Corp Fin has announced a new intake system for requests from companies for no-action positions from the staff regarding companies’ intentions to exclude shareholder proposals under Rule 14a-8. In the announcement, Corp Fin indicates that Rule 14a-8 submissions and related correspondence must now be submitted using Corp Fin’s online shareholder proposal form, available at https://www.sec.gov/forms/shareholder-proposal, and that emailed materials will no longer be accepted. The announcement—and the form itself—emphasize that staff responses to these requests are only “informal, non-binding staff views” regarding exclusion of shareholder proposals.
Remember that, under Rule 14a-8(j), a company that intends to exclude a proposal must file its reasons with the SEC no later than 80 calendar days before it files its definitive proxy statement with the SEC. At the same time, the company must provide the proponent with a copy of its submission. Submission of the new online form is not effective to transmit the correspondence to the proponent; the company is still required to send it separately by email and/or mail and to confirm that it has done so by marking a checkbox on the form.
The form states that Corp Fin offers only informal advice, generally determining whether or not it’s appropriate to recommend that the SEC take enforcement action:
“It is important to note that the staff’s no-action responses to Rule 14a-8(j) submissions reflect only informal views. The determinations reached by the staff in connection with these submissions do not and cannot adjudicate the merits of a company’s position with respect to the proposal. Only a court, such as a U.S. District Court, can decide whether a shareholder proposal can be excluded from a company’s proxy materials. Accordingly, a discretionary determination not to recommend or take Commission enforcement action does not preclude a proponent, or any shareholder of a company, from pursuing any rights he or she may have against the company in court should the company’s management omit the proposal from the company’s proxy materials.”
The form makes clear that the staff considers information furnished to it by the company in support of exclusion, as well as any information furnished by the proponent or the proponent’s representative. Rule 14a-8(k) permits, but does not require, proponents to submit their own statements to the SEC responding to the company’s arguments. Although no communications from shareholders to the staff are required, the form notes that “the staff will always consider information concerning alleged violations of the statutes and rules administered by the Commission, including arguments as to whether or not activities proposed to be taken would violate the statute or rule involved. The receipt by the staff of such information, however, should not be construed as changing the staff’s informal procedures and proxy review into a formal or adversarial procedure.”
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