The capital markets-related improvements to the Financial CHOICE Act outlined in this newly-released Summary of Bill Changes are largely consistent with the more abbreviated summary of changes set forth in the widely-leaked memo that we reported on in February, inclusive of these points:
- Modernization of the shareholder proposal and resubmission thresholds for inflation (see our earlier reports on calls for shareholder proposal reform here (Manhattan Institute), here (Business Roundtable), and here (Chamber))
- Imposition of term limits on members and the chair/vice chair of the SEC Investor Advisory Committee
- Elimination of the PCAOB's Investor Advisory Committee
- Prohibition on co-conspirators' receipt of a whistleblower award under the SEC Dodd-Frank whistleblower program
- Establishment by the SEC of a committee to evaluate and recommend reforms to its Enforcement policies and practices, and a requirement for the SEC to either codify or report to Congress the basis for not doing so
- Prohibition on the SEC mandating a universal proxy
- Increased threshold for SOX 404 compliance to $500 million market cap or $1 billion in assets for banks
As to shareholder proposals specifically, the forthcoming bill proposes to: (i) change the ownership requirements for submission of a proposal to 1% over a three-year period; (ii) increase the resubmission thresholds consistent with the SEC's 1997 proposal (i.e., 6% on first submission, 15% on second submission, and 30% on third submission); and (iii) prohibit proposal by proxy other than the shareholder.
As previously reported, the House Financial Services Committee initially unveiled the CHOICE Act - characterized as the Republican plan to replace the Dodd-Frank Act and promote economic growth - in June 2016, and formally introduced the bill in the House in September (reported on here). Our prior report here highlighted provisions of particular interest to issuers, which remain largely intact.
House Financial Services Committee Chair Jeb Hensarling reportedly plans to reintroduce the new bill by the end of the month.