SEC Issues New Guidance On Shareholder Proposals

On November 1, 2017, the Division of Corporation Finance of the U.S. Securities and Exchange Commission (SEC) released Staff Legal Bulletin No. 14I (SLB 14I), which provides important guidance to public companies reviewing whether to include shareholder proposals in their proxy statements. Specifically, SLB 14I addresses the following topics:

• The scope and application of the ordinary business exception
• The scope and application of the economic relevance exception
• Documentation that proposals submitted on behalf of shareholders need to include
• The treatment of images with respect to the 500-word limit in shareholder proposals

Ordinary Business Exception

Rule 14a-8(i)(7) of the Securities Exchange Act of 1934, as amended (the Exchange Act), is a popular provision companies rely on to exclude a shareholder proposal and allows a company to exclude a shareholder proposal when it "deals with a matter relating to the company's ordinary business