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September 10, 2019

SEC Announces Changes to Administration of Shareholder Proposal No-Action Requests


On September 6, 2019, the SEC announced changes to how it will respond to companies that seek to exclude shareholder proposals from their proxy statements under Exchange Act Rule 14a-8. Therehas been no change in the requirement that a company seeking to exclude a shareholder proposal from its proxy statement notify the SEC that it intends to do so (and provide a copy of that notification to the shareholder who submitted the proposal). The SEC staff will also continue to inform the proponent and the company that it concurs, disagrees or declines to state a view with respect to the company’s asserted basis for exclusion. However, commencing with the 2019-2020 shareholder proposal season, the staff may respond orally (instead of in writing) to some requests to exclude shareholder proposals; written responses will be issued if the staff believes it would provide value, such as more broadly applicable guidance about complying with Rule 14a-8. The SEC announcement noted that the staff’s declining to state a view as to whether a proposal may be excluded should not be interpreted as an indication that the proposal must be included. If the staff declines to express a view, the company may determine to exclude the proposal, recognizing that the proponent may challenge that decision in court under Rule 14a-8.

© Arnold & Porter Kaye Scholer LLP 2019 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.