SEC releases additional no-action letters on “substantial implementation” of shareholder proxy access proposals

Abstract

Purpose To explain a series of no-action letters recently released by the SEC’s Division of Corporation Finance that help to clarify the circumstances in which a company may exclude shareholder proposals involving proxy access bylaw provisions from the company’s proxy statement. Design/methodology/approach Explains the background of competing proxy access bylaw provisions adopted or proposed by companies and proposed by shareholders, the “directly conflicts” test explained in SEC Staff Legal Bulletin 14H, and the “substantially implemented” guidelines implied in a series of no-action letters in February and March 2016. Explains the status of shareholder proxy access proposals as of Spring 2016. Findings Taken together with an earlier series of no-action letters released in February 2016 and Staff Legal Bulletin No. 14H, published in October 2015, companies considering the adoption of a proxy access bylaw provision now have a clearer understanding of when the Staff of the Division of Corporation Finance is likely to conclude that a company may appropriately exclude a proxy access shareholder proposal in favor of a proxy access provision adopted or proposed by a company.