The Scope of the SEC's Authority Over Shareholder Voting Rights
Stephen M. Bainbridge
University of California, Los Angeles (UCLA) - School of Law
UCLA School of Law Research Paper No. 07-16
At a May 2007 Roundtable on The Federal Proxy Rules and State Corporation Law, the Securities and Exchange Commission posed the following question for discussion: What should be the relationship of federal and state law with respect to shareholders' voting rights and ability to govern the corporation? To answer that question, this essay reviews the legislative history of Section 14(a) and of the Securities Exchange Act generally, as well as the leading judicial precedents. It concludes that, as a general rule of thumb, federal law appropriately is concerned mainly with disclosure obligations, as well as procedural and antifraud rules designed to make disclosure more effective. In contrast, regulating the substance of corporate governance standards is a matter for state corporation law.
The author was an invited panelist at the May 7th Roundtable and submitted this essay as his written comments.
Number of Pages in PDF File: 22
Keywords: shareholders, stockholders, voting rights, SEC, securities, federalism, competitive federalism, proxy voting, proxies
JEL Classification: K22
Date posted: May 14, 2007