SEC Proposes Amendments to Shareholder Proposal Rule
On November 5, the SEC proposed amendments to Exchange Act Rule 14a-8, the rule that governs the process for shareholder proposals to be included in a company’s proxy statement.
Among other things, the proposed amendments would:
- Replace the current requirement that a shareholder-proponent have held at least $2,000 or one percent of a company’s securities for at least one year with three alternative thresholds: (i) continuous ownership of at least $2,000 of the company’s securities for at least three years, (ii) continuous ownership of at least $15,000 of the company’s securities for at least two years, or (iii) continuous ownership of at least $25,000 of the company’s securities for at least one year;
- Update the “one proposal” rule to clarify that a single person may not submit multiple proposals at the same shareholder’s meeting, whether the person submits a proposal as a shareholder or as a representative of a shareholder; and
- Increase the levels of shareholder support a proposal must receive to be eligible for resubmission at future shareholder meetings.
The SEC’s press release quotes Chairman Jay Clayton: “Today’s proposed amendments follow from the staff’s extensive experience with shareholder proposals and recognize the significant changes that have taken place in our markets in the decades since these regulatory requirements were last revised … The proposed amendments would facilitate constructive engagement by long-term shareholders in a manner that would benefit all shareholders and our public capital markets.”
The proposal is subject to a 60-day public comment period.