SEC Restraint on Shareholder Proposals to Stoke State Competition

Opinion: The Securities and Exchange Commission's moves to allow companies more discretion in blocking shareholder proposals will further energize competition among states seeking to provide the most attractive corporate law. Corporate America is entering a proxy season unlike any in recent memory. The Securities and Exchange Commission has announced a major shift in how it will handle shareholder proposals for inclusion in company proxy statements, heightening state competition in the realm of corporate law.

For decades, SEC staff served as the main referee, issuing views on when companies could omit a shareholder proposal. That system placed most of the interpretive weight on federal law, with state corporate law playing only a modest role. SEC Chair Paul Atkins indicated last month that state corporate law should have a greater effect on what topics shareholders may properly ask companies to put to a vote. And the SEC’s staff just announced it will weigh in only on questions that turn on state law—specifically, whether a proposal is a proper subject for shareholder action. On all other disputes, companies and shareholders will proceed without SEC staff views.

The objectives are clear: reduce the costs of being a public company and stimulate capital formation by encouraging more companies to go or to remain public. But the implications run deeper. These developments will further energize competition among states seeking to provide the most attractive corporate law.

“The mechanism for shareholder proposals, while a minor element of U.S. securities regulation, sits at the heart of discussions surrounding corporate purpose, board oversight, and the voice of investors. These are fundamentally issues governed by state corporate law.”

Delaware, Texas, and Nevada are among states where efforts are underway to address gaps in understanding of how the federal system has functioned in practice. Delaware may capitalize on its established equilibrium of director authority and shareholder rights, Texas might prioritize attracting businesses and stock exchange listings, and Nevada could emphasize economic materiality metrics. State lawmakers are considering legislation, agency guidance, or judicial doctrine to incorporate the SEC’s precedents into state law, potentially introducing a new dimension of competition at the state level.

Amid these initiatives, the SEC’s current approach intersects corporate governance and state charter competition. It presents states with a crucial opportunity to influence the future of shareholder engagement in U.S. corporations by clarifying when proposals are appropriate topics for shareholder action, while leaving other issues to state law and market dynamics.

Авторское резюме: Реформы SEC по ограничению участия в блокировании предложений акционеров стимулируют большую конкуренцию штатов за наиболее благоприятное корпоративное право, усиливая влияние штатного регулирования на процесс голосования и капитализацию рынков.

Bloomberg Law News — 2025-11-21

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