Dealing with SEC changes and universal proxy
What should IROs have their eye on when it comes to activism in the future? While sector vulnerability, macro trends or external factors will always be on the radar, Laura Turano of Paul Weiss and Okapi’s Bruce Goldfarb point to some potential big-picture shifts on the horizon, such as the SEC’s proposed changes to the 13D and 13G disclosure rules.
‘If these were to pass, they would be the most significant changes to beneficial ownership reporting in decades,’ Turano says. ‘The rules would accelerate reporting deadlines and account for derivative holdings.’
Goldfarb adds that ‘any change to the definition of what constitutes beneficial ownership or group formation may be game changing. Beyond that, any items that require more granular disclosure on the company side give activists more insight and allow them to examine companies on a peer-by-peer basis, which can help them to identify companies that are outliers in terms of performance and disclosure.’
Then there’s universal proxy, which came into effect last year, though Goldfarb says that so far, the biggest impact has been ‘a fear of the unknown, which has led to fewer campaigns that have gone to a vote than we have seen in previous years.’
He adds that while the basis on which campaigns are run doesn’t appear to have changed yet, ‘we are talking with investors that are considering campaigns they wouldn’t have contemplated without universal proxy.’
