The Collective Action Problem The Number One Problem...

The number one problem effecting shareholders is the collective action problem. This problem can be lessened through the use of proxies, but there are numerous federal proxy rules that must be followed, There are four major elements to these federal proxy rules. (1) Disclosure requirements and a mandatory vetting regime that permit the SEC to assure the disclosure of relevant information and to protect shareholders from misleading communication, (2) Substantive regulation of the process of soliciting proxies from shareholders, (3) a specialized â€Å"town meeting† provision (Rule 14a-8) that permits shareholders to gain access to the corporation’s proxy materials and to thus gain a low-cost way to promote certain kinds of shareholder resolutions, AND (4) A general anti-fraud provision (Rule 14a-9) that allows courts to imply a private shareholder remedy for false or misleading proxy materials. Rule 14a-1 lays out the basic definitions of the terms of the rules to come, with the most important definition being the terms â€Å"solicit or solicitation† which are defined as â€Å"any request for a proxy whether or not accompanied by or included in a form of proxy; Any request to execute or not to execute or to revoke, a proxy; OR The furnishing of a form of proxy or other communication to security holders under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy.† Rule 14a-2 contains a long list of exceptions, which essentially boils downShow MoreRelatedHR as a Source of Shareholder Value2181 Words   |  9 PagesHR as a Source of Shareholder Value Companies with the best people management deliver nearly twice as much value to shareholders as their average competitors - Watson Wyatt Consultants What is HRM ? †¢ Human resource management is the management of an organizations workforce, or human resources. 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