SEC addresses shareholder proposals, proxy advice, ads, and solicitation

By Ken Tysiac

The SEC voted Tuesday to propose amendments intended to change the shareholder proposal rule, to improve the accuracy and transparency of proxy voting advice, and to modernize the advertising and cash solicitation rules for investment advisers.

Comments will be welcomed on all three proposals for 60 days following their publication in the Federal Register.

Shareholder proposals

Under the proposed amendments, the criteria that a shareholder is required to satisfy to be eligible to require a company to include a proposal in its proxy statement would be updated.

In addition to meeting a $2,000 minimum ownership threshold, a shareholder under the proposal will need to have held the shares for at least three years to be eligible to require a company to include a proposal in its proxy statement.

The “one proposal” rule also would be clarified to state that a single person may not submit multiple proposals at the same shareholder’s meeting on behalf of different shareholders.

The proposal also would update the levels of shareholder support a proposal must receive to be eligible for resubmission at the same company’s future shareholder meetings.

Proxy advice

Proxy voting advice businesses would be required to provide their clients with enhanced disclosures about their conflicts of interest under the new proposal.

The proposal is intended to enhance the accuracy and transparency of information that proxy voting advice businesses provide to investors and others who vote on investors’ behalf.

Advertising and cash solicitation

The current advertising rule contains broadly drawn limitations and would be replaced under the new proposal with principles-based provisions, according to the SEC. The proposed amendments also would:

  • Permit the use of testimonials, endorsements, and third-party ratings, subject to certain conditions.
  • Include tailored requirements for the presentation of performance results based on an advertisement’s intended audience.

The solicitation rule would be expanded under the proposed amendments to cover solicitation arrangements involving all forms of compensation, rather than just cash, subject to a new de minimis threshold.

Other aspects of the rule, such as who is disqualified from acting as a solicitor under the rule, also would be changed.

Ken Tysiac ( is the JofA’s editorial director.


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