“Shareholders Defy SEC on Proposal Rule,” Agenda Week
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This article is intended to inform the reader of general legal principles applicable to the subject area. It is not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations.

By Gregory Zerzan, Shareholder

In an article published in Agenda Week on July 6, 2021, Shareholder Gregory Zerzan was quoted discussing a recent lawsuit against the SEC claiming the “commission violated federal rulemaking requirements in altering the way shareholders submit proposals to be voted on at annual meetings.”

The SEC updated Rule 14a-8 last year, which made it more difficult for investors to file shareholder proposals, raised the ownership threshold required to submit a proposal, updated resubmission thresholds and prohibited investors from aggregating shares to meet these thresholds.

Zerzan believes the lawsuit over the shareholder proposal rule calls into question the SEC’s role in corporate decision-making, noting that, “Lawsuits over threshold amounts, ownership periods and resubmission times in Rule [14a-8] will probably not achieve what activist shareholders really want, which is greater proxy access. Doing that will require action by Congress, which is where activist investors are likely to increasingly turn their attention.”

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