Just in Time for Proxy Season, SEC Provides New Guidance on Shareholder Proposal “Unbundling”

The U.S. Securities and Exchange Commission (SEC) staff recently issued several Compliance and Disclosure Interpretations (C&DIs) providing guidance as to when it is permissible under Rule 14a-4(a)(3) (and its companion rule, Rule 14a-4(b)(1)) under the Securities Exchange Act of 1934 (the “Exchange Act”) to group multiple matters in a single proposal to be voted on by shareholders. These C&DIs provide an opportunity to review the Exchange Act rules regarding “bundling” of matters, and to discuss the practical implications of Rule 14a-4(a)(3) for companies and shareholders crafting proposals for shareholder votes to be included in proxy materials for the upcoming proxy season.


Exchange Act Rule 14a-4(a)(3) requires that the form of proxy “identify clearly and impartially each separate matter intended to be acted upon, whether or not related to or conditioned on the approval of other matters.” Rule 14a-4(b)(1) further requires that the form of proxy provide separate boxes for shareholders to choose between approval, disapproval or abstention “with respect to each separate matter referred to therein as intended to be acted upon.” These rules are intended to provide a means for shareholders to communicate their views to the board of directors on each matter to be acted upon.

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