocates say the former system allowed corporate management to skew elections by proposing ballots with a limited number of candidates whom they preferred. Other candidates submitted by investors are often pushed to separate ballots.

Business groups say the status quo was efficient and warn that a universal proxy card could lead to potential over-voting, more frequent disqualification of faulty ballots, and even shareholder confusion.

SEC Chairman Gary Gensler said Wednesday’s rule would vote candidates in person and by proxy on an equal footing.

“It makes sense that shareholders should be able to see all the candidates in one place, just as they would personally. This is an important aspect of shareholder democracy.”

Reporting by Katanga Johnson in Washington; Editing by Dan Grebler and Matthew Lewis


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