Frozen Charters

102 Pages Posted: 11 Feb 2016 Last revised: 3 Jul 2017

See all articles by Scott Hirst

Scott Hirst

Boston University - School of Law; Harvard Law School Program on Corporate Governance

Date Written: February 2017


In 2012, the New York Stock Exchange changed its policies to prevent brokers voting shares on corporate governance proposals where they had not received instructions from beneficial owners. Although the change was intended to protect investors and improve corporate governance, it has had the opposite effect: a significant number of U.S. public companies are no longer able to amend important parts of their corporate charters, despite the support of their boards of directors and overwhelming majorities of shareholders. Their charters are frozen.

This paper provides the first empirical and policy analysis of the broker voting change and its significant unintended consequences. I provide empirical evidence that the broker voting change has resulted in the failure of more than fifty charter amendments at U.S. public companies, despite board approval and overwhelming shareholder support, and that hundreds more companies have their charters frozen as a result of the change. These costs substantially outweigh the negligible benefits of the broker voting change. I compare a number of solutions to address these problems, and identify several that would be preferable to the current approach.

Keywords: Shareholder voting, corporate governance, charter amendment, broker voting

JEL Classification: D22, G34, G38, K22

Suggested Citation

Hirst, Scott, Frozen Charters (February 2017). 34(1) Yale Journal on Regulation 91-166 (2017), Available at SSRN:

Scott Hirst (Contact Author)

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Harvard Law School Program on Corporate Governance ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States

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