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SEC staff revives former guidance on shareholder proposals raising social policy issues
26 February 2025
On February 12, the SEC’s Division of Corporation Finance issued Staff Legal Bulletin No. 14M (SLB 14M) to update its guidance on the “economic relevance” and “ordinary business” exclusions in Exchange Act Rule 14a-8, which is the SEC’s shareholder proposal rule. The SEC staff will apply the guidance during the current proxy season in responding to company no-action requests seeking to exclude shareholder proposals under those provisions.
In this latest statement on the scope of the two exclusions, the Division has rescinded Staff Legal Bulletin No. 14L (SLB 14L) issued in November 2021. The staff in the prior bulletin narrowed the grounds on which companies could exclude from their proxy materials shareholder proposals that raise significant social policy issues, such as those relating to climate change and workforce diversity.
The guidance outlined in SLB 14M reinstates the “company-specific” analysis the staff applied to exclusion determinations before issuing SLB 14L, which can be expected to enlarge the basis for excluding proposals involving social policy issues.
The Division states in SLB 14M that, in evaluating shareholder proposals, a company should not focus solely on whether a proposal raises issues of social or ethical significance (in the case of the economic relevance exclusion) or issues with a broad societal impact or that are universally significant (in the case of the ordinary business exclusion). Even if a proposal raises such issues, the company may exclude the proposal from its proxy materials if the proponent does not establish that the issues are significant in relation to the company or its business.
SLB 14M can be found here.
Click here to read our full SEC Update publication.
Authored by Alan Dye (co-editor), Richard Parrino (co-editor), John Beckman, Rupa Briggs, Kevin Greenslade, Val Delp, Weston Gaines.
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