Eleazer Klein is a partner and Daniel A. Goldstein and David M. Rothenberg are associates at Schulte Roth & Zabel LLP. This post is based on their SRZ memorandum.
The U.S. Securities and Exchange Commission (“Commission”) has adopted amendments to the proxy rules to increase the threshold requirements for shareholders to access a company’s proxy materials. These new rules will make it more difficult for certain shareholders seeking to submit shareholder proposals for inclusion at a company’s special or annual meeting of shareholders.
Previously, Rule 14a-8 of the Securities Exchange Act of 1934 provided that for a shareholder to submit a proposal for inclusion in a company’s proxy materials, the shareholder must have continuously held at least $2,000 in market value, or 1%, of the company’s securities entitled to vote on the proposal for at least one year by the date the proposal is submitted. Under the new rules, such test is replaced with the following three alternative thresholds that will require a shareholder to demonstrate continuous ownership of at least:
- $2,000 of the company’s securities for at least three years;
- $15,000 of the company’s securities for at least two years; or
- $25,000 of the company’s securities for at least one year.
