On July 13, 2022, the U.S. Securities and Exchange Commission (SEC) proposed rule amendments that would update certain substantive bases for exclusion of shareholder proposals under the SEC’s shareholder proposal rule, Exchange Act Rule 14a-8.1 The proposed amendments would revise three of the substantive bases for exclusion: the “substantial implementation” exclusion in Rule 14a-8(i)(10), the “duplication” exclusion in Rule 14a-8(i)(11), and the “resubmission” exclusion in Rule 14a-8(i)(12). The proposed amendments would provide the following:
- A proposal may be excluded as substantially implemented if “the company has already implemented the essential elements of the proposal.”
- A proposal “substantially duplicates” another proposal if it “addresses the same subject matter and seeks the same objective by the same means.”
- A proposal constitutes a resubmission if it “substantially duplicates” a prior proposal, using the same test proposed in the previous bullet.
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