The main US financial regulator changes position on social issues

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WASHINGTON, Nov. 3 (Reuters) – The United States Securities and Exchange Commission on Wednesday released new staff guidelines that could make it more difficult for companies to block shareholder proposals from voting on issues such as the diversity of the workforce or the climate at annual meetings.

The new bulletins replace Trump-era guidelines that gave companies more leeway to launch proposals on hot social issues, changes that critics said were meant to silence investors’ voices.

Among other changes, staff will now pay more attention to the importance of a shareholder proposal for social policy and recognize “that proposals seeking detail or seeking to promote time frames or methods do not in themselves constitute micromanagement, “or grounds for exclusion, the bulletin said. published by the Division of Corporation Finance of the SEC.

“The right to submit proposals to other shareholders for a vote is an important part of securities laws,” SEC Chairman Gary Gensler said in a statement.

“Today’s bulletin will provide greater clarity to companies and shareholders on these issues, so that they can better understand when the exclusions may or may not apply,” he said.

Shareholder voting rights have become a major bone of contention as more investors pushed companies to deal with social and environmental issues and gained more support from top investment firms. Read more

Under agency rules, shareholders who wish to put a proposal to a vote must first submit it for a company’s proxy statement – months before the annual meeting itself – and companies often ask authorization from an agency to ignore the proposal. Separate changes to SEC rules from 2020 that increased the shareholding required to file a resolution remain in place but face litigation. Read more

Sanford Lewis, director of the Shareholder Rights Group, which represents social-purpose investment firms that often file proposals, welcomed Wednesday’s changes.

“They’ve removed a bunch of cumbersome interpretations that made tabling proposals more difficult, more uncertain and more costly for shareholders,” he said in an interview.

The two Republicans appointed to the five-member commission, Hester Peirce and Elad Roisman, said in a joint statement that “the rationale for today’s action is a bit of a mystery”, the practical effects of the changes no ‘being unclear.

Determining which proposals can be excluded from corporate powers of attorney “has long been an insatiable consumer of working time” at the agency, the two commissioners wrote, adding that the new bulletin “does not make their jobs easier”.

Reporting by Katanga Johnson in Washington and Ross Kerber in Boston Editing by Michelle Price and Jonathan Oatis

Our standards: Thomson Reuters Trust Principles.


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