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Investors expect delays under US shareholders' voting rights



(Reuters) – US investors expect the securities regulator to release a disputed provision in a new rule that would make it more difficult for them to run companies on issues such as climate change and social justice, according to three people informed about the matter

The Securities and Exchange Commission next Wednesday is scheduled to finalize the rule, which was first proposed in November last year, which would raise the bar for submitting shareholder proposals at corporate general meetings. It says that the decades-old rule must be modernized.

Talks about the rule have stalled as investors made final efforts this month to halt changes in meetings with SEC staff and letters, the people said.

While the SEC next Wednesday will continue with the new rule, it is ready to release one of its most controversial provisions, which would have allowed companies to exclude proposals that have reduced shareholder support, sources said. SEC staff were still working on the final draft on Tuesday, one of the people said.

The expected removal of the provision, which has not been reported before, marks a critical exposure for supporters of social and environmental movements, who can take years on the ballot to gain traction.

With nationwide protests against race and justice fires in the US West that researchers say are driven in part by climate change, corporate America should be under greater pressure to address environmental and social issues, no less, investors argue.

"The regulations are tone-deaf to the sharp increase in market support for the publication of environmental and social governance and the basis for young people's demands that their investments and employers have a positive effect on the environment and society," said Sanford Lewis, head of Shareholder Rights Group, which fights for greater corporate democracy.

An SEC spokeswoman declined to comment on Tuesday. [1

9659002] Once considered a distraction, US shareholder proposals have gained new importance at many corporate meetings in recent years, as investors, especially younger ones, pay more attention to issues such as climate change and social inequality.

Corporate lobby groups, including the US Chamber of Commerce, have pushed for shareholder submissions, arguing that the bar for re-submitting them should be higher to stop niche issues with declining support levels from clogging up corporate choices.

The so-called "Momentum" provision would have enabled companies to block proposals for which shareholder support is reduced annually by more than 10% and which receives less than majority support.

Investors argued that the provision was not meaningful, as it would allow companies to cut proposals to command a large chunk, if not majority, of aid and have fought hard to water it down and other aspects of the rule that they say will kneel them. [19659002] Mr. Lewis wrote to the SEC on Friday urging it to review the economic impact of the entire package after other regulators warned of climate change posing systemic risks.

The Council of Institutional Investors, the Forum for Sustainable and Responsible Investment and the Interfaith Center on Corporate Responsibility this month also wrote to the Agency, highlighting shortcomings in its financial analysis of the rule.

While SEC Chairman Jay Clayton can usually count on his two Republican colleagues, who are in the majority in the five-member panel, to comply with rules, the SEC has been cautious about promoting investors and has sought a compromise, he said. the sources.

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