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Related information: The statements contained in this legal bulletin reflect the views of the Corporate Finance Division. This bulletin is not a rule, regulation or statement of the Securities and Exchange Commission. Moreover, the Commission neither approved nor rejected its content. References to “we”, “us” and “our” refer to the Corporate Finance Division. The new Bulletin effectively adapts the staff`s interpretation to the requirements of the article and to the previous positions of the Commission as a whole. Its adoption should reduce uncertainty and controversy related to inaction on a number of key issues: 1 See Exchange Act Release No. 20091 (16. August 1983)[48 FR 38218] (“In the past, IMF staff have argued that proposals requiring issuers to prepare reports on certain aspects of their operations or to form special committees to investigate a segment of operations cannot be excluded under Rule 14a-8(c)(7). Since this interpretation takes precedence over substance and largely invalidates the provisions of paragraph (c) (7), the Commission decided to accept the change in interpretation contained in the publication of the proposal.

Henceforth, staff will consider whether the subject matter of the special report or the Committee relates to a matter of ordinary business; If so, the proposal may be excluded under Article 14a(8)(c)(7). »). Bulletin 14I-J-K also radically extended the concept of micromanagement beyond that defined by the Commission. SLB 14L reinforces Rule 14a-8 in the broader matrix of the evolution of investors` rights and obligations. It has become clear that the process by which investors exercise their legal right to submit proposals falls within a general framework of accountability – including public and legal scrutiny of institutional investor voting and whether trustees exercise sufficient due diligence in accordance with a transparent set of principles. To the extent that a trustee has adopted ESG principles, its votes on shareholder proposals are considered as one of the most visible ways to determine whether its commitment to ESG is in good faith. [16] Representatives of the Corporate Bar Association argued that SLB 14L would allow for a flood of new inappropriate shareholder requests or radically redefine a company`s goal of requiring socially responsible citizenship from companies. These opinions are unfounded and largely ignore the serious legal concerns regarding the positions taken by staff since 2017. 2,792 F.3d 323 (3d Cir.

2015). In Trinity v. Wal-Mart, the U.S. Court of Appeals for the Third Circuit, considered the application of Rules 14a-8(i)(3) and 14a-8(i)(7) after the division`s employees decided to accept the exclusion based on 14a-8(i)(7), the ordinary business exception. Following the Court`s decision, the Division issued SLB 14H because, although the Court`s final decision was consistent with the Division`s position, the Court`s approach to interpreting Rule 14a-8(i)(7) was not consistent with the Division`s practice. The bulletins also added new requirements to the exclusions contained in other parts of Rule 14a-8. The Article contains in subsection (i)(10) an exclusion for proposals already implemented. [11] However, in 2018, a new criterion was introduced in Personnel Legal Bulletin 14J that allowed the board to assess whether it was observing a sufficient “delta” between the company`s existing activities and the activities required in a proposal.

This new approach allowed a board of directors to comment on its existing operations and determine whether it saw a significant difference between the proposals in a proposal and the company`s existing actions. This approach was contrary to Rule 14a-8(i)(10), which assesses whether a proposal is substantially implemented by examining whether the company`s existing activities comply with the guidelines and essential objective set out in the proposal. We hope that this bulletin, along with our other bulletins, will help you better understand Article 14a-8, the procedure for not requesting action, and our views on some important issues that often arise in our consideration of requests for non-release under Article 14a-8. We believe that these bulletins contain information that will contribute to the effective functioning of the Rule 14a-8 process for corporations and shareholders. What it means: In short, proposals on climate change targets and associated timetables are unlikely to be as excluded as in the past, and the same is true for other environmental and social proposals that include specific targets and timelines.5 SLB 14L provides an example of the future policy of its policy in the form of a shareholders` motion, which ConocoPhillips later rejected as non-action. The proposal required the company to set emission reduction targets and did not prescribe a specific methodology for doing so. IMF staff concluded that this proposal did not allow for micromana of the entity to the extent that an exclusion under Rule 14a-8(i)(7) would be warranted. This bulletin is part of the Corporate Finance Division`s ongoing efforts to provide advice on significant issues arising from Rules 14a-8. Specifically, this bulletin contains information on: Instead of continuing to focus on micromanagement analysis of the long-standing approach of determining whether the level of detail of the proposal went too far into the details of the company`s operations or whether it was drafted in a manner that “probes” at a level consistent with shareholder deliberations and debates, A new principle has been added to the bulletins that a consultative proposal can be excluded if it proposes a particular outcome or strategy. A whole new standard.