SEC Seeks to Reduce Politicisation of Proxies

The Securities and Exchange Commission (SEC) will introduce proposed rules and clarifications for proxy advisers to address what it calls the “weaponisation” of shareholder proposals, SEC Chair Paul Atkins said.

Atkins said some shareholder activists have used Corporate Governance mechanisms to advance political agendas, consuming management time and resources. Proxy advisers, who guide shareholders on voting, have come under scrutiny, including a reported Federal Trade Commission investigation into potential antitrust violations by two advisers on politically charged proposals. Atkins said the proposals often focus on environmental or social issues, are non-binding, and involve matters not material to business operations. The SEC aims to shift shareholder meetings back to Director elections and significant corporate matters. Atkins also noted broader efforts to simplify disclosure requirements and reduce frivolous securities lawsuits to encourage companies to go public.