Sanford Lewis, Shareholder Rights Group, Director and General Counsel:
Back in November, the Securities and Exchange Commission announced that it would halt issuing substantive responses to companies' notices of intent to exclude shareholder proposals. Companies could just submit a request for a no-objection letter based on their unilateral assertions that the proposal was excludable under SEC rules, and the SEC would simply issue "no objection" letters.
The move disrupts a long-standing agency practice of substantive review of evidence against exclusion from proponents as well as the exclusion arguments presented by the companies. It is a process aligned with the rule intended to protect shareholder rights. The new policy essentially allows companies to exclude whatever proposals they choose, without fear of SEC enforcement.
In my opinion, the SEC move directly contradicts the right of shareholders to respond to company claims and for the SEC to require a clear burden of proof on companies. Though at least five shareholders lawsuits have been filed to force companies to include the proposals, most small shareholders are essentially shut out from challenging a company's exclusion of their proposal, even if it addresses material issues.
Giving corporations a blank check to stop shareholder proposals is an unlawful and unfair way to harm investors. Thank you Interfaith Center on Corporate Responsibility, as you so, and Democracy Forward for taking on this destructive policy with your important lawsuit against the SEC filed today!
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https://democracyforward.org/news/press-releases/investor-representatives-file-lawsuit-challenging-unlawful-restriction-of-shareholder-rights/