The American Bar Association's (ABA) Corporate Laws Committee has declined a request from the Council of Institutional Investors (CII) to revise the Model Business Corporation Act (MBCA) to make majority voting the default legal standard for uncontested director elections.

In an Oct. 25 letter, A. Gilchrist Sparks, chair of the Corporate Laws Committee of the ABA's Business Law Section, said the panel considered the investor group's request but decided that a new review of the MBCA is not warranted "at this time." The MBCA is the basis for the corporate laws of most states besides Delaware. Section 7.28(a) of the MBCA now sets plurality voting as the default standard for director elections unless a company's articles of incorporation call for a different standard.

Sparks pointed out that a significant number of companies have adopted majority threshold provisions since the MBCA was amended in 2006 to encourage issuers to adopt bylaws on this topic. He said the committee "believes that a cautious approach to making changes to the MBCA is prudent," and that the results of the 2006 amendments and related state law changes should continue to be monitored before additional revisions to the MBCA are considered.

While about 70 percent of large-cap U.S. companies have adopted majority threshold provisions and director resignation policies, most mid- and small-cap issuers have not. The CII request to the ABA (along with a similar letter to the Delaware State Bar Association) is among the efforts by majority voting advocates to spur smaller firms to adopt this reform. In May, the United Brotherhood of Carpenters petitioned the SEC to abolish "withhold" votes in an effort to prod more issuers to adopt majority voting bylaws.