Corporate governance - Vigil

On November 13th, the Federal Reserve Board (FRB) finalized liquidity reporting requirements for large US financial institutions and US operations of foreign banks (FBOs). [1] The requirements were proposed last year and are intended to improve the FRB’s monitoring of the liquidity profiles of firms that are subject to the liquidity coverage ratio (LCR) [2] and their foreign peers, and to enhance the FRB’s view of liquidity across institutions.

In 2013, I attended the annual Activist Investor Conference in New York, and had the chance to learn from a variety of top North American activists.

On October 27, 2015, the Division of Corporation Finance of the SEC modified Section 201 of its Question and Answer guidance regarding SEC Rule 14a-4(a)(3) to require that if a material amendment to an acquiror’s organizational documents would require shareholder approval under state law, stock exchange rules or otherwise if presented on a standalone basis, if the change is effected by a merger (including a triangular merger) and is required by the transaction documents, the shareholders of both the acquiror and the target company must be given the opportunity to vote on the change in the organizational documents separately from their vote on whether to approve the merger or the merger agreement.

Directors have traditionally been elected by a plurality of the votes cast (the Plurality Voting Rule or PVR). This means that the candidates who receive the most votes are elected, even if a candidate does not receive a majority of the votes cast. Indeed, in uncontested elections, a candidate who receives even a single vote is elected. Proponents of “shareholder democracy” have advocated a shift to a Majority Voting Rule (MVR), under which a candidate must receive a majority of the votes cast to be elected. This, proponents say, will make directors more accountable to shareholders.