Regulations proposed by the Texas State Legislature would mark a blow to shareholder rights, subjecting investors, proxy advisors and other shareholder support firms to unprecedented disclosure requirements, and potentially serving to reverse the recent expansion of proxy access.

Texas House Bill 2382 would require “activist investors” in Texas-based public companies to register with the state’s Securities Commissioner, and provide both the state and the company in question with exhaustive disclosure (including “all plans, intentions, motives, strategies, and objectives” along with any related “notes, e-mails, memoranda, letters, communications, proposals, analyses, spreadsheets, presentations, instruments, and any other documents”, and associated costs) within 10 days of becoming a beneficial owner and activist investor. Moreover, the same extensive disclosure requirements apply to all beneficial owners of the activist investor “until the last person named is a natural person,” creating a massive headache for any fiduciary and privacy issues for savers. Failure to comply would constitute a Class C Misdemeanor, equivalent to simple assault or criminal trespassing.

(more…)