SEC's Proposed Universal Proxy Ballot

In October 2016, the Securities and Exchange Commission (SEC) proposed changes to the proxy rules. These proposed changes would require all parties to an election contest to use “universal proxy ballots” containing the names of all board nominees. This configuration allows shareholders to vote by proxy for their preferred combination of candidates, as they could if they were attending a meeting in person. The proposal of a universal proxy ballot brings up questions and issues to confront.

Overview of Universal Proxy Ballot Proposal

At the core of the universal proxy ballot proposal is the proposed ballot itself: a single, universal proxy card/voting instruction form (VIF) for elections, to allow shareholders to vote for a combination of individual candidates proposed by management and dissidents, rather than the traditional format that requires shareholders to choose a set of nominees chosen by one group or the other.

The new proposed ballot impacts all parties involved in a proxy event: solicitors, tabulators, proxy agents, issuers, contestants, and shareholders will all face changes.

According to the SEC,

The rules would apply to all non-exempt solicitations for contested elections other than those involving registered investment companies and business development companies. In addition, the proposed rules would require management and dissidents to provide each other with notice of the names of their nominees, establish a filing deadline and a minimum solicitation requirement for dissidents, and prescribe presentation and formatting requirements for universal proxy cards.

Currently, shareholders who vote by proxy cannot vote in the same manner as if they were attending the meeting, because the ballots differ. In person, the ballot contains all the individual nominated candidates for the board of directors; shareholders can pick and choose their votes from both the company’s and the dissident’s nominations. By contrast, proxy voters are presented with one proxy card that contains management’s slate of nominees and proxy statement, and another proxy card that contains the dissident’s slate of nominees and statements. Thus, shareholders can vote on either the company’s or the dissident’s proxy card, but cannot submit votes with a combination of nominees from both cards.

What to Know About Universal Proxy Ballot

To date, there has been much debate and discussion over the proxy ballot proposal. The universal proxy ballot is intended to remove discrepancies in voting options, but it does present new challenges and questions. Some of these unknowns could impact the shareholder.

The new proposal necessitates changes to the mechanics of the proxy voting process. The term “universal proxy ballot” implies that only one proxy card/VIF is mailed, but actually, there will be two cards with the same set of candidates. This is because the SEC will continue to allow each party in a contested election to distribute proxy cards. Policies that were considered but discarded included the registrant distributing the card (which could have resulted in the registrant having an unfair advantage over the vote) and the registrant and dissident distributing an identical card (which would have created disagreements over the presentation of nominees on the card, e.g. order of listing).

In the final proposal, it was decided that management and dissidents will prepare separate solicitations; though there will be separate proxy cards, the universal proxy ballot rules will require the same set of names of nominees. The cards are not likely to be completely visually identical.

Universal proxy cards, no matter which party solicits them, will still be subject to some presentation and formatting requirements that include providing clear instructions to permit shareholders to vote for the nominees they prefer. Proposed Rule 14a-19e covers the requirements for how candidates are listed and in what order, and additional details that must be included on the card.

Universal proxy ballots pose some additional challenges for tabulators, too. For example, the order of the directors and/or proposals on each card could be different, making comparisons more challenging. Additional time may be required to finalize the vote results. Another challenge may lie in situations in which the vote must be recalculated because the dissident’s solicitation did not follow the rules, and those votes would have to be voided.

To avoid issues and prepare for potential challenges, such as a dispute or contrary instructions from management and a dissident, it’s important to work with a trusted partner as proxy agent during the process.

What to Look For in a Proxy Agent

While you’re preparing for the proxy season, whether you’re a broker, corporate issuer, or other firm affected by the proposed universal proxy ballot, it’s important to choose a proxy agent to partner with who has the flexibility and expertise to guide you through the ever-evolving regulatory landscape.

Advanced technology

Technology is key to balancing innovation and compliance. Advanced tools and an integrated technology platform allow you to both keep up with the pace of innovation and continue to meet regulatory requirements, even as those requirements change. You can trust in reliable technology to handle all the variables in the still-developing universal proxy ballot process.


Whether or not the SEC adopts the universal proxy ballot proposal, flexibility is key. Your proxy agent must provide solutions that are flexible enough to meet changing requirements, and provide you with transparency when you need it.


Your proxy agent should provide teams with deep industry expertise to partner with you throughout the process. Experienced, high-touch teams can provide both flexibility and guidance even as requirements change and questions arise.


The universal proxy ballot proposal debate continues. The comment period on the SEC’s proposal will close January 9, 2017. With changes to the administration after the 2016 election, SEC changes could result that impact whether the proposal is finalized, or in what form. Mediant is prepared to provide flexibility and compliance to our clients and partners during proxy season, no matter what happens in the new year.