Corporate Governance, Shareholder Proposals, and Engagement Between Managers and Owners

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Sturm College of Law


Corporate governance, Shareholder proposals, Business management, Corporate law


Tucked into the Financial Choice Act (FCA), the recent endeavor in the House of Representatives to overturn significant segments of the Dodd-Frank Act, was an entirely unrelated provision. Section 844 of the FCA proposed a number of changes to Rule 14a-8, including tougher eligibility standards. To submit a proposal, shareholders would have to own at least 1 percent of a company’s outstanding voting shares continuously for three years. Instead of holding around 15 shares of Apple for 12 months, the proposed standards would require something closer to 5 million shares for 36 months. Instead of acquiring $2000 worth of securities, as the rule now allows, they’d need to invest more than $7 billion in Apple. Few shareholders would meet these requirements. Nor did the FCA stand alone. Others have called for similar restrictions.

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