The Securities and Exchange Commission on Wednesday proposed scrapping its shareholder proposal rule, known as Rule 14a-8 under the Securities Exchange Act of 1934, saying it exceeds its statutory authority and intrudes into matters of state law. Rolling back Rule 14a-8 would leave determinations about the role of shareholder proposals to state law and company government documents, the SEC said. The agency also proposed amendments to Rule 14a-4(c) under the Exchange Act that would give companies greater flexibility and shareholders greater control regarding proposals for which a company may seek discretionary proxy voting authority. Separately, the SEC proposed rule amendments to modernize the proxy solicitation process, including eliminating the requirement that companies deliver an annual report to security holders, eliminating the delivery deadline when documents are incorporated by reference in a proxy statement, eliminating the requirement and the ability to submit notices of exempt solicitation, and shortening the minimum broker search period from 20 business days to five business days. SEC Chairman Paul S. Atkins said the proposals reflect two of his highest regulatory priorities: ensuring the commission does not improperly intrude into state corporate law when applying the federal securities laws, and updating the commission's rules to reflect developments in market practice and technology since the rules' adoption or last amendment. The public comment periods for the proposals will be open for 60 days after publication of the proposed releases in the Federal Register.
