On Monday, I posted on Steps to Prepare for 2020 Proxy Season, including possible shareholder proposals. The preceding Friday, before we went to press, but after I wrote the blog, the SEC announced a new no-action letter policy for 2019-2020 shareholder proposals, which I promised to follow-up on later in the week. Well, here it is.

The “Announcement Regarding Rule 14a-8 No-Action Requests,” discusses the SEC’s approach to shareholder proposals for the upcoming proxy season. The announcement indicated that the SEC will continue to actively monitor correspondence and provide informal guidance to companies and shareholder proponents as appropriate. In cases where a company seeks to exclude a proposal, the SEC 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 SEC 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.

The announcement also reemphasized that when a company seeks to exclude a shareholder proposal from its proxy materials under paragraphs (i)(5) or (i)(7) of Rule 14a-8, an analysis by the company’s board of directors is often useful, as noted in Staff Legal Bulletin 14I and Staff Legal Bulletin 14J.

If the SEC declines to state a view on any particular request, the interested parties should not interpret that position as indicating that the proposal must be included. Where the SEC does not take a position on the merits of the request, the company may nonetheless have a valid legal basis to exclude the proposal under Rule 14a-8.