On September 6, the staff of the Division of Corporation Finance (the Staff) of the Securities and Exchange Commission announced changes (the Announcement) concerning its procedures for administering Rule 14a-8 under the Securities Exchange Act of 1934. Specifically, starting with the 2019-2020 proxy season, in response to no-action requests by companies seeking to exclude shareholder proposals from their proxy materials pursuant to Rule 14a-8, the Staff may provide an oral statement of its view, rather than issuing the statement in writing. The Staff clarified that its response to such a request may be that it agrees, disagrees or declines to state a view with respect to the company’s basis for excluding the shareholder proposal, and, when the Staff declines to state its view with respect to a particular no-action request under Rule 14a-8, the interested party or parties should not interpret that as indicating the proposal must be included in the company’s proxy materials. As a reminder, the granting of no-action relief by the Staff confirms that the Staff will not recommend that the SEC bring an enforcement action against the requester based on the facts and representations described in the request, but, as noted in the Announcement, regardless of the Staff’s position, parties may still bring a suit in court to have the issue adjudicated on the merits. Additionally, the Staff will still issue written response letters when “doing so would provide value, such as more broadly applicable guidance about complying with Rule 14a-8.” The Announcement also reiterated prior guidance that, when a company request for no-action relief is being made under paragraphs (i)(5) (Relevance) or (i)(7) (Management functions) of Rule 14a-8, it is helpful to the Staff for the company to provide its board of directors’ analysis.
The full text of the Announcement is available here.