SEC Proposes Amendments to Shareholder Proposal Rule

On July 18, 2022, Cravath prepared a memo for its clients entitled “SEC Proposes Amendments to Shareholder Proposal Rule,” which reviews the agency’s proposed changes, released on July 13, 2022, to rules governing the bases for exclusion of shareholder proposals in a company’s proxy statement. If adopted as proposed, these changes would create narrower grounds for exclusion, which would likely result in an increased number of shareholder proposals appearing on companies’ ballots at annual meetings. The memo also concludes that these changes could have a particularly significant effect on environmental, social and governance-related shareholder proposals and that companies may need to contend with a larger number of detailed ESG shareholder proposals, given there would be fewer tools to exclude them from the ballot.

Please click here to read the memo.