Division of Corporation Finance Staff Legal Bulletin Proposals of Security Holders: Ordinary Business Operations Exclusion
November 3, 2009
On October 27, 2009, the Securities and Exchange Commission's (the "Commission") Division of Corporation Finance (the "Division") issued Staff Legal Bulletin No. 14E, providing guidance regarding Rule 14a-8 under the Securities Exchange Act of 1934. Specifically, Bulletin No. 14E contains information regarding:
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the application of Rule 14a-8(i)(7) to proposals relating to risk;
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the application of Rule 14a-8(i)(7) to proposals focusing on succession planning for a company's chief executive officer ("CEO"); and
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the manner in which shareholder proponents and companies can notify the Division that they will be submitting correspondence in connection with a no-action request.
Rule 14a-8 focuses on when a company must include a shareholder's proposal in its proxy statement and identify the proposal in its form of proxy when the company holds an annual or special meeting of shareholders. Rule 14a-8(i)(7), one of the substantive bases for exclusion in Rule 14a-8, permits a company to exclude a proposal that deals with a matter relating to the company's ordinary business operations.
