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The
new bulletins replace Trump-era guidance that gave companies
more room to toss proposals on hot-button social issues, changes
critics said had aimed to silence investors' voices.
Among other changes, staff now will give more consideration to
the social policy significance of a shareholder proposal and
will recognize "that proposals seeking detail or seeking to
promote timeframes or methods do not per se constitute
micromanagement," or grounds for exclusion, said the bulletin
published by the SEC's Division of Corporation Finance.
"The right to put proposals in front of other shareholders for a
vote is an important part of the securities laws," SEC Chairman
Gary Gensler said in a statement.
"Today’s bulletin will provide greater clarity to companies and
shareholders on these matters, so they can better understand
when exclusions may or may not apply," he said.
Shareholder voting rights have become a major bone of contention
as more investors have pushed companies to take up social and
environmental issues, and drawn more support from top investment
firms.
Under agency rules, shareholders who want to bring a proposal
for a vote must first submit it for a company's proxy statement
- months before the annual meeting itself - and companies often
seek agency permission to skip the proposal. Separate SEC rule
changes from 2020 that raised the share ownership needed to file
a resolution remain in place but face litigation.
Sanford Lewis, director of the Shareholder Rights Group, which
represents socially-minded investment firms that often file
proposals, praised Wednesday's changes.
“They have taken away a bunch of burdensome interpretations that
made it harder, more uncertain and more expensive for
shareholders to file proposals,” he said in an interview.
The two Republican appointees on the five-member commission,
Hester Peirce and Elad Roisman, said in a joint statement that
"The rationale for today’s action is a bit of a mystery," with
the practical effects of the changes unclear.
Sorting out which proposals can be excluded from company proxies
"has long been an insatiable consumer of staff time" at the
agency, the two commissioners wrote, adding that the new
bulletin "does not make their jobs easier."
(Reporting by Katanga Johnson in Washington and by Ross Kerber
in BostonEditing by Michelle Price and Jonathan Oatis)
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