SEC Approves Stricter Shareholder Proposal Rules

On September 23, 2020, the Securities and Exchange Commission (the SEC) voted to adopt amendments modernizing its shareholder proposal rules.

Effective Date and Transition

The final rules provide for a transition period for the ownership thresholds that will allow shareholders who currently are eligible to submit proposals under the current $2,000 threshold/one-year minimum holding period, but who do not satisfy the new requirements, to continue to be eligible to submit proposals through the expiration of the transition period that extends for all annual or special meetings held prior to January 1, 2023, provided they continue to hold at least $2,000 of a company’s securities. These amendments will become effective 60 days from their publication in the Federal Register, and the final rules will be applicable to any proposal submitted for an annual or special meeting to be held on or after January 1, 2022. Capital Markets & Securities Law Watch will continue to monitor any changes in this area and provide updates to our readers.