General Counsel’s Committee Update

Staff Contact: Heather Briccetti
June 19, 2009

Shareholder/Corporate Governance

Here are two documents:

• The Federal Register notice issued earlier this week from the SEC, and open for public comment through August 17, which propose changes to the federal proxy rules to remove impediments to the exercise of shareholders’ rights to nominate and elect directors to company boards of directors.
•  A copy of Senate Bill 1074 introduced in May by US Senator Schumer whose title is the “Shareholder Bill of Rights Act of 2009”. 

At least one Business Council member has asked for the BC efforts with Senator Schumer opposing S.1074.  The draft regulations also proposed significant changes which may also be opposed by BC members.

It would be helpful to know from the General Counsel Committee whether there is concern about the Schumer bill which they would seek BC advocacy on; and whether or not there is value to having the BC comment on the draft regulations.

State legislative initiatives

• Martin Act Expansion
  The Business Council has issued a memo in opposition to legislation (S.5768 / A.8646)  that would expand securities litigation under the state’s Martin Act  by creating a new private right of action for mutual funds, pension funds, etc. to pursue litigation under the state’s security law, known as the Martin Act.  The legislation would create a private right of action and impose liability for acts of negligence, but would not require that the plaintiff show reliance on the defendant’s conduct.    In addition, the proposal includes a six-year statute of limitations running from the date of discovery rather than the three-year statute generally applicable to negligence claims.  S.5768/A.8646 legislative memo is available here.
• Remote Shareholder Participation
  The Business Council has issued a memo in opposition to legislation (A.1567 / S.5793 ) which would requires certain corporations to permit shareholders to attend Meetings via remote communication and to be deemed present for voting purposes.  A.1567/S.5793 legislative memo is available here.