SEC approves Nasdaq rule amendments regarding annual meetings
By: Cydney Posner
The SEC has approved, on an accelerated basis, Nasdaq's proposal to amend its rule 4350(e) regarding annual shareholders' meetings (see my posting of 6/15/05). The amendments require issuers with listed voting and non-voting common stock and voting preferred stock and their respective equivalents to hold annual meetings within one year after fiscal year-end. This requirement is not applicable to specified other types of securities, such as Trust Preferred Securities, Index Linked Notes and Contingent Value Rights, among others, that do not elect directors or otherwise participate directly as equity owners. As a result, issuers listing these types of securities will still be subject to the annual shareholder meeting requirement if such securities have the attributes of common stock or voting preferred stock or their equivalents. For a new listing that was not previously subject to a requirement to hold an annual meeting, the company is required to hold its first meeting within one year after its first fiscal year-end following listing.
The previous requirement to provide notice of the meeting to Nasdaq has been deleted as unnecessary because Nasdaq verifies compliance by monitoring filed proxy statements. At the meeting, the shareholders must be afforded the opportunity to discuss company affairs with management and, if required by the company's governing documents, to elect directors. Nasdaq previously indicated that it permits the use of webcasts instead of, or in addition to, a physical meeting, provided that the webcasts are permissible under the applicable state law and that shareholders have the opportunity to ask questions of management.