SEC Proposes Major Proxy Rule Changes–The SEC just announced two proxy‑rule proposals that could reshape the governance landscape for all US issuers and fundamentally change how shareholder proposals are submitted, how they’re included in proxy materials, and how those proposals will be voted upon. The SEC’s September 16th proposal would eliminate Rule 14a‑8 entirely, removing the federal obligation to include shareholder proposals in proxy materials. Instead, companies would rely on state corporate law, company bylaws or charter provisions to determine if it would include a proposal in its proxy statements. The companion proposal, which includes amendments to Rule 14a‑4(c), addresses how companies may vote proxies on proposals not included in the proxy statement. Today, companies have limited ability to vote proxies on shareholder proposals introduced from the floor at the annual meeting. The SEC’s proposal would expand companies’ discretionary voting authority, allowing them to vote on proposals excluded from the proxy materials. Proxy cards would also need a new opt‑out checkbox enabling shareholders to prevent discretionary voting. The proposed rescission of Rule 14a‑8 and the expansion of discretionary voting authority under Rule 14a‑4(c) represents a major change in the shareholder-proposal process. If approved, the changes are expected to reduce compliance requirements for all issuers, but the greatest relief would be felt by micro‑ and small‑cap companies that often operate with leaner governance and compliance resources. However, it may also create a patchwork of standards across states, leaving smaller issuers to navigate inconsistent rules and potentially revise governing documents to clarify how proposals will be handled. Shareholder proposals are formal requests submitted by investors asking a company to take specific action on an item of interest, such as adopting a governance policy. Under current federal rules, these proposals must be included in the company’s proxy statement — the document shareholders use to cast votes before the annual meeting. This inclusion requirement, established under Rule 14a‑8, ensures shareholders can vote on proposals even if they do not attend the meeting in person. In announcing the proposals, SEC Chair Paul Atkins said, “Today’s proposals demonstrate my focus on ensuring that the Commission’s rules are within the agency’s statutory authority and reflect policy positions grounded in current and anticipated market practice and modern technologies.” In addition, the SEC separately proposed rule amendments to modernize the proxy solicitation process. Reflecting advancements in technology and current realities of shareholder communications, those amendments would:
The public comment period for the proposals will remain open for 60 days following the publication of the proposals in the Federal Register. For more information: SEC Chair Atkins’ statement: SEC ReviewNYSE’s Bid to Delay Internal Audit RequirementsThe public comment period has closed on a closely watched New York Stock Exchange (NYSE) proposal that would give newly listed companies up to five years to establish an internal audit function, replacing the current one‑year requirement. The SEC now moves into the review phase. The NYSE said that the extended timeline would ease compliance burdens for emerging companies entering public markets, particularly those with small finance teams and limited resources. Many new issuers struggle to build a fully functioning internal audit department within 12 months of an IPO, the exchange says, and a five‑year phase‑in would allow companies to scale controls as their operations grow. The NYSE frames the proposal as a modernization effort that aligns listing standards with the realities of today’s capital‑raising environment. In its filing with the SEC, the NYSE said: “the Exchange notes that Nasdaq Stock Market (“Nasdaq”) does not require companies listed on that exchange to maintain an internal audit function. Given that a company could list on Nasdaq without any internal audit function at all, the Exchange does not believe that providing an extended transition period for its internal audit function should raise concern.” Regardless, opposition to the proposal has been strong, particularly among various investor protection groups, including the Institute of Internal Auditors (IIA) which has urged the SEC to reject the proposal, warning that allowing companies to go five years without an internal audit function would expose investors to heightened risks. In its comment letter to the SEC, the IIA said the internal audit requirement “has provided an important safeguard for investors in newly listed companies for more than two decades.” It added that weakening requirements for newly listed companies would undermine market integrity and reduce oversight at a time when companies are most vulnerable to control failures. The association emphasized that internal audit plays a central role in detecting fraud, strengthening internal controls, and supporting accurate financial reporting; functions it says should be in place from the moment a company goes public. Governance groups and investor‑protection advocates echoed the IIA’s concerns, warning that the proposal could create a two‑tiered system in which newer public companies operate with significantly weaker oversight. For more information: AND https://www.sec.gov/files/rules/sro/nyse/2026/34-106128.pdf Blockchain goes MainstreamTokenized Stock Trading AdvancesThe SEC on September 17th issued an order granting temporary, conditional exemptive relief to Tokenized Securities Venues (TSVs) from the definition of “exchange” in the Securities Exchange Act of 1934. This allows TSVs to trade tokenized National Market System (NMS) stock using innovative permissioned automated market makers and liquidity pools. It is the SEC’s most significant step in its goal of integrating blockchain‑based securities into mainstream markets. The decision establishes a five‑year “Innovation Exemption” that lifts certain regulatory barriers and permits authorized TSVs to trade digital tokens that represent fully regulated shares of public companies. Under the new framework, trading venues may list tokenized versions of a company’s shares once they meet the conditions of exemption. For third‑party tokenized stocks, however, venues must provide the issuing company 30 days notice before trading begins. If the company objects, the venue must halt the offering. All platforms operating under the exemption must use automated market makers, enabling continuous trading against on‑chain liquidity pools. The SEC stressed that permitted tokens must carry the same shareholder rights as traditional stock, including dividends and proxy voting. The decision follows a major July pilot by the Depository Trust & Clearing Corp., where nearly 40 financial institutions, including JPMorgan, Goldman Sachs, BlackRock and the NYSE, tested tokenizing stocks and Treasurys for live settlement. The trial demonstrated how digital “twins” of securities could streamline collateral transfers and accelerate settlement, with potential benefits for thinly traded micro‑ and small‑cap stocks. Not all market participants support the SEC’s move toward tokenization. Citadel Securities objected to the use of innovation exemptions, arguing the agency should rely on a full notice‑and‑comment process to address concerns about fair access and regulatory consistency. In announcing the Order, SEC Chair Paul Atkins said: “Earlier this week, Congress was unsuccessful in advancing the CLARITY Act despite the tireless efforts of many. So today, the Securities and Exchange Commission is taking a significant step forward, within its statutory authority, to bring America’s capital markets into the digital age by facilitating onchain trading of certain tokenized stocks through the Innovation Exemption.” The exemptions take effect immediately, opening the door to 24/7 tokenized‑equity markets and signaling a new phase in the modernization of US securities trading. For more information: Europe’s Annual Peak in Beer-Tax RevenueIf you’re heading to Europe for Oktoberfest this year, you might want to choose your destination based on something far more sobering than the beer selection: the beer tax. According to a new Tax Foundation analysis of beer excise taxes across the EU, governments are poised to collect their annual peak in beer‑tax revenue just as millions of revelers lift their steins. However, your stein‑lifting experience could vary wildly depending on how enthusiastically a country taxes your brew. Finland, for example, continues its 7-year running streak as the #1 spot for the highest beer tax in the EU. It is followed by the UK, Ireland, Sweden, and Estonia. Meanwhile, Bulgaria levies the lowest tax per bottle of beer, followed by Germany and Luxembourg making those destinations ideal for anyone who prefers their Oktoberfest celebrations with more drinking and less contributing to government coffers. So, before you book that flight for the ultimate Bierfeste, you might want to check the beer-tax rates. Oh… and don’t forget that EU countries also levy a value-added tax (VAT) as a percentage of the sales price, which is separate and additional to the excise taxes. Prost! For more information: |
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