The Dialectical Regulation of Rule 14a-8: Intersystemic Governance in Corporate Law

Securities Law Review, Vol. 40, 2008

Journal of Business & Technology Law, Vol. 2, p. 165, 2007

Emory Law and Economics Research Paper No. 08-28

Emory Public Law Research Paper No. 08-39

20 Pages Posted: 17 Apr 2008  

Robert B. Ahdieh

Emory University School of Law

Abstract

In recent years, Rule 14a-8 of the Securities Exchange Act - first adopted more than sixty years ago to increase shareholder participation in corporate governance - has been the subject of a flurry of litigation, scholarly analysis, and SEC rulemaking. Most recently, following several years of debate, the SEC issued a significant clarification of the rule, reversing the Second Circuit's hotly contested interpretation of it in AFSCME v. AIG. For the most part, the debates surrounding Rule 14a-8 - including in the latter case - have focused on the scope of the rule's exceptions. This paper, selected for reprinting in the Securities Law Review's forthcoming volume of the year's top securities law articles, attempts to go beyond those exceptions, to suggest a fundamental rethinking of the nature and operation of the rule.

Specifically, the paper explores Rule 14a-8 as an occasion for what I have termed "intersystemic governance" - an embrace of cross-jurisdictional overlap and engagement in regulatory design and function. In its very structure, thus, Rule 14a-8 calls on the SEC to interpret and apply state law. Properly utilized, this scheme offers an opportunity for the development of regulatory norms that meaningfully integrate both federal and state values of corporate governance and shareholder participation. To this end, among other reforms, I propose a shift in the SEC presumptions applicable to no-action letters, praise Delaware's recent constitutional amendment to permit SEC certification of questions to the Delaware courts, and highlight various opportunities for heightened discourse. By means such as these, a more integrated - and ultimately more efficient - regime of shareholder participation may begin to emerge.

Keywords: intersystemic governance, dialectic, pluralism, Rule 14a-8, shareholder, voting, proxy, ordinary business, no-action letter, certification, state law, AFSCME

JEL Classification: D73, G18, G38, H77, K22

Suggested Citation

Ahdieh, Robert B., The Dialectical Regulation of Rule 14a-8: Intersystemic Governance in Corporate Law. Securities Law Review, Vol. 40, 2008; Journal of Business & Technology Law, Vol. 2, p. 165, 2007; Emory Law and Economics Research Paper No. 08-28; Emory Public Law Research Paper No. 08-39. Available at SSRN: https://ssrn.com/abstract=1121427

Robert B. Ahdieh (Contact Author)

Emory University School of Law ( email )

1301 Clifton Road
Atlanta, GA 30322
United States
404-727-4924 (Phone)
404-727-6820 (Fax)

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