On the heels of the release of SLB 14J, Corp Fin has posted a couple of new no-action letters that shed some more light on the “ordinary business” exclusion of Rule 14a-8(i)(7). As you may recall, in SLB 14J, the staff addressed the nature of the board analysis the staff would find most “helpful” in evaluating a no-action request to exclude a shareholder proposal under Rule 14a-8(i)(7), as well as “micromanagement” as a basis for exclusion under that same Rule. Most impressive is that, in the response letters, the staff actually includes a sentence or two that provides some insight into the staff’s reasoning. If you recall, a request for more clarity from the staff was one of the comments raised at the SEC’s proxy roundtable, and the staff appears to have heard. (See this PubCo post.) Both of the letters were submitted in connection with proposals to Walgreens Boots Alliance.
Corp Fin has posted some updates to its CDIs relating to the new rule amendments regarding smaller reporting companies. (See this Cooley Alert and the SEC’s Amendments to the Smaller Reporting Company Definition — Compliance Guide.) In connection with the new updates, Corp Fin has also withdrawn a number of CDIs (presumably, at least in part, because they were no longer appropriate in view of the changes to the rules). Below are summaries:
New SLB 14J on shareholder proposals revisits the economic relevance and ordinary business exclusions
Corp Fin has just released a new staff legal bulletin on shareholder proposals—we’re up to 14J—that once again examines the exclusions under Rules 14a-8(i)(5), the “economic relevance” exception, and 14a-8(i)(7), the “ordinary business” exception. Notably, these rules were also the subject of SLB 14I. More specifically, the new SLB provides guidance with regard to the following:
the nature of the board analysis the staff would find most “helpful” in evaluating a no-action request to exclude a shareholder proposal,
“micromanagement” as a basis for exclusion under Rule 14a-8(i)(7) and
the application of Rule 14a-8(i)(7) to exclude proposals related to senior executive and/or director compensation matters.
The staff of Corp Fin have posted a revised set of CDIs interpreting the cross-border exemptions. The new CDIs replace the 17-year old interpretations that were contained in Section II of the July 2001 Interim Supplement to the antediluvian Telephone Interpretations Manual. (You may even have a copy in a three-hole binder somewhere.) Some of the CDIs reflect only technical revisions, some are substantive and some are entirely new interps.
Corp Fin has just posted A Small Entity Compliance Guide for Issuers that summarizes the recent amendments to the definition of “smaller reporting company” and related amendments. (See this PubCo post and this Cooley Alert.) The Guide also provides some clarification regarding timing and transition to the new definition.
Corp Fin has issued two new CDIs related to the voluntary submission of Notices of Exempt Solicitation under Exchange Act Rule 14a-6(g). That rule requires any person who engages in an exempt solicitation pursuant to Exchange Act Rule 14a-2(b)(1) (i.e., without soliciting a proxy) and beneficially owns over $5 million of the class of securities subject to the solicitation to furnish or mail to the SEC a Notice of Exempt Solicitation. Rule 14a-103 requires the soliciting party to attach the written soliciting materials required to be submitted pursuant to Rule 14a-6(g)(1). Recently, some shareholders (think John Chevedden) have begun to submit these Notices voluntarily in what appears to be a way to publicly to express their views on proposals.