John E. Sorkin, Abigail Pickering Bomba, Steven Epstein, Jessica Forbes, Peter S. Golden, Philip Richter, Robert C. Schwenkel, David Shine, Arthur Fleischer and Gail Weinstein
To provide an overview of the guidance for proxy firms and investment advisers included in the Staff Legal Bulletin released this year by the Securities and Exchange Commission…
Abstract
Purpose
To provide an overview of the guidance for proxy firms and investment advisers included in the Staff Legal Bulletin released this year by the Securities and Exchange Commission (SEC) after its four-year comprehensive review of the proxy system.
Design/methodology/approach
Discusses briefly the context in which the SEC’s review was conducted; the general themes of the guidance provided; the most notable aspects of the guidance; and the matters that were expected to be, but were not, addressed by the SEC.
Findings
The guidance does not go as far in regulating proxy advisory firms as many had anticipated it would. The key obligations specified in the guidance are imposed on the investment advisers who engage the proxy firms. The responsibilities, policies and procedures mandated do not change the fundamental paradigm that has supported the influence of proxy firms – that is, investment advisers continue to be permitted to fulfill their duty to vote client shares in a “conflict-free manner” by voting based on the recommendations of independent third parties, and continue to be exempted from the rules that generally apply to persons who solicit votes or make proxy recommendations.
Practical implications
The SEC staff states in the Bulletin that it expects that proxy firms and investment advisers will conform to the obligations imposed in the Bulletin “promptly, but in any event in advance of [the 2015] proxy season.”
Originality/value
Practical guidance from experienced M&A lawyers.
Details
Keywords
Abigail Pickering Bomba, Steven Epstein, Philip Richter, David Shine, John E. Sorkin and Gail Weinstein
To inform on recent developments in shareholder activism, a phenomenon well-documented in North America and Europe and now spreading to Latin America, and summarize the key…
Abstract
Purpose
To inform on recent developments in shareholder activism, a phenomenon well-documented in North America and Europe and now spreading to Latin America, and summarize the key considerations for corporate boards.
Design/methodology/approach
The article discusses a recent development involving Cartica Capital, a USA hedge fund and minority shareholder in CorpBanca, a Chilean bank pursuing a merger with Itau Unibanco Holding SA, Latin America’s biggest bank by market value, Cartica.
Findings
Shareholder activism will continue to be an expanding global phenomenon.
Practical implications
Boards must continue to plan accordingly when structuring a strategic transaction, both in and outside the USA market.
Originality/value
Practical overview of recent developments in shareholder activism with a review of the key considerations for practitioners.