SEC Tightens Requirements For Shareholder Proposal Rule 14a-8

On September 23, 2020, the Securities and Exchange Commission (the “SEC”) adopted amendments¹ to its shareholder proposal rule² (“Rule 14a-8,” or the “Rule”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to update the requirements for a shareholder to include its own proposal within a public company's proxy statement for consideration by the company's shareholders. The final amendments become effective 60 days following publication in the Federal Register and will apply to any proposal submitted for an annual or special meeting to be held on or after January 1, 2022.

Ownership requirements

The revised Rule updates the ownership requirement that a shareholder must meet to be eligible to submit a shareholder proposal for inclusion in the company's proxy statement. Rule 14a-8 previously required that a shareholder must have owned company securities representing the lesser of (a) $2,000 in market value or (b) 1% of securities entitled