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April 23, 2014

U.S. Chamber Joins SEC Petition on Shareholder Resolution

BNA reports that the U.S. Chamber of Commerce is among nine business organizations that have jointly asked the Securities and Exchange Commission (SEC) to raise the thresholds for when shareholder proposals rejected by shareholders may be resubmitted for inclusion in a company’s proxy materials.

As BNA reports, “The current thresholds in the SEC’s resubmission rule–1934 Securities Exchange Act Rule 14a-8(i)(12)–increases the likelihood of shareholders having to plow through ‘a profusion of repetitive’ resolutions that have little or no relevance for them, the groups said.”

Further, under the current rule, companies may exclude a proposal or a substantially similar version from their proxy materials if it failed to receive the support of:

• 3 percent of the shareholders, if voted on once in the last five years;
• 6 percent of the shareholders, if voted upon twice within the last five years; or
• 10 percent of the shareholders, if voted upon three or more times within the last five years.

In a petition submitted April 9, the U.S. Chamber and other groups pointed out, “a rise in shareholder proposals on social issues and a corresponding rise in the general costs of dealing with resolutions.”

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