Fair Investor Access
SEC Support of New Communication Processes
Responsibilities for Issue Definition and Information Access
of the recently reported Forum policies for defining issues relevant to
investor decisions have raised questions
about what should be expected of corporate managers, not only in the issue
definition process itself but also in the related processes of providing
information required to consider the issue. Since a subject company’s
management must be relied upon as the primary source of information,
the integrity of issue definition processes – with or without Forum
support – will necessarily depend on corporate board responsibilities for
“engagement” with investors and for
minimizing manipulation by factional investor interests.
Preliminarily, the questions about a corporate board’s responsibilities
for informed consideration of issues may be summarized as follows:
director has a fiduciary duty to exercise individual judgment about
what will be in the best long term interests of the corporation. This
duty of independent judgment requires being responsibly informed of
investor interests, but does not allow compromising that judgment to
accommodate the interests of any factional investor constituency.
should boards manage constructive communications with investors to
avoid actual or apparent compromises of director duties to the
communications by activists or others seeking support of an issue may
confuse or mislead other investors. While a company and its directors
may not have any responsibility to control the conduct of an
independent investor, it is generally assumed that a company will
actively monitor public reports to assure the integrity of information
that may be relied upon for investment decisions.
should a company’s board assure the reliability of investor
decision-making information independently of any partisan advocacy or
defense of its own positions?
your comments on these and any related considerations of either corporate
or investor responsibilities for informed decisions. We are now trying to
prepare a final program report of consensus views about marketplace
requirements of fair investor access to decision-making information, and
will appreciate your guidance.
August 11, 2014
The Shareholder Forum
Avenue, New York, New York 10022