ABA Committee Report on Shareholder Access

The American Bar Association Committee on Corporate Laws announces that it

"in December 2009 adopted amendments to the Model Business Corporation Act regarding proxy access for director nominations and reasonable reimbursement for shareholder expenses incurred in proxy contests for director elections." The press release continues: 

These amendments expressly provide a vehicle for the directors or shareholders of corporations in Model Act states to establish their own procedures, through their corporation’s bylaws, to allow shareholder access to the corporation’s proxy statement to nominate directors and to allow shareholders to be reimbursed for reasonable expenses incurred in connection with proxy contests for director elections.  The December 2009 press release announcing adoption of the amendments and a copy of the amendments is available by clicking here.

 

The Report just issued describes the committee’s deliberations and conclusions concerning the roles of board of directors and shareholders of publicly-owned companies.  In particular, the committee reaffirmed its view that centralized management under the board of directors maximizes corporations’ ability to contribute to long-term wealth creation.  The Report also reflects the committee’s belief that shareholders should have a process by which they can participate in a meaningful way in the selection of directors.  This belief forms the foundation for the committee’s recent proxy access amendments to the MBCA which enables companies and their shareholders to private order on a company-by-company basis how they will address this issue.

 

Herbert S. Wander, the committee’s chair, noted, “The committee believes that this Report will be helpful to the corporate governance community in understanding the reasons for the recent amendments to the MBCA, the committee’s emphasis on centralized management under a board of directors, the importance of state corporate law and private ordering and the committee’s future agenda.”

 

The Report also sets forth the committee’s views on communications among board of directors and addresses certain issues regarding shareholder roles and responsibilities.  A copy of the Report is available by clicking here.

 

I am less enthusiastic than some Committee members about expanded shareholder rights, but I commend the Committee for focusing on the need to