Update 1

SEC Chair, Christopher Cox, announced in testimony before the US House Committee on Financial Services that the SEC will issue new proxy rules before the next proxy season:

‘In connection with the Commission’s review of our proxy rules governing shareholder proposals, we have just completed a series of roundtables that considered, among other issues, the future role of technology in facilitating communications not only between shareholders and their company, but also directly among shareholders themselves. As we prepare to put new proxy rules in place in time for the next proxy season to address the implications of the court’s decision in AFSCME v. AIG, the Commission is also considering ways to facilitate greater online interaction among shareholders by removing any obstacles in the current rules, such as the ambiguity concerning whether use of an electronic shareholder forum could constitute a proxy solicitation.’

FinancialWeek.com reported Cox indicated the regulations (regs) would appear next month.

FinancialWeek.com also reported that Committee Chair Barney Frank (D-Mass.) said he would hold hearings on the SEC’s proposed proxy regulations. 1

If the regs appear in late July, it will be very difficult for the regs opponents to mount an effective campaign. Congress will adjourn for its summer recess late in July and will not convene again until after Labor Day. The financial services industry itself usually adjourns from mid-July to early September.

N.B.: Thanks to James McRitchie, proprietor of www.corpgov.net who called my attention to the FinancialWeek.com article.

Update 2

Tim Smith of Walden Asset Management’s Director of Socially Responsible Investment has pointed out that the SEC could act in one of two ways. It could repeal its existing regulations outright, or it could significantly increase the barriers to filing and re-filing.

He and I agree that the second is the more likely route. To me, it has the advantage to opponents of preserving the illusion of access while limiting ‘abusive’ ‘precatory proposals’.

A $100,000 minimum holding for filing is a possibility, as would a 20 to 30 percent vote in favor of a resolution in order to refile the next year.

Endnotes
1. Nicholas Rummell, ‘SEC plans proxy access rule proposal within a month, chairman says’, www.FinancialWeek.com, June 27, 2007 (behind firewall).