By Mark S. Nelson, J.D.
The SEC’s Division of Corporation Finance announced late today that it has decided to reverse a Clayton-era policy of only responding to selected shareholder proposals with a no-action letter. The prior policy had resulted in CorpFin issuing few letters and instead suggesting the results of such reviews in a tabular format on the SEC’s website.
The CorpFin announcement emphasized that transparency was an abiding concern in deciding to change its response policy. Said CorpFin “We have reconsidered this approach, and after review of the practice we believe that written responses will provide greater transparency and certainty to shareholder proponents and companies alike. Beginning with the publication of this announcement, we will return to our prior practice and the staff will once again respond to each shareholder proposal no-action request with a written letter, similar to those issued in prior years.”
CorpFin also said that it would cease using the tabular or chart format that has been used by the agency to provide a public tracker of shareholder proposals for the past several years. However, CorpFin said that it expects to publish a chart at the end of proxy season.
During Jay Clayton’s tenure as SEC chair, CorpFin had announced the following: “In cases where a company seeks to exclude a proposal, the staff will inform the proponent and the company of its position, which may be that the staff concurs, disagrees or declines to state a view, with respect to the company’s asserted basis for exclusion. Starting with the 2019-2020 shareholder proposal season, however, the staff may respond orally instead of in writing to some no-action requests. The staff intends to issue a response letter where it believes doing so would provide value, such as more broadly applicable guidance about complying with Rule 14a-8.”