You may recall that, last month, Corp Fin announced that it had revisited its approach to responding to no-action requests to exclude shareholder proposals. In essence, under the new policy, the staff may respond to some requests orally, instead of in writing, and, in some cases, may decline to state a view altogether, leaving the company to make its own determination. (See this PubCo post.) In describing the new approach in remarks to the PLI Securities Regulation Institute, Corp Fin Deputy Director Shelley Parratt said that the plan was to post a chart on the SEC website with the bottom line responses to these no-action requests and to inform both the company and the proponent by email that the response would shortly be posted on the chart. (See this PubCo post.) As reported on thecorporatecounsel.net blog, the 2019-2020 Shareholder Proposal No-Action Responses chart is now available. Parratt had suggested that the chart might actually be easier for readers to follow—and she may well be right.
In her remarks, Parratt indicated that the only real change that would result from the new approach was in the form of the response; there was no intent to otherwise change policy (i.e., for those who were concerned about the potential expansion of “declines to state.”) Parratt also observed that SEC responses to no-action requests are essentially an accommodation to companies and that it has always been the case that Corp Fin could decline to state a view. She added that Corp Fin will continue to provides letter responses where they believe it would be valuable.
The introduction to the chart reiterates the SEC’s position that the staff’s responses represent only the “informal, non-binding views as to whether the Division would recommend enforcement action to the Commission if a company excludes a proposal from its proxy materials. The staff does not and cannot adjudicate the merits of a company’s position with respect to a proposal. Only a court can determine whether a company may legally exclude the shareholder proposal from its proxy materials.”
Thecorporatecounsel.net reported that, in one case, the staff emailed notification (presumably to both parties) that it had “completed its review of the company’s submission. Our response will be posted after 4:30 PM this afternoon,” providing a link to the chart and indicating that all the correspondence would be available soon. So far, the chart has two entries, and both of the staff responses, issued on November 21, concurred with exclusion of the proposals. One of the two companies that submitted no-action requests received a written response. In that case, the staff concurred that the proposal (for a majority vote for directors) would cause the company to violate the corporate laws of the company’s state of incorporation under Rule 14a-8(i)(2). The request that did not receive a response asserted as a basis for exclusion Rule 14a-8(b)/(f), procedural bases related to failure to establish the requisite eligibility to submit the proposal within the required time following the company’s notice.
In the chart, there are hyperlinks to each company’s initial no-action request. There are also supposed to be hyperlinks to all the related correspondence back and forth in reverse chron order. The text indicates, however, that the hyperlink will not be available until “the materials are posted on the SEC website, generally within a few business days of the staff’s response.” The chart also indicates the regulatory bases asserted by the company for exclusion and the rule on which the staff based its decision.