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A service for global professionals · Friday, July 11, 2025 · 830,524,702 Articles · 3+ Million Readers

SEC Withdraws Gensler-Era Shareholder Proposal Rule

In a broad reversal of course on proposed rules issued by the Securities and Exchange Commission (SEC) under the leadership of former SEC Chair Gary Gensler, on June 12, 2025, the SEC issued a notice withdrawing 14 of the proposed rules.

While most of the withdrawn proposals (13 of them) relate to investment management, and trading and markets matters, the SEC also withdrew its July 2022 rule proposal (the “rule proposal”). This had proposed amendments to certain substantive bases for excluding shareholder proposals from issuers’ proxy statements for annual or special shareholder meetings under the SEC’s shareholder proposal rule, Rule 14a-8 under the Securities Exchange Act of 1934.

The withdrawal of the rule proposal will be welcome news to issuers as the proposed amendments, which would have amended the substantial implementation, duplication, and resubmission exclusion bases, would have made it more difficult for issuers to exclude shareholder proposals from their proxy statements. The public comment period for the rule proposal had been closed since September 12, 2022, and based on the SEC’s fall 2024 regulatory flexibility agenda, final rules were planned for adoption in October this year.

While the substantial implementation exclusion permits an issuer to exclude a shareholder proposal that “[it] has already substantially implemented,” the duplication exclusion permits an issuer to exclude a shareholder proposal if the proposal “substantially duplicates another proposal previously submitted to [it] by another proponent that will be included in [its] proxy materials for the same meeting,” and the resubmission exclusion permits an issuer to exclude a shareholder proposal if it “addresses substantially the same subject matter as a proposal, or proposals, previously included in [its] proxy materials within the preceding five calendar years” if the matter was voted on at least once in the last three years and received support below specified vote thresholds on the most recent vote.

In the rule proposal, which we discuss in detail here, the SEC proposed to amend:

  • The substantial implementation exclusion by specifying that a proposal may be excluded on that ground only if “essential elements” of the proposal have been implemented;
  • The duplication exclusion by specifying that “substantially duplicates” means that a proposal “addresses the same subject matter and seeks the same objective by the same means” as a previously submitted proposal; and
  • The resubmission exclusion by changing the “addresses substantially” standard to a “substantially duplicates” standard (as defined above).

In the notice of withdrawal, the SEC noted that it will publish new proposed rules if it decides to pursue future regulatory action on any of the withdrawn rules.

The withdrawal of the rule proposal follows the SEC Division of Corporation Finance’s issuance of SEC Staff Legal Bulletin No. 14M in February 2025 (which we discuss here) to clarify its application of the economic relevance and ordinary business exclusion bases of its shareholder proposal rule, and shows that the SEC remains focused on its shareholder proposal rule.

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