ANALYSIS: Investors, SEC Target Shareholder Proposal Amendments

The SEC, under former Chairman Jay Clayton, amended its shareholder proposal rules in September 2020 to significantly restrict the ability of small investors to have their initiatives included in company proxy materials. According to the agency, the amendments were designed to “modernize and enhance the efficiency and integrity of the shareholder-proposal process.” According to one of the plaintiffs in a lawsuit challenging those amendments, however, the amended rule “guts the existing shareholder proposal process, which has long served as a cost-effective way for shareholders to communicate their concerns to management.”

In addition to the court challenge, the SEC, now under ...