TheCorporateCounsel.net Blog

The Practical Corporate & Securities Law Blog

Broc Romanek and Dave Lynn are Editors of TheCorporateCounsel.net

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SEC Adopts Rules to Facilitate Shareholder E-Forums: My Ten Cents (Sorta)

As noted in this press release and Corp Fin Staff statement, the SEC also voted to amend the proxy rules to facilitate the use of electronic shareholder forums. The rules enable participation in an electronic shareholder forum, which could potentially constitute a solicitation subject to the current proxy rules, to be exempt from most of the proxy rules if the exemption conditions are satisfied. Here is a statement from Chairman Cox.

What does this mean? The demise of the traditional annual meeting? No more shareholder proposals (the rule itself doesn't prohibit proposals, but maybe shareholders will find better avenues for their concerns and wishes)? Or will nothing happen? With Web 2.0 in its infancy, I think it's too soon to tell what the future holds.

Borrowing very liberally from Gary Lutin (who has done a related podcast described below), here is a 10,000 feet level perspective on how e-forums might work effectively:

- The nature of a forum process depends on the issue or agenda that's defined, and on who's attracted to participate. If a genuinely open forum is established to address value issues, I think it will attract a fairly broad range of "mainstream" investors interested in how management will make the company successful.

- Rather than a narrow constituency that's attracted to protest rallies, corporate managers can - and should - make effective use of the "forum" processes themselves to define issues, rather than simply respond once someone else has defined an issue.

- A genuinely open forum can actually be a very effective means for management to understand and respond to investor concerns, assuming one defines the agenda properly and keeps it on track.

The Future? Independent Shareholder Forums

Quite an interesting person with some great ideas - and who has executed some of these ideas! (that's the hard part) - Gary Lutin, CEO of Lutin & Company and Founder of ShareholderForum.com, shares some insight into how an independent shareholder forum works in this podcast, which includes discussion on:

- What is ShareholderForum.com?
- How do the shareholder forums work?
- Can you describe what happened recently with the forum devoted to Verizon?
- What should be the goals of independent shareholder forums?

- Broc Romanek