SEC Proposes Rules On Universal Proxies

On October 26, 2016, the SEC proposed amendments to the proxy rules to require parties in a contested election to use universal proxy cards that would include the names of all board nominees. The amendments would thus allow shareholders to vote by proxy for their preferred combination of company and dissident nominees (i.e., to “split their vote”), similar to the way that shareholders who attend the meeting in person can cast votes. The proposed universal proxy rule (Rule 14a-19) would apply to contested elections other than those involving registered investment companies and business development companies. In addition, the SEC proposed amendments to require that proxy cards clearly specify the applicable shareholder voting options in all director elections and require that proxy statements disclose the effect of a shareholder’s election to withhold votes.