Investor organizations CII, US | SIF, Shareholder Rights Group, Ceres, and ICCR sent this letter on behalf of their members to SEC Division of Corporation Finance Director Bill Hinman requesting that the Division rescind its recently announced changes to the Rule 14a-8 no-action request process. The letter identifies a number of adverse consequences anticipated to result from the changes, including reduced transparency, predictability, and accountability; increased burden for investor-proponents, who may need to litigate to enforce the rule; and increased conflict between companies and their investors.
The letter also suggests a series of boundaries and safeguards Corp Fin should consider in the event it is determined to proceed with the new approach, including: (i) only declining to state a view, and responding to requests orally, in exceptional circumstances, (ii) establishing clear criteria/guidelines around when these new response options will be exercised, (iii) ensuring any declination to state a view is provided promptly so that the parties still have time to consider and pursue alternative courses of action, (iv) making the staff's decisions and any proponent and issuer correspondence available publicly online, and (v) establishing safeguards for decisions communicated orally to ensure fair and symmetrical information and access by both parties.
Access law firm memos and other commentary and analysis on our Shareholder Proposals page. This post first appeared in the weekly Society Alert!