SEC Amends Requirements For Shareholder Proposals In Proxy Statements

On September 23, the SEC voted 3-2 to amend certain of the procedural requirements for the inclusion of shareholder proposals in a company's proxy statement under Exchange Act Rule 14a-8.¹

The amendments were adopted substantially as proposed in November 2019,² except for the so-called "momentum" provision, which would have permitted companies to exclude shareholder proposals that have decreasing shareholder support.

The final rule will, among other things, replace the current ownership requirements for submissions with a tiered approach that will require shareholders to either show an increased economic stake in a company or hold their stake for a longer period of time to be eligible to submit a proposal and will increase the minimum support thresholds for resubmissions. In adopting these amendments, the SEC reiterated its position that a shareholder-proponent needs to demonstrate a meaningful "economic stake or investment interest" in a company to have access