Bloomberg reports:
Companies that receive shareholder proposals and want to prevent them from going to a vote can ask the SEC to weigh in, a process that was delayed this year by the federal government’s longest shutdown. The commission currently reviews all such proposals, but it’s considering how to “still actively monitor” them without issuing a response every time, Bill Hinman, who directs the SEC’s Division of Corporation Finance, said in a July 16 speech. ...
... the SEC’s potential pullback could lead to more litigation over shareholder proposals and limit the paper trail used for company requests, shareholder reaction, and SEC staff responses.
Indeed. Unless the SEC simultaneously imposes sharp limits on shareholder proposals, it is very hard to see how this would work. My best guess:
- Proponent submits proposal
- Issuer decides to exclude
- Issuer asks SEC to issue no-action latter
- SEC ignores request
- Company goes ahead and excludes proposal
- Proponent files lawsuit
- Company tries to run up proponent's legal expenses
That doesn't look like much of an improvement.
