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US SIF Commends Introduction of Congressional Review Act Resolution to Reverse SEC Rule on Shareholder Rights

If left unchanged, the rule, when fully implemented, will disenfranchise investors and shift power to company CEOs and management.
 
WASHINGTON, D.C., March 26, 2021 – US SIF: The Forum for Sustainable and Responsible Investment today released a statement on the introduction of Senate Joint Resolution 16 (S.J. 16).
 
On March 25, 2021, Senator Sherrod Brown (D-OH), chair of the Senate Banking, Housing and Urban Affairs Committee introduced Senate Joint Resolution 16 (S.J. 16), a resolution of disapproval under the Congressional Review Act (CRA) to reverse the Securities and Exchange Commission's (SEC) changes to Rule 14a-8 “Procedural Requirements and Resubmission Thresholds Under Exchange Act Rule 14a-8.” The final rule was issued by the SEC on September 23, 2020.
 
The changes made by the Rule included the following:
 
  • More than 1,000 percent increase in the holding requirements necessary to file a shareholder proposal from $2,000 held for one year to a tiered approach requiring $25,000 held for one year, $15,000 held for two years and $2,000 held for three years.
  • Increase in the thresholds to resubmit a proposal from 3, 6 and 10 percent to 5, 15 and 25 percent for the first, second and third years, respectively.
  • Shareowners are no longer permitted to aggregate shares to meet holding requirements.
 
A successful CRA resolution requires a majority vote in both the House and the Senate and the President's signature.
 
Lisa Woll, CEO of US SIF: The Forum for Sustainable and Responsible Investment, made the following statement:
 
“We thank Chair Brown for standing up for investors by introducing the CRA resolution to reverse the deeply flawed changes to Rule 14a-8.  If left unchanged, the rule, when fully implemented, will disenfranchise investors and shift power to company CEOs and management.
 
“Shareholder proposals provide a low-cost method for shareholders to talk to management and to each other about the future of their company and important policy issues affecting the company. The votes on shareholder proposals provide more precise information about shareholders' views of the given topic. In our view, the Commission should not be in the business of reducing these lines of communication. Such reductions will likely be unavoidable if the rule is not reversed.
 
About US SIF and the US SIF Foundation
 
US SIF: The Forum for Sustainable and Responsible Investment is the leading voice advancing sustainable and impact investing across all asset classes. Its mission is to rapidly shift investment practices toward sustainability, focusing on long-term investment and the generation of positive social and environmental impacts. US SIF members include investment management and advisory firms, mutual fund companies, asset owners, research firms, financial planners and advisors, community investing organizations and nonprofit associations.
 
US SIF is supported in its work by the US SIF Foundation, a 501(C)(3) organization that undertakes educational and research activities to advance the mission of US SIF.

Learn more at ussif.org.

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