SEC Revises Guidance on Process for Excluding Shareholder Proposals

On February 12, 2025 SEC issued Staff Legal Bulletin 14M, revising the Commission’s guidance on the scope and application of Exchange Act Rules 14a-8(i)(5) and 14a-8(i)(7). The new Bulletin rescinds the Commission’s prior guidance in Staff Legal Bulletin 14L, under which determining whether a shareholder proposal is significant enough to be included in a company’s proxy statement could include considering whether an issue has a significant social impact. Under SEC’s new guidance, a company’s own facts and circumstances are the key factor in deciding whether a shareholder proposal may be excluded.