Fifth Circuit to Scrutinize SEC Sway Over Proxy Ballot Proposals

The SEC’s influence over which shareholder proposals make it onto companies’ annual meeting ballots will see its closest judicial examination yet, as businesses and conservatives battle the Democratic-led agency’s power in court.

The US Court of Appeals for the Fifth Circuit will hear oral arguments Tuesday in a lawsuit over Securities and Exchange Commission guidance allowing Kroger Co. to block a vote on a conservative group’s anti-discrimination proposal last year. The company ultimately permitted its consideration, but the National Association of Manufacturers joined the case to contest the SEC’s role refereeing shareholder proposal disputes.

The SEC can sue companies that ...