SEC Proposes Modernizing Shareholder Proposal Rule
Nov 13 2019
On November 5, 2019, the U.S. Securities and Exchange Commission (SEC) proposed amendments to Rule 14a-8 under the Securities Exchange Act of 1934 in response to changes in the markets and recent shareholder proposal trends [1] . The proposed changes are also intended to facilitate long-term shareholder engagement and curb abuse of the shareholder proposal process. If adopted, the proposed amendments would:
1. Update Shareholder Proponent Ownership Eligibility Requirements to:
|
Value |
Minimum duration |
Threshold 1 |
$2,000 |
3 years |
Threshold 2 |
$15,000 |
2 years |
Threshold 3 |
$25,000 |
1 year |
2. Promote Shareholder Engagement by:
3. Move to One Proposal per “Person” by:
4. Replace Resubmission Thresholds and Add “Momentum” Requirement by:
Next Steps
Comments on the proposed rule amendments are due 60 days after publication of the proposing release in the Federal Register. Companies should review the proposed rule amendments, including the specific requests for comment in the proposing release, consider how the amendments, if adopted, would impact them, and determine whether to timely submit any comments to the SEC. However, because these are not final rules, companies should continue to rely on the current shareholder proposal and other proxy rules as they head into the 2020 proxy season.
Contact Information
Womble Bond Dickinson regularly advises publicly-traded companies on SEC filings and related matters. If you need assistance or have any questions regarding the issues discussed in this alert, please contact Jessica Dickerson at (336) 721-3677 or Jessica.Dickerson@wbd-us.com or you may contact the Womble Bond Dickinson attorney with whom you usually work or one of our Public Company Advisors Team attorneys for more information.
[1] See “Procedural Requirements and Resubmission Thresholds under Exchange Rule 14a-8,” SEC Release No. 34-87458 (Nov. 5, 2019), available at https://www.sec.gov/rules/proposed/2019/34-87458.pdf .