SEC Issues New Staff Guidance (SLB 14L) That Makes it Harder to Exclude Climate Change and Human Capital Management-Related Shareholder Proposals

On November 3, 2021, the Staff of the SEC’s Division of Corporation Finance issued Staff Legal Bulletin No. 14L (SLB 14L), walking back previous Staff guidance issued in recent years addressing how the Staff would consider Rule 14a-8 no-action requests to exclude shareholder proposals raising a significant policy issue. Where prior guidance sought to define a “significant” policy issue as one that both transcends day-to-day management and is significant to the company’s business, under SLB 14L, the Staff will now no longer focus on the nexus prong – i.e., determining whether the policy issue raised is significant to the particular company. As a result, shareholder proposals that were previously viewed as excludable because they did not raise a policy issue of significance to the company will no longer be viewed as excludable. To that end, the Staff specifically called out as examples proposals that raise climate change and human capital management issues.

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