Glass Lewis's Expectations In Response To New Corp Fin Approach To Shareholder Proposals

You may recall that, last month, Corp Fin announced that it had revisited its approach to responding to no-action requests to exclude shareholder proposals. In essence, under the new policy, the staff may respond to some requests orally, instead of in writing, and, in some cases, may decline to state a view altogether, leaving the company to make its own determination. (See this PubCo post.) In its most recent proxy guidelines, Glass Lewis explains its expectations from companies in light of the new approach.

In describing the new approach in remarks to the PLI Securities Regulation Institute this week, Corp Fin Deputy Director Shelley Parratt indicated that the only real change was in the form of the response; there was no intent to otherwise change policy (i.e., for those who were concerned about the potential expansion of "declines to state.") Parratt indicated that SEC responses to no-action requests are essentially an accommodation to companies and that it has always been the case that Corp Fin could decline to state a view. She said that the plan was to post a chart on the SEC website with the bottom line responses to these no-action requests—which she thought might actually be easier for readers to follow—and to inform both the company and the proponent by email that the response would shortly be posted on the chart. The expectation is that this process would start later this month. Corp Fin will continue to provides letter responses where they believe it would be valuable.

At least one of the proxy advisory firms, Glass Lewis, has chimed in with its expectations regarding how companies should respond to the new approach. In its 2020 Proxy Paper" Guidelines, Glass Lewis has stated that they "believe that companies should only omit proposals in instances where the SEC has explicitly concurred with a company's...

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