This is the fourth in my series of posts responding to the Securities and Exchange Commission’s recent release proposing to rescind Securities and Exchange Act Rule 14a-8.
The first post gave an overview of the SEC proposal:
My second post addressed the question of whether the SEC had authority to adopt a shareholder proposal rule in the first instance:
The third tackled the basic question: should the rule be repealed? (In short, yes.)
In this post, I take up the claim made by proponents of the rule that it serves “the congressional aim to facilitate ‘corporate democracy.’”1 As the story goes, § “14 of the Securities Exchange Act of 1934 (governing proxies), under which Rule 14a–8 was promulgated, was intended to ‘give true vitality to the concept of corporate democracy.”2
Hence, for example, former SEC Commissioner Caroline Crenshaw has complained that Rule 14a-8 “a preferred punching bag of those who wish to diminish corporate democracy.”
All of which is lousy legal history and worse corporate governance theory.
