Companies and shareholders are currently facing significant shifts in corporate governance due to recent announcements from the U.S. Securities and Exchange Commission (SEC). These changes are poised to reshape how shareholders engage with public companies, particularly concerning proxy voting and shareholder proposals. Longacre Square Partners, a leading advisory firm in corporate governance, is closely monitoring these developments and guiding clients through the evolving landscape.
The SEC has recently unveiled two critical pieces of guidance that will have a dramatic impact on shareholder communication. Firstly, new guidance on 13D filings clarifies that shareholder engagements suggesting adverse votes against board members if certain provisions are not adopted may now necessitate a 13D filing. This is a notable shift that significantly affects the engagement strategies of major passive investors like BlackRock, Vanguard, and State Street, who have historically operated under different assumptions. The projected impact is a potential decrease in shareholder engagement for passive investors managing aggregated holdings exceeding 5% in public companies, especially regarding proxy voting based on pre-set policies. Further details on this guidance can be found at https://shorturl.at/3lfPB.
Secondly, the SEC has issued new guidance concerning no-action relief for shareholder proposals. This updated guidance allows companies to exclude proposals on issues deemed not economically relevant to their business, specifically those affecting less than 5% of the company’s total assets, net earnings, or gross sales. This change is expected to increase the likelihood of companies receiving no-action relief, leading to potentially fewer shareholder proposals being voted on during the 2025 proxy season. More information on this guidance is available at https://shorturl.at/yCfTs.
Longacre Square Partners is at the forefront of helping companies navigate these complex changes. Jessica McDougall, Chair of the Corporate Governance and Shareholder Engagement Advisory practice at Longacre Square Partners, is a recognized expert in this field. Her extensive experience, including previous stewardship and voting roles at BlackRock and TIAA, positions her and the Longacre Square Partners team as invaluable resources for boards, management teams, and senior investment professionals. They provide crucial counsel on both contested and routine proxy matters in this evolving governance environment.
For expert advice on navigating these SEC governance changes, reach out to Jessica McDougall at [email protected] or the Longacre Square Partners governance team at [email protected]. Longacre Square Partners is dedicated to providing strategic guidance and support in this era of significant governance transformation.
