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Securities Law Techniques
Copyright 2017, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

5-66 Securities Law Techniques 66.syn


Why, When and How To Conduct a Proxy Contest for Corporate Control


Kenneth J. Bialkin;A.A. Sommer, Jr.

Chapter Summary


This chapter from Securities Law Techniques discusses the mechanics of conducting a proxy contest, and identifies the legal and associated issues that must be considered during the contest. It begins with a general introduction to the proxy contest, which contrasts the proxy contest with other takeover techniques, and suggests management responses to stockholder threats. It next discusses the concept of proxy solicitation including the Exchange Act provisions, and the rules and cases promulgated thereunder. The threshold determination of what activity constitutes a solicitation is critical, for a solicitation involving a public corporation triggers compliance with the federal proxy rules, and in many instances requires the preparation of a proxy statement.

The chapter then examines the roles of the experts organized to successfully conduct the proxy contest. These experts include legal counsel, proxy solicitors, and often, public relations and financial advisors. It also discusses the roles of other players, such as inspectors of election, proxy tabulators, brokers, and nominees. In addition, this section of the discussion addresses the concept of the "participant" in a proxy contest, and examines those activities that render players in a proxy contest, "participants."

In addition, the chapter contains detailed information concerning the disclosure obligations imposed on insurgents by the federal proxy rules. Other filing obligations considered include the Exchange Act Schedule 13D, and those under the Hart-Scott-Rodino Antitrust Improvements Act (HSR). It also discusses tactics and strategies employed by insurgents. The methods discussed include the use of a formal stockholder committee, securing necessary funds and manpower, preparing a timetable, obtaining a stockholder list, purchasing stock, commencing litigation, negotiating an agreement for the conduct of the meeting and establishing telegraphic, and other electronic voting procedures.

The chapter also addresses the duties of directors in proxy contests, particularly in relation to timing issues. Accordingly, it highlights advance notice bylaws, which require stockholders to provide the company with advance notice when intending to nominate directors or propose new business at annual meetings. Finally, it discusses what the insurgents can expect in terms of contest expenses, and how the insurgents can obtain reimbursement for their expenses.

Securities Law Techniques (Matthew Bender) provides valuable insight into virtually every area of modern securities practice. Authoritative, practical and well respected throughout the industry, it is valued by securities attorneys at all levels of experience for its sharp insights and strategic focus. It combines the authoritative analysis of a treatise with the "real world" focus of a practice guide.


Securities law,proxy contest for corporate control,corporate control by proxy contest,corporate takeover,Exchange Act Schedule 13D,Hart-Scott-Rodino Antitrust Improvements Act


For examination of Exchange Act registration and deregistration, which is the framework around which an issuer's continuing disclosure obligations are arranged, see Chapter 49, Registration Under the Exchange Act.

For discussion of the various securities laws and regulations that govern the content of each of the methods by which a company can communicate with its shareholders, see Chapter 51, Preparation of Proxy Statements and Annual Reports to Shareholders.

For discussion of initiatives, other than contests for corporate control, undertaken by shareholders for the purposes of influencing management with respect to matters of corporate governance and business policy and strategy, as well as those with respect to more traditional social, political and cultural issues, see Chapter 53, Shareholder Initiatives.

For discussion of the philosophy of the annual meeting, logistics in its preparation, and practical suggestions for conduct of the meeting, including agenda, rules of conduct, voting, ruling on motions and recesses and adjournment, see Chapter 54, Conducting the Annual Meeting.


See Blue Sky Regulation (Matthew Bender) for definitive coverage of all legal and strategic issues central to state securities practice.

For full coverage of The Securities Act of 1933, including discussion of the organization of the SEC, definitions of "security" and "sale," exempted securities and transactions, small issue exemptions, restricted and controlled securities, registration process, registration forms, regulation of investment company securities, The Trust Investor Act of 1939, civil liabilities, and SEC and criminal enforcement, see Federal Securities Act of 1933 (Matthew Bender).

For full coverage of The Securities Act of 1934, including discussions of the organization of the SEC, 1934 registration and reporting requirements, integrated disclosure proxy rules and proxy contests, insider trading and short-swing trading, registration and regulation of securities markets, broker-dealers, transfer agents, clearing agencies, SEC enforcement actions, and private civil liabilities, along with a "black letter law" analysis of the regulations that govern the trading of securities, see Federal Securities Exchange Act of 1934 (Matthew Bender).

For coverage of issues arising in a dispute, and discussion on how to evaluate the merits of a case and how to prepare and present cases to arbitration panels nationwide, including coverage of the emergence of stock analyst cases, waivers of the right to arbitrate, proving and defending clearing firm cases, primers on Statements of Claim, Opening Statements and Summations, the NASD's new default procedures, and expunging an arbitration from a broker's record, see Securities Arbitration Procedure Manual (Matthew Bender).

For thorough guidance on the antitrust, tax, corporate, securities and financial aspects of business combinations, including extensive forms and discussion of issues such as when a merger is anticompetitive under domestic and foreign antitrust laws and Justice Department guidelines and how to comply with the securities law, see Corporate Acquisitions and Mergers (Matthew Bender).

For practical guidance on securities transactions, along with helpful practice and strategic tips, see The Securities Practice Guide (Matthew Bender).
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