Pour une gouvernance créatrice de valeurs®

For more than a decade, the SEC has been wrestling with whether and how to regulate the activities of the proxy advisory firms—principally ISS and Glass Lewis—that have come to play such an important role in shareholder voting at U.S. public companies. On July 22, 2020, the SEC adopted rules and interpretive guidance that, together, are probably as far as it will go. Very generally, the main impact of last week’s actions is that, beginning in the 2022 proxy season:
(1) When a proxy advisory firm gives its clients voting advice about a typical shareholders’ meeting, it will have to provide the advice simultaneously to the company.
(2) In case the company decides to respond to the proxy voting advice, the proxy advisory firm will need to develop procedures to alert its clients to the company’s response before the vote is cast.
(3) If the client is a registered investment adviser, it will need to have procedures to consider any company response. [...]
Critics of the proxy advisory firms—already disappointed by the November 2019 proposal—will not be satisfied. On the other hand, the firms themselves and institutional investors, who generally opposed the proposal, were hoping it would be cut back further, or perhaps that it would expire unadopted in the peculiar circumstances of 2020. But now the current SEC has given the topic its best shot, and in the complicated eco-system that connects a public company with its shareholders—where asset managers play a decisive role and rely heavily on proxy advisory firms—this will provoke some adjustments but not fundamental change.

As a legal person or entity, a corporation is the repository of rights and duties in its own name. It is legally separate from its shareholders and managers. Current legal and economic scholarship views asset partitioning—the separation between the assets of the corporation and those of its shareholders—as the essential economic role performed by legal personality. The law also recognizes exceptions to asset partitioning and provides for “departitioning remedies,” of which veil piercing is the most prominent. Through veil piercing, courts overcome the attribute of limited liability to hold shareholders liable for corporate debts in certain circumstances.