This alert provides an overview of the new Universal Proxy Rules adopted by the SEC in August 2022 and some considerations for companies in view of its implantation. The Rule and its effect on a company’s bylaws are important for any Israeli company that has securities registered under the US Exchange Act or that is contemplating such registration, as well as for any Israeli investors who plan to engage in any shareholder activism or similar campaigns involving any issuer with such registered securities. Such market participants should study the rule and consider its implications for their activities.
The Securities and Exchange Commission (the SEC) Rule 14a-19 (the Rule) requiring use of universal proxy cards in contested director elections became effective August 31, 2022. As envisioned by the Rule, a universal proxy card is a voting proxy that permits stockholders to see and select from a complete list of all nominees in a director election (from both the company’s slate and any “dissident” stockholder-nominated slates). This procedure is inconsistent with the language now commonly seen in many public company bylaws regarding director elections. Public companies with a class of securities registered under Section 12 of the Securities Exchange Act of 1934, and private companies who anticipate going public, should consider the Rule in preparing their advance notice, proxy access, and related bylaws. This GT Alert provides a brief overview of the Rule, certain potential bylaw revisions in view of the Rule, and some practical considerations for such companies.