The SEC has adopted rules enabling institutional shareholders of listed companies to include their own nominees for the company’s board on the proxy materials sent annually to the shareholders. The new rules follow the Dodd-Frank Act, a financial reform act which became law in the US this summer. To be eligible for this ‘proxy access’ a stake of at least 3% must be held. The rules apply to US-listed companies where 50% of the shares are held by US residents and:
- the majority of the directors are US citizens or residents,
- more than 50% of the assets are situated in the US, or
- the business is managed mainly from the US.
The rules do not apply to companies that qualify as foreign private issuers.