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Companies Face New Twists in Shareholder Proposals

Joe Mont | December 23, 2014

The proper care and handling of shareholder proposals has generally meant one thing for Corporate America: finding ways to keep those proposals off the proxy statement.

This coming proxy season, that exercise will be even more murky than usual. At issue are two recent developments: one at the Securities and Exchange Commission, the other in a U.S. federal district court.

Traditionally, companies wanting to exclude a shareholder proposal have asked the SEC Division of Finance staff for a no-action letter, allowing the company to keep the proposal off the proxy if it chooses; tailoring that request for a no-action letter to the SEC’s exemption criteria is a crucial part of the process. Not necessarily easy, but a well-understood routine of corporate securities law.

This coming year, not so much. Earlier this month the SEC offered no-action relief to Whole Foods over a proxy access battle, which might suggest looser standards in the SEC’s decision-making...

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