A newly released opinion from the Court of Appeals for the Third Circuit sheds additional light on an earlier decision that allowed Walmart to reject a shareholder proposal calling for a board review of the company’s policies regarding the sale of high-capacity firearms. The opinion, released last week, could provide the blueprint for future courts considering the Securities and Exchange Commission’s traditional “ordinary business exception”for shareholder proposals.
In December 2013, Trinity Wall Street, an organization associated with New York City’s Trinity Church, submitted a proposal aimed at pressuring Walmart’s board of directors to decide whether the company should keep selling guns with magazines able to hold more than 10 rounds of ammunition. Walmart asked the SEC for a no-action letter that would allow it to omit the proposal on the basis it “deals with matters relating to the company’s ordinary business operations.” The SEC agreed and Trinity turned to the court in protest.
