Legacy Management Consulting Group LLC Bulletin: SEC Adopts New Rules on Shareholders Vote for Board

Aug. 26, 2010 - PRLog -- "The SEC has now approved changes that will make it easier for shareholders to nominate directors to a company's board." stated Dominick Sartorio, Director of New Business at Legacy Management Consulting Group LLC. Under these adopted changes, shareholders will be eligible to have their nominees included in proxy materials if they own at least 3 percent of the company's shares continuously for at least the prior three years. It is important to note that these shareholders will not be able to borrow stock to meet this minimum 3 percent level. Additionally, these same shareholders will have to certify, in writing, that they do not intend to use these newly adopted rules to change control of the company or to gain more than one nominee, or a number of nominees that represents up to 25 percent of the company's board of directors, whichever is greater. These groups will now be allowed to put their nominees for board seats on the annual proxy ballot sent to all shareholders.
"Under the current system, investors must pursue, inform and appeal to shareholders at their own expense if they ever wished to nominate new directors for seats on a board." stated Anthony Urbano, Principal at Legacy.  The new Dodd-Frank Wall Street Reform and Consumer Protection Act formally gives the SEC authority to make these changes.
The SEC hasn't  made any real in depth reviews of the proxy system in many years. Over those years, and more so now in recent times, there have been numerous changes in technology, information gathering and accessibility, shareholder demographics, shareholder structure and the economic climate overall that would warrant such reform.
"As a matter of fairness and accountability, long-term significant shareholders should have a means of nominating candidates to the boards of the companies that they own," said SEC Chairman Mary L. Schapiro in a released statement. "Nominating a director candidate is not the same as electing a candidate to the board. I have great faith in the collective wisdom of shareholders to determine which competing candidates will best fulfill the responsibilities of serving as a director. The critical point is that shareholders have the ability to make this choice."


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The information contained herein was prepared by Legacy Management Consulting Group, LLC from public documents for general informational purposes.  Its contents should not be construed as professional advice, and readers should not act upon the information contained herein without consulting a professional.  This information is presented without any representation or warranty as to its accuracy, completeness or timeliness.  Transmission or receipt of this information does not create any relationship with Legacy Management Consulting Group, LLC.  Electronic mail or other communications with Legacy Management Consulting Group, LLC cannot be guaranteed to be confidential and will not imply nor create any relationship with Legacy Management Consulting Group, LLC.

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