SEC Modernizes Shareholder Proposal Rule
September 23, 2020
The SEC has issued a final rule, Procedural Requirements and Resubmission Thresholds Under Exchange Act Rule 14a-8. The final rule amends:
- Procedural rules related to the “current ownership requirements to incorporate a tiered approach that provides three options for demonstrating a sufficient ownership stake in a company — through a combination of amount of securities owned and length of time held — to be eligible to submit a proposal; require certain documentation to be provided when a proposal is submitted on behalf of a shareholder-proponent; require shareholder-proponents to identify specific dates and times they can meet with the company in person or via teleconference to engage with the company with respect to the proposal; and provide that a person may submit no more than one proposal, directly or indirectly, for the same shareholders’ meeting.”
- Resubmission thresholds by revising “the levels of shareholder support a proposal must receive to be eligible for resubmission at the same company’s future shareholders’ meetings from 3, 6, and 10 percent to 5, 15, and 25 percent, respectively.”
For more information, see the press release and statements by SEC Chairman Jay Clayton and Commissioners Elad L. Roisman, Hester M. Peirce, Allison H. Lee, and Caroline A. Crenshaw on the SEC’s Web site.