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Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International

Document Type


Publication Date

Winter 2017


Harvard Law School




In 2012, the New York Stock Exchange changed its policies to prevent brokers voting shares on corporate governance proposals where they had not received instructions from beneficial owners. Although the change was intended to protect investors and improve corporate governance, it has had the opposite effect: a significant number of U.S. public companies are no longer able to amend important parts of their corporate charters, despite the support of their boards of directors and overwhelming majorities of shareholders. Their charters are frozen.

This paper provides the first empirical and policy analysis of the broker voting change and its significant unintended consequences. I provide empirical evidence that the broker voting change has resulted in the failure of more than fifty charter amendments at U.S. public companies, despite board approval and overwhelming shareholder support, and that hundreds more companies have their charters frozen as a result of the change. These costs substantially outweigh the negligible benefits of the broker voting change. I compare a number of solutions to address these problems, and identify several that would be preferable to the current approach.


Published as: "Frozen Charters," 34 Yale Journal on Regulation 91 (2017).

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