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14-460: The Williams Act amended the Securities and Exchange Act of 1934 (15 U.S.C. § 78a et seq.) to require mandatory disclosure of information regarding cash tender offers. When an individual, group, or corporation seeks to acquire control of another corporation, it may make a tender offer. A tender offer is a proposal to buy shares of stock from the stockholders for cash or some type of corporate security of

28-626: A dissident form. In 2016, the SEC proposed a rule requiring a "universal" proxy card so that shareholders could vote on a mix of candidates, which as of 2019 had not passed. Prior to 2009, companies in the United States were required to send proxy materials via postal mail, but following a rule change effective in 2009, companies, can handle voting electronically. According to one study, about 31% of voting happened electronically in 2019. One major vendor, Computershare , reported that 27% of votes occurred on

42-432: A proxy access rule. According to one estimate, retail investors voted 46% of the time between 2011 and 2016. According to a 2013 estimate, between 23 and 38% of stocks are held directly, compared to 20% held by mutual funds and 16% held by pensions. When retail investors own stock via investment funds such as mutual funds , the investor cannot vote the shares as the investment manager has that power. Regulation 14A

56-464: The U.S. Securities and Exchange Commission . This statement is useful in assessing how management is paid and potential conflict of interest issues with auditors. The statement includes: SEC proxy rules: The term "proxy statement" means the statement required by Section 240.14a-3(a) whether or not contained in a single document. In many cases, shareholder votes—particularly institutional shareholder votes—are determined by proxy firms which advise

70-608: The SEC the power to regulate the solicitation of proxies, though some of the rules the SEC has since proposed (like the universal proxy) have been controversial. There has been some controversy over "proxy access" which is a method to allow certain shareholders to nominate candidates which appear on the proxy statement. Historically, only the nominating board can place candidates on the proxy statement. Activist investors typically had mailed their own ballots when running competing candidates. The United States Dodd–Frank Wall Street Reform and Consumer Protection Act specifically allowed

84-631: The SEC to rule on this issue. In 2010, the SEC passed a rule which allowed certain shareholders to place candidates on the proxy statement; however, in Business Roundtable v. SEC the rule was struck down by the United States Court of Appeals for the District of Columbia Circuit in 2011. Beginning in 2015, proxy access rules began to spread driven by initiatives from major institutional investors, and as of 2018, 71% of S&P 500 companies had

98-465: The Williams Act has become tricky. This development came to a head in 2008 over the railroad company CSX Corporation . Proxy statement A proxy statement is a statement required of a firm when soliciting shareholder votes. This statement is filed in advance of the annual meeting. The firm needs to file a proxy statement, otherwise known as a Form DEF 14A (Definitive Proxy Statement), with

112-437: The acquiring company. Since the mid-1960s, cash tender offers for corporate takeovers have become favored over the traditional alternative, the proxy campaign . A proxy campaign is an attempt to obtain the votes of enough shareholders to gain control of the corporation's board of directors. Because of abuses with cash tender offers, Congress passed the Williams Act in 1968, whose purpose is to require full and fair disclosure for

126-401: The benefit of stockholders, while at the same time providing the offeror and management equal opportunity to fairly present their cases. The act requires any person who makes a cash tender offer (which is usually 15-20% in excess of the current market price) for a corporation, that is required to be registered under federal law, to disclose to the federal Securities and Exchange Commission (SEC)

140-410: The most part, governed by Rule 452. The SEC approved the rule on July 1, 2009. In July 2010, the SEC announced that it was seeking public comment on the efficiency of the proxy system. In contested elections for the board of directors , shareholders typically have to vote using either the management form ("card") listing management candidates or separately listing the contesting candidates in

154-549: The securities are traded, making the information available to shareholders and investors. The law also imposes miscellaneous substantive restrictions on the mechanics of a cash tender offer, and it imposes a broad prohibition against the use of false, misleading, or incomplete statements in connection with a tender offer. The law gives the SEC the authority to institute enforcement lawsuits. In recent years, as complicated forms of derivatives bearing upon but not actually constituting corporate stock have become common, interpretation of

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168-473: The shareholders. Traditionally, broker-dealers have been permitted to vote for "routine" proposals on behalf of their shareholders if the shareholders do not return the proxy statement. This has been controversial, and in 2006 the NYSE Proxy Working Group recommended that the rules, e.g. Rule 452, be modified so that uncontested director elections were not considered routine. Broker voting is, for

182-511: The source of the funds used in the offer, the purpose for which the offer is made, the plans the purchaser might have if successful, and any contracts or understandings concerning the target corporation. Filing and public disclosures with the SEC are also required of anyone who acquires more than 5 percent of the outstanding shares of any class of a corporation subject to federal registration requirements. Copies of these disclosure statements must also be sent to each national securities exchange where

196-433: The web in 2017. Broadridge is another major vendor. Voting is important for corporate governance , but many of the votes are cast by institutional shareholders, including many who are passive investors. These organizations use proxy advisory firms , notably including Institutional Shareholder Services and Glass Lewis , to help them vote their shares in a responsible way. The Securities Exchange Act of 1934 also gave

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