SEC Releases Pro-Issuer Guidance on Shareholder Proposals

By Steve Quinlivan, Cate Heaven Young and Bryan Pitko

The U.S. Securities and Exchange Commission staff’s release of Staff Legal Bulletin No. 14I ahead of the upcoming proxy season appears to reflect several issuer-friendly modifications to the staff’s processing of no-action letters seeking exclusion of shareholder proposals under Rule 14a-8 of the Exchange Act. In particular, SLB 14I addresses the following aspects of the shareholder proposal submission process under Rule 14a-8 that could be viewed as favorable to issuers:

  • Deference to issuers' analyses of significant policy issues under Rule 14a-8(i)(7)'s "ordinary business" exception
  • Expansion of the "economic relevance" exception under Rule 14a-8(i)(5)
  • Additional eligibility requirements for proposals "by proxy" under Rule 14a-8(b)
  • Application of Rule 14a-8(d) to the use of images in shareholder proposals and supporting statements and encouraged reliance on Rule 14a-8(i)(3)’s "false and misleading" standard for exclusion

We have published a comprehensive analysis of the SEC guidance on the Stinson blog

For more information, please contact Steve Quinlivan, Cate Heaven Young, Bryan Pitko or the Stinson Leonard Street contact with whom you regularly work.

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