(Reuters) – The US Securities and Exchange Commission voted 3-2 on Wednesday to make it harder for shareholders to run companies on issues such as climate change, social justice and diversity, with Democratic commissioners deviating from moving.  The rule, first proposed by the SEC in November last year, raises the bar for submitting shareholder proposals to companies' annual votes and increases the proportion of votes a proposal must win before it can be resubmitted.
The SEC and corporate lobby groups have said the decades-old rules need to be modernized to stop niche issues blocking corporate voting – a risk that SEC Chairman Jay Clayton said on Wednesday could pose "significant" costs to companies and other shareholders.
But the changes triggered relapses from many investors, lawmakers, and the SEC's own Democratic commissioners, who warned that it would kill proposals on climate change, racial justice, and the COVID-1
"These issues are essential for performance and shareholders … Today's rule changes unnecessarily disrupt, and may cool, the lively debate on these issues," said Caroline Crenshaw, the agency's new Democrat.
Previously, an investor had to hold at least $ 2,000 in a company's stock for one year to submit a proposal – a threshold that the SEC raised to three years on Wednesday. It also increased the proportion of the vote that a proposal must win in order to be returned to the vote from year to year.
However, the Agency abolished a highly controversial provision that would have allowed companies to exclude proposals that received falling levels. which was first reported by Reuters. The SEC considered change "unnecessary", an official said.
Amy Borrus, CEO of the Institutional Investors 'Council, a large group of investors who opposed the changes, said they would weaken investors' votes and result in fewer shareholders.
"And it is precisely the goal of the business lobby that pressured the SEC to make these changes. Simply put, CEOs and CEOs do not like to be second-guessed by shareholders, she says.
Corporate groups including the US Chamber of Commerce have pushed to curb shareholder proposals and on Wednesday cheered on the changes. The House said it would help prevent "activists of particular interest" from pursuing "narrow agendas unrelated to the success of public enterprises."
SEC officials said most of the proposals come from a small group of repeat archives.
"While we all have the right to go on our soaps, we have no right to force others to pay for them," said Republican Commissioner Elad Roisman, who led the rule change.
Earlier this year, the SEC also introduced stricter rules for companies that advise investors how to vote in corporate elections, a change that is also supported by corporate lobbyists and panned by investor groups.]