Proposals can be a popular and effective mechanism to allow shareholders to advise or require that a business and/or the board have a specified actions. They are frequently used to advance environmental, social and governance targets of investors.

The shareholder proposal procedure involves:

a presentation from the proposal and an enclosing supporting assertion to shareholders by the proponent or a representative of the proponent; and, where relevant, a seconding simply by another person.

Shareholder proposals sometimes call for within corporate governance documents to enhance shareholder enfranchisement through the correct to call an exclusive meeting or to act by written approval. However , a large number of institutional shareholders are cautious with such recommendations as they are concerned that a small community of shareholders would be able to access these rights and thus probably dominate decision-making at an organization.

Rule 14a-8 (i)(11) and 12 : Duplication, Resubmissions & Rescheduling

Under current rules, a shareholder may be excluded in the proposal method if it seems to have substantially replicated a previously submitted proposal. The SEC staff seems to have traditionally thought to be whether a proposal has the same “principal thrust” or “principal focus. ” It is possible that two proposals that are comparable in terms and range could be regarded excludable within this guideline because they have the same principal thrust or focus, thereby creating shareholder confusion and implementation problems for corporations.

Under SLB 14L, the SEC staff is proposing to work over this control by defining “substantially duplicates” as proposals that “address considerably the same material and seek out the same purpose by the same means. ” The amendment would likewise permit an organization to exclude a proposal because “substantially implemented” if it seems to have implemented all of the essential components identified inside the proposal (with the exemption that as a proponent recognizes more factors, each turns into less essential). This transformation should bring about less anxiety for shareholders and businesses regarding the add-on or exemption of proposed shareholder promises.

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