This week investors filed suit seeking to block rules designed to restrict the ability of investors, particularly small investors, to submit shareholder proposals. The Interfaith Center on Corporate Responsibility (ICCR) announced the filing of a complaint (PDF) in the U.S. District Court for the District of Columbia challenging the Securities and Exchange Commission (SEC’s) recent amendments to the 14a-8 rule governing the filing of shareholder proposals. The Unitarian Universalist Association is a long-time member of ICCR and was part of the group planning the lawsuit.
Co-filers of the suit included As You Sow, a leading practitioner of corporate engagement and shareholder advocacy; and James McRitchie, a shareholder advocate and one of the most active individuals submitting shareholder proposals related to corporate governance in the U.S.
The revised rule creates impediments to shareholders’ ability to hold corporations accountable for their impacts on the environment, workers and communities. Corporations and their trade associations have pushed the SEC for years to reduce the number of shareholder resolutions submitted at their annual general meetings.
ICCR has engaged a leading law firm with special expertise in regulatory law. They believe the SEC rules are vulnerable to being overturned under the Administrative Procedures Act because of the poor economic analysis presented by the SEC.
Josh Zinner, CEO of ICCR, said "We believe that the rule changes were wholly unfounded, and that they were promulgated due to political pressure from business trade groups that have long been lobbying to restrict the ability of our members, and our many allies, to file shareholder resolutions."
Link to ICCR's press release.