SEC Provides Guidance On Shareholder Proposals And Expands Boards' Responsibilities

On November 1, 2017, the staff of the US Securities and Exchange Commission's Division of Corporation Finance (Staff) provided important guidance to companies and shareholders on how Staff will evaluate arguments to exclude shareholder proposals from proxy materials. Among other considerations, the Staff Legal Bulletin No. 14I (CF) (the Bulletin) deals primarily with the "ordinary business" and "economic relevance" exclusions found in Rule 14a-8 of the Securities Exchange Act of 1934 (the Rule). The Bulletin reflects Staff's continuing effort to address issues arising under the Rule, and among other things, transfers to boards of directors the responsibility for analyzing whether a proposal can be excluded on either of these bases.