Shareholder Proposal Rules and Practice: Evidence from a Comparison of the United States and United Kingdom

American Business Law Journal

Volumn 49, Issue 4, 2012, Pages 739-803

  Buchanan, Bonnie G ^a   Netter, Jeffry M ^b   Poulsen, Annette B ^b   Yang, Tina ^c  

^a SEATTLE UNIVERSITY   (United States)

^b UNIVERSITY OF GEORGIA   (United States)

^c Villanova School of Business   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 84869832911     PISSN: 00027766     EISSN: 17441714     Source Type: Journal    
DOI: 10.1111/j.1744-1714.2012.01141.x     Document Type: Article

References (81)

1. Aaron A. Dhir, Realigning the Corporate Building Blocks: Shareholder Proposals as a Vehicle for Achieving Corporate Social and Human Rights Accountability, 43 Am. Bus. L.J. 374, 374-412 (2006).
2. To gain historical perspective of U.S. shareholder activism, see generally 25 for 25: Observations on the Past, Present, and Future of Corporate Governance (ISS 2011), available at http://www.rhsmith.umd.edu/cfp/pdfs_docs/commentary/ISS.pdf (compiling essays and articles on corporate governance topics and issues); Stuart L. Gillan & Laura T. Starks, The Evolution of Shareholder Activism in the United States, 19 J. Applied Corp. Fin. 55 (2007) (discussing the role of activism in corporate governance); Stewart J. Schwab & Randall S. Thomas, Realigning Corporate Governance: Shareholder Activism by Labor Unions, 96 Mich. L. Rev. 1018 (1998) (describing the early history of U.S. shareholder proposals).
3. For arguments in favor of shareholder empowerment, see, for example, Lucian Arye Bebchuk, The Case for Increasing Shareholder Power, 118 Harv. L. Rev. 833 (2005) [hereinafter Bebchuk, Shareholder Power]; Lucian A. Bebchuk, Essay, The Myth of the Shareholder Franchise, 93 Va. L. Rev. 675 (2007) [hereinafter Bebchuk, Shareholder Franchise]. For arguments against shareholder empowerment, see, for example, Stephen M. Bainbridge, Director Primacy: The Means and Ends of Corporate Governance, 97 Nw. U. L. Rev. 547 (2004) [hereinafter Bainbridge, Director Primacy]; Stephen M. Bainbridge, Director Primacy and Shareholder Disempowerment, 119 Harv. L. Rev. 1735 (2006) [hereinafter Bainbridge, Shareholder Disempowerment]; Lynn A. Stout, Essay, The Mythical Benefits of Shareholder Control, 93 Va. L. Rev. 789 (2007); Leo E. Strine, Jr., Toward a True Corporate Republic: A Traditionalist Response to Bebchuk's Solution for Improving Corporate America, 119 Harv. L. Rev. 1759 (2006).
4. 417 C.F.R. § 240.14a-11 (2010), vacated by Business Roundtable v. SEC, 647 F.3d 1144 (D.C. Cir. 2011).
5. Div. of Corp. Fin., SEC, Staff Report: Review of the Proxy Process Regarding the Nomination and Election of Directors 2-5 (2003) [hereinafter SEC Proxy Report], available at http://www.sec.gov/news/studies/proxyreport.pdf.
6. Facilitating Shareholder Director Nominations, Securities Act Release No. 9046, Exchange Act Release No. 60, 089, Investment Company Act Release No. 28, 765, 74 Fed. Reg. 29, 024, 29, 025-26 (proposed June 10, 2009) (to be codified at 17 C.F.R. pts. 200, 232, 240, 249, 274
7. Kathleen L. Casey, Comm'r, SEC, Statement at Open Meeting to Adopt Amendments Regarding Facilitating Shareholder Director Nominations (Aug. 25, 2010) (transcript available at http://www.sec.gov/news/speech/2010/spch082510klc.htm); see also Jessica Holzer & Dennis Berman, Investors Gain New Clout, Wall St. J. (Aug. 26, 2010, 1:01 PM), http://online.wsj.com/article/SB10001424052748703632304575451572616571774.html.
8. Bus. Roundtable v. SEC, 647 F.3d 1144, 1148 (D.C. Cir. 2011); see also Bus. Roundtable, Securities Act Release No. 9149, Exchange Act Release No. 63031, Investment Company Act Release No. 29465, 2010 SEC LEXIS 32375 (Oct. 4, 2010) (order granting stay); Jessica Holzer, Court Deals Blow to SEC, Activists, Wall St. J., July 23, 2011, at B3.
9. Press Release, SEC, Statement by SEC Chairman Mary L. Schapiro on Proxy Access Litigation (Sept. 6, 2011), available at http://www.sec.gov/news/press/2011/2011-179.htm.
10. See Peter Cziraki etal., Shareholder Activism Through Proxy Proposals: The European Perspective, 16 Eur. Fin. Mgmt. 738 (2010) (studying shareholder proposals in Europe); William Q. Judge etal., Antecedents of Shareholder Activism in Target Firms: Evidence from a Multi-Country Study, 18 Corp. Governance: An Int'l Rev. 258 (2010) (studying the antecedents of shareholder activism of targeted firms located in three common law countries-the United States, United Kingdom, and Australia-and three civil law countries-Japan, Germany, and South Korea-from 2003 to 2007).
11. Pub. L. 107-204, 116 Stat. 745 (2002) (codified in scattered sections of 5, 11, 12, 15, 18, 28, 29, and 49 U.S.C.).
12. Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376 (2010) (codified in scattered sections of the U.S. Code).
13. Fin. Reporting Council, The U.K. Corporate Governance Code (2010), available at http://www.frc.org.uk/getattachment/b0832de2-5c94-48c0-b771-ebb249fe1fec/The-UK-Corporate-Governance-Code.aspx. "The Financial Reporting Council is the UK's independent regulator responsible for promoting high quality corporate governance and reporting to foster investment." About the FRC, Fin. Reporting Counsel, http://www.frc.org.uk/about/ (last visited May 25, 2012); see also infra app. 1.
14. 17 C.F.R. § 240.14a-8; see also Robert B. Thompson & Paul H. Edelman, Corporate Voting, 62 Vand. L. Rev. 129, 143-44 (2009).
15. See, e.g., Lucian Arye Bebchuk, The Case for Shareholder Access to the Ballot, 59 Bus. Law. 43, 64-65 (2003); Lucian Arye Bebchuk & Marcel Kahan, A Framework for Analyzing Legal Policy Towards Proxy Contests, 78 Cal. L. Rev. 1071, 1106-22 (1991).
16. In contested proxy solicitation, dissidents typically seek control of, or some representation on, the board. See Ronald E. Schrager, Corporate Conflicts: Proxy Fights in the 1980s, at 8-15 (1986) (finding that, up to the 1980s, almost all proxy contests concerned the election of directors); infra tbl.7. Therefore, if a proposal is passed, it generally becomes binding as the dissidents are able to directly influence board decisions. See generally J. Harold Mulherin & Annette B. Poulsen, Proxy Contests and Corporate Change: Implications for Shareholder Wealth, 47 J. Fin. Econ. 279 (1998) (studying the wealth effect of proxy contests from 1979 to 1994).
17. See Clifford Chance LLP, Shareholder Requisitioned Meetings And Resolutions 2, 4 (2007), available at http://www.sec.gov/comments/4-537/4537-15.pdf.
18. Diane Del Guercio & Jennifer Hawkins, The Motivation and Impact of Pension Fund Activism, 52 J. Fin. Econ. 293, 308 (1999); Jonathan M. Karpoff etal., Corporate Governance and Shareholder Initiatives: Empirical Evidence, 42 J. Fin. Econ. 365, 388 (1996).
19. See infra Part VI.A for more detail on the prior studies of long-term performance impact of shareholder proposals.
20. Doron Levit & Nadya Malenko, Nonbinding Voting for Shareholder Proposals, 66 J. Fin. 1579 (2011).
21. Milton Harris & Arthur Raviv, Control of Corporate Decisions: Shareholders vs. Management, 23 Rev. Fin. Stud. 4115 (2010).
22. See generally Rafael La Porta etal., Legal Determinants of External Finance, 52 J. Fin. 1131, 1150 (1997); Rafael La Porta etal., Law and Finance, 106 J. Pol. Econ. 1113, 1155 (1998).
23. For statistics on U.K. institutional ownership, see UK Office For Nat'l Statistics, Share Ownership: A Report on Ownership of Shares as at 31st December 2004 (2005), available at http://www.ons.gov.uk/ons/rel/pnfc1/share-ownership-share-register-survey-report/2004/index.html (click on "Share Register Survey Report, Share Ownership, 2004"). For statistics on U.S. institutional ownership, see Laura T. Starks, PowerPoint Presentation to the FMA Doctoral Seminar: The Influence of Institutional Investors on Financial Markets Through Their Trading & Governance Monitoring, at slide 3 (Oct. 17, 2007), available at http://69.175.2.130/~finman/FMAOnline/Fall2008/LauraStarks.ppt.
24. See Marc Goergen & Luc Renneboog, Strong Managers and Passive Institutional Investors in the UK, in The Control of Corporate Europe 259, 262 ( Fabrizio Barca & Marco Becht eds., 2d ed. 2002); Julian Franks etal., Who Disciplines Management in Poorly Performing Companies?, 10 J. Fin. Intermediation 209, 218 (2001) (evaluating the role of five parties-large blockholders, acquirers of new blocks, bidders in takeovers, nonexecutive directors, and investors-in disciplining management).
25. See Tony Tassell, Investors Face Pressure from Government, Fin. Times, June 4, 2002, at 20.
26. See Willard T. Carleton etal., The Influence of Institutions on Corporate Governance Through Private Negotiations: Evidence from TIAA-CREF, 53 J. Fin. 1335, 1339 (1998); Michael P. Smith, Shareholder Activism by Institutional Investors: Evidence from CalPERS, 51 J. Fin. 227, 231 (1996).
27. See Marco Becht etal., Returns to Shareholder Activism: Evidence from a Clinical Study of the Hermes UK Focus Fund, 22 Rev. Fin. Stud. 3093, 3102 (2009) (studying activism strategies and returns of the Hermes U.K. Focus Fund).
28. Angela Morgan etal., Mutual Funds as Monitors: Evidence from Mutual Fund Voting, 17 J. Corp. Fin. 914, 915 (2011).
29. See Chris Mallin, Financial Institutions and Their Relations with Corporate Boards, 7 Corp. Governance: An Int'l Rev. 248, 248-55 (1999) (examining the role of U.K. institutional investors and their relations with corporate boards).
30. See Deborah A. DeMott, The Figure in the Landscape: A Comparative Sketch of Directors' Self-Interested Transactions, Law & Contemp. Probs., Summer 1999, at 243, 246 (identifying significant divergences between U.S. and U.K. corporate law in the resolution of basic issues in corporate governance).
31. See Jennifer G. Hill, The Rising Tension Between Shareholder and Director Power in the Common Law World, 18 Corp. Governance: An Int'l Rev. 344, 348 (2010) (exploring the rising tension between shareholder and director power in the common law world).
32. Bernard Black etal., Outside Director Liability, 58 Stan. L. Rev. 1055 (2006).
33. John Armour etal., Private Enforcement of Corporate Law: An Empirical Comparison of the United Kingdom and the United States, 6 J. Empirical Legal Stud. 687, 690 (2009).
34. Roberts Daines, Does Delaware Law Improve Firm Value?, 62 J. Fin. Econ., 525, 526 (2001); see also Paul S. Atkins, Comm'r, SEC, Shareholder Rights, the 2008 Proxy Season, and the Impact of Shareholder Activism, Speech at the U.S. Chamber of Commerce (July 22, 2008) (transcript available at http://www.sec.gov/news/speech/2008/spch072208psa.htm).
35. Shareholder Proposals, 72 Fed. Reg. 43, 466, 43, 467 (Aug. 3, 2007).
36. Shareholder Proposals, 17 C.F.R. § 240.14a-8 (2011). Details on substantive bases for exclusion are available at Div. of Corp. Fin., SEC, Staff Legal Bulletin No. 14 (2002), available at http://www.sec.gov/pdf/cfslb14.pdf.
37. See infra Introduction Part B.
38. See Hewlett-Packard Co., Definitive Proxy Statement (Schedule 14A Filing) (Feb. 5, 2002).
39. Companies Act, 2006, c. 46 (U.K).
40. Written consent allows shareholders to take an action that has the same effect as a shareholder vote, but without holding an annual or special shareholder meeting. For example, section 228 of the Delaware General Corporation Law provides that, absent a contrary provision in the certificate of incorporation, any action that may be taken at a shareholder meeting may be taken by a written consent of at least the minimum number of votes that would be necessary to take such action at the meeting in which all shares entitled to vote were present and voting. See Del. Code Ann. tit. 8, § 228 (2009).
41. Quality Dining, Inc., Definitive Proxy Statement (Schedule 14A Filing) (Feb. 8, 2000).
42. Quality Dining, Inc., Preliminary Proxy Statement (Schedule PRE 14A Filing) (Jan. 25, 2000).
43. See Chris Mallin, Institutional Investors and Voting Practices: An International Comparison, 9 Corp. Governance: An Int'l Rev. 118, 122 (2001) (comparing the voting systems in several countries, including the United Kingdom, United States, Australia, and Germany).
44. Norma Cohen, Survey of Pension Fund Investment (16): Investors Urged to Behave Like Owners-Corporate Governance is Taking Hold in the Consciousness of UK Pension Funds, Fin. Times, May 7, 1992, at 8.
45. Jennifer E. Bethel & Stuart L. Gillan, The Impact of the Institutional and Regulatory Environment on Shareholder Voting, Fin. Mgmt., Winter 2002, at 29, 40 (analyzing the institutional and regulatory environment governing shareholder voting).
46. Steve Johnson, Plea for Democracy in Corporate US European Funds are Lobbying for the Rights of Shareholders in American Companies, Fin. Times, Jan. 22, 2007, at 1.
47. IRRC was founded in 1972 as a nonprofit organization to provide research on social and corporate responsibility issues. Laurie S. Wiseberg, North American Human Rights Directory 140 (1984). ISS bought IRRC in 2005. Jeffrey N. Gordon, The Rise of Independent Shareholders in the United States 1950-2005: Of Shareholder Value and Stock Market Prices, 59 Stan. L. Rev. 1465, 1474 n.12 (2007). RiskMetrics bought ISS in 2006. David S. Hilzenrath, Investor Advisor ISS Is Sold to RiskMetrics, Wash. Post, Nov. 2, 2006, at D01.
48. For studies on withdrawn shareholder proposals in the United States, see, for example, Cynthia J. Campbell etal., Current Perspectives on Shareholder Proposals: Lessons from the 1997 Proxy Season, Fin. Mgmt., Spring 1999, at 89, 94.
49. Filings & Forms, SEC, http://www.sec.gov/edgar.shtml (last modified Feb. 21, 2012).
50. The ISS database also contains 109 shareholder proposals requisitioned at twenty-six closed-end funds or unit trusts from 2000 to 2006. We exclude those observations from our study to make the U.K. sample consistent with the U.S. sample. IRRC does not have shareholder proposals submitted to mutual funds. Further, the business nature of mutual funds is fundamentally different from the rest of the sample firms.
51. See, e.g., Kathleen F. Brickley, From Enron to WorldCom and Beyond: Life and Crime After Sarbanes-Oxley, 81 Wash. U. L.Q. 357, 359 (2003).
52. North Fork Bancorporation, Inc., Soliciting Material Pursuant to Rule 14a-12 (Schedule 14A Filing) (Mar. 6, 2000).
53. North Fork Bancorporation, Inc., Definitive Proxy Statement (Schedule 14A Filing) (June 9, 2000); Dime Bancorp, Inc., Notice of Annual Meeting of Stockholders (Schedule 14A Filing) (June 12, 2000).
54. See, e.g., Lucian Arye Bebchuk & Marcel Kahan, A Framework for Analyzing Legal Policy Towards Proxy Contests, 78 Cal L. Rev. 1071 (1990) (discussing legal and institutional factors affecting proxy contests); Lucian A. Bebchuk & Michael S. Weisbach, The State of Corporate Governance Research, 23 Rev. Fin. Stud. 939 (2010); Harry DeAngelo & Linda DeAngelo, Proxy Contests and the Governance of Publicly Held Corporations, 23 J. Fin. Econ. 29 (1989) (studying the outcome and market reaction to proxy contests for board seats); Peter Dodd & Jerold B. Warner, On Corporate Governance: A Study of Proxy Contests, 11 J. Fin. Econ. 401 (1983) (studying the outcome and market reaction to proxy contests); John Pound, Proxy Contests and the Efficiency of Shareholder Oversight, 20 J. Fin. Econ. 237 (1988) (examining restrictions that discourage use of proxy contests to challenge management and transfer corporate control).
55. Paul Myners, Institutional Investment in the United Kingdom: A Review 90 (2001), available at http://archive.treasury.gov.uk/pdf/2001/myners_report.pdf.
56. See Tony Tassell, Investors Face Pressure from Government, Fin. Times, June 4, 2002, at 20; Tony Tassell, Big Investors Pledge to Step Up Activism: Institutional Shareholders in Bid to Avoid Legislation, Fin. Times, Oct. 22, 2002, at 1.
57. Press Release, Dow Jones Factiva Press Release Serv., Call on Labour to Change Shareholder Rules (May 6, 1997) (on file with authors).
58. See Jeffrey Gordon, Proxy Contests in an Era of Increasing Shareholder Power: Forget Issuer Proxy Access and Focus on E-Proxy, 61 Vand. L. Rev. 475, 481-82 (2008) (offering an example of a just-vote-no campaign where Disney CEO and chairman Michael Eisner had more than forty percent of the votes withheld against him in 2004); Diane Del Guercio etal., Do Boards Pay Attention when Institutional Investor Activists "Just Vote No"?, 90 J. Fin. Econ. 84, 86-89 (2008).
59. Martin Conyon & Graham Sadler, Shareholder Voting and Directors' Remuneration Report Legislation: Say on Pay in the UK, 18 Corp. Governance: An Int'l Rev. 296, 301-10 (2010) (studying the determinants of shareholder voting and its relation to CEO pay in the United Kingdom).
60. We classify any shareholder who sponsors more than twenty proposals as individual activist, otherwise as individual occasional. Twenty is the cutoff that we chose based on the frequency distribution of the number of proposals sponsored by individual shareholders in our sample of 3793 proposals. We make three exceptions to this twenty-proposal rule based on the proposing history of a shareholder. They are John Gilbert, John Jennings Crapo, and Charles Miller, who sponsored seventeen, eleven, and nine proposals in our sample, respectively. As an example, John Gilbert (1914-2002), together with his brother Lewis Gilbert, sponsored more than 2000 proposals starting in the 1930s. Based on our classification, we have twelve individual activists. The average number of proposals sponsored by these individual activists is seventy-five, compared to 1.83 by individual occasionals. For more on Ms. Davis, see Evelyn Y. Davis, Editor: Highlights and Lowlights, SEC, http://www.sec.gov/spotlight/proxyprocess/bio052507/eydavis.pdf (last visited May 25, 2012).
61. Lilli A. Gordon & John Pound, Information, Ownership Structure, and Shareholder Voting: Evidence for Shareholder-Sponsored Corporate Governance Proposals, 48 J. Fin. 697 (1993) (studying the impact of information and ownership structure on the voting outcome of shareholder-sponsored governance proposals).
62. Randall S. Thomas & Kenneth J. Martin, The Effect of Shareholder Proposals on Executive Compensation, 67 U. Cin. L. Rev. 1021, 1061 (1999).
63. Joan S. Lublin, "Poison Pills" Are Giving Shareholders a Big Headache, Union Proposals Assert, Wall St. J., May 23, 1997, at C1; Stephen M. Bainbridge, Flanigan on Union Pension Fund Activism, ProfessorBainbridge.com (Apr. 18, 2004, 5:11 PM), http://www.professorbainbridge.com/professorbainbridgecom/2004/04/flanigan-on-union-pension-fund-activism.html.
64. We do not study short-term market reaction because confounding effects make the results from using this event-study approach difficult to interpret. For discussion about this issue, see Diane Del Guercio & Jennifer Hawkins, The Motivation and Impact of Pension Fund Activism, 52 J. Fin. Econ. 293, 325 (1999); Stuart L. Gillan & Laura Starks, Corporate Governance Proposals and Shareholder Activism: The Role of Institutional Investors, 57 J. Fin. Econ. 275, 297-98 (2000).
65. Roberta Romano, Less is More: Making Institutional Investor Activism a Valuable Mechanism of Corporate Governance, 18 Yale J. on Reg. 174, 191-208 (2001).
66. Ernst G. Maug, How Effective is Proxy Voting? Information Aggregation and Conflict Resolution in Corporate Voting Contests (Mar. 25, 1999) (unpublished manuscript), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=157693.
67. Joseph A. Grundfest, The SEC's Proposed Proxy Access Rules: Politics, Economics, and the Law, 65 Bus. Law. 361, 361 (2010).
68. See, e.g., Joseph A. Grundfest, Just Vote No: A Minimalist Strategy for Dealing with Barbarians Inside the Gates, 45 Stan. L. Rev. 857, 865 (1993); Bengt Holmstrom & Steven Kaplan, Corporate Governance and Merger Activity in the United States: Making Sense of the 1980s and 1990s, J. Econ. Persp., Spring 2001, at 121, 121-44; Omesh Kini etal., The Nature of Discipline by Corporate Takeovers, 59 J. Fin. 1511, 1514-16 (2004); Jeffry M. Netter etal., The Rise of Corporate Governance in Corporate Control Research, 15 J. Corp. Fin. 1, 1-9 (2009).
69. See generally Lucian A. Bebchuk etal., What Matters in Corporate Governance, 22 Rev. Fin. Stud. 783 (2009) (investigating the relative importance of twenty-four governance provisions); Olubunmi Faleye, Classified Boards, Firm Value, and Managerial Entrenchment, 83 J. Fin. Econ. 501 (2007) (finding that classified boards destroy firm value and entrench management); Paul Gompers etal., Corporate Governance and Equity Prices, 118 Q. J. Econ. 107 (2003) (studying the relation between stock prices and a governance index constructed using twenty-four governance provisions); Paul Malatesta & Ralph Walkling, Poison Pill Securities: Stockholder Wealth, Profitability, and Ownership Structure, 20 J. Fin. Econ. 347 (1988) (finding that poison pill defenses reduce shareholder wealth and disincentive management).
70. Examples of proposals that might not increase shareholder value include: "Ensure Tobacco Ads Are Not Youth Friendly" (from the U.S. sample) and "Change the Name of the Doug Ellis Stand [stand in a soccer stadium] to an Alternative as Decided on a Poll of Supporters" (from the U.K. sample).
71. Eugene F. Fama & Kenneth R. French, Industry Costs of Equity, 43 J. Fin. Econ. 153, 179 (1997).
72. We calculate industry median by using all firms in the same Fama-French industry as the sample firm. We have balanced five-year, industry-adjusted financial data for 1362 U.S. proposing events.
73. See, e.g., Mark R. Huson etal., Managerial Succession and Firm Performance, 74 J. Fin. Econ. 237, 237-75 (2004).
74. Stephen N. Kaplan & Bernadette A. Minton, How Has CEO Turnover Changed? Increasingly Performance Sensitive Boards and Increasingly Uneasy CEOs 2 (NBER Working Paper No. 12465, 2006), available at http://www.nber.org/papers/w12465.
75. See, e.g., Stephen M. Bainbridge, In Defense of the Shareholder Wealth Maximization Norm: A Reply to Professor Green, 50 Wash. & Lee L. Rev. 1423, 1423-24 (1993); Stephen M. Bainbridge, Director v. Shareholder Primacy in the Convergence Debate, 16 Transnat'l Law. 45, 45 (2002); Lucian Arye Bebchuk & Allen Ferrell, Federalism and Corporate Law: The Race to Protect Managers from Takeovers, 99 Colum. L. Rev. 1168, 1170 (1999); Roberta Romano, Answering the Wrong Question: The Tenuous Case for Mandatory Corporate Laws, 89 Colum. L. Rev. 1599, 1602 (1989).
76. Iman Anabtawi & Lynn A. Stout, Fiduciary Duties for Activist Shareholders, 60 Stan. L. Rev. 1255, 1255 (2008).
77. See, e.g., Iman Anabtawi, Some Skepticism About Increasing Shareholder Power, 53 UCLA L. Rev. 561 (2006).
78. Jennifer Hill, The Rising Tension Between Shareholder and Director Power in the Common Law World, 18 Corp. Governance: An Int'l Rev. 344, 344 (2010).
79. Companies Act 2006, which became effective in October 2008, replaces Companies Act 1985. It makes some material changes to the proxy rules, including making firms, not shareholders, the bearer of the circulation costs. It also provides electronic communication with shareholders. See Companies Act 2006, legislation.gov.uk, http://www.legislation.gov.uk/ukpga/2006/46/contents (last visited Aug. 4, 2012) (providing the full text of Companies Act 2006).
80. Shareholder Proposals, 17 C.F.R. § 240.14a-8 (2011).
81. Bernard S. Black, Shareholder Passivity Reexamined, 89 Mich. L. Rev. 520, 551-53 (1991).