Shareholder Rights and SEC Rule Changes to 14a-8

In what is being seen by investors as a major setback for corporate transparency and shareholder democracy, the SEC announced on September 23, 2020 the imposition of new rules severely restricting shareholders’ access to the corporate proxy by limiting the filing of resolutions. The SEC’s move comes after years of lobbying by powerful industry trade associations that have sought to limit shareholder engagement with corporations on critical environmental, social, and governance issues.

The new rules will significantly limit investors’ ability to submit these proposals by raising the thresholds of ownership both in terms of the number of shares and length of time they must be held. Before the new rule, a shareholder who has held shares in a company for at least a year needed to hold at least $2,000 in shares. Under the new rule, new purchasers of stock must hold $25,000 in shares for at least a year, or hold $2000 in shares for at least three years.

In addition, the new rules make it much more difficult to refile a proposal that has been voted on. The prior rule required 3% support on a first-year vote, 6% on a second vote, and 10% on a third vote to keep a proposal before a company’s shareholders. Now resubmission will require 5% on a first vote, 15% on a second vote and 25% on a third vote. This will stifle deliberation by shareholders on emerging issues. 

Timeline of the Investor Campaign to Preserve Rule 14a-8:

ICCR has joined together with the Investor Rights ForumCERES, the Council of Institutional Investors, US SIF, PRI, and other stakeholders to defend shareholder rights. Together, we are pressing key decision makers to preserve Rule 14a-8 in its present form, as the most effective and efficient means for shareholders to communicate with boards of directors, corporate management, and their fellow shareholders. 

ICCR Statements and SEC Submissions:


Press Coverage/Further Reading

Articles related to the SEC lawsuit:

Articles related to the SEC's rule changes:

Read additional press coverage here

Additional Background: The history of the Financial CHOICE Act


Investors speak out on proposed changes

Investors speak out against SEC weakening corporate accountability rule

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