(Reuters) – The US Securities and Exchange Commission on Wednesday published a new personnel guide that may make it more difficult for companies to prevent shareholder proposals on issues such as labor diversity or climate from being voted on at annual meetings.
The new bulletin replaces Trump era's guidance that gave companies more leeway to make proposals on hot social issues, changes that critics said had aimed to silence investors' voices.
Among other changes, staff will now take more account of the social policy significance. of a shareholder proposal and will recognize "that proposals that seek details or seek to promote time frames or methods do not in themselves constitute micro-management" or grounds for exclusion, said the bulletin published by the SEC's Division of Corporation Finance.
"The right to submit submitting proposals to other shareholders for a vote is an important part of securities laws, "said GEC President Gary Gensler in a statement. [1
According to the authority's rules, shareholders who want to submit a proposal for a vote must first submit it for a company's proxy – months before the annual meeting itself – and companies often seek the agency's permission to skip the proposal. Separate SEC rule changes from 2020 that increased shareholding required to submit a resolution remain but face litigation.
Sanford Lewis, head of Shareholder Rights Group, which represents socially minded investment firms that frequently submit proposals, praised Wednesday's changes.
"They have removed a bunch of burdensome interpretations that have made it harder, more uncertain and more expensive for shareholders to submit proposals," he said in an interview.
The two Republican appointments to the five-member commission, Hester Peirce and Elad Roisman, said in a joint statement that "the rationale for today's actions is a bit of a mystery," with the practical effects of the changes unclear.
Sort out which proposals can be excluded from the company's powers of staff time "at the agency, the two commissioners wrote, adding that the new bulletin" does not make their job easier. "