On September 6, the SEC announced a change in its process for responding to no-action requests regarding shareholder proposals. In the past, a company seeking to exclude a shareholder proposal could submit a no-action request stating the basis for exclusion, and the SEC would respond in writing indicating whether or not it agreed with the company’s position. In its announcement, the SEC states that “[s]tarting with the 2019-2020 shareholder proposal season…the staff may respond orally instead of in writing to some no-action requests” and that a written response would be issued “where [the staff] believes doing so would provide value, such as more broadly applicable guidance.”
In addition, while not explicitly stated, the staff apparently intends not to respond at all to some no-action requests, stating that “[if] the staff declines to state a view… the parties should not interpret that…as indicating that the proposal must be included.” Rather, a non-response means that the staff is simply “not taking a position on the merits” and that “the company may have a valid basis to exclude the proposal”. The announcement also states that the parties may, as always, ask the courts to provide a formal, binding adjudication on the merits.
If you have any questions, please contact Gunster securities law and corporate governance practice leader Bob Lamm or Gus Schmidt.
