The quiet silencing of shareholder voices

The US Securities and Exchange Commission’s division of corporation finance ended its practice of responding to shareholder proposal no-action requests on August 14. Effective immediately, it will no longer tell companies whether staff would recommend enforcement if they exclude a proposal from their proxy materials. Nor will it issue the letters that, since last November, have substituted for that review on the strength of a company’s own representation.

At a glance
•    The US Securities and Exchange Commission’s Division of Corporation Finance has ended its practice of responding to shareholder-proposal no-action requests

•    The withdrawal rescinds nothing and creates no new grounds for exclusion, and some companies may even proceed more cautiously without SEC comfort. But it leaves the parties to resolve their disputes themselves
•    Bigger companies command greater legal resources and control the proxy timetable, while smaller proponents may be unable to finance expedited litigation

The referee has left the field. The rules, for now, remain.