SEC’s Division of Corporation Finance Issues Guidance on Rule 14a-8’s “Directly Conflicting” and “Ordinary Business” Exclusions
On October 22, 2015, the Division of Corporation Finance (the “Division”) of the Securities and Exchange Commission (“SEC”) issued Staff Legal Bulletin No. 14H (“SLB 14H”), which provides much awaited guidance on the Division’s interpretation of Rule 14a-8(i)(9) – the provision that permits public companies to exclude a shareholder proposal “[i]f the proposal directly conflicts with one of the company’s own proposals to be submitted to shareholders at the same meeting.” The guidance clarifies the Division’s reading of this provision following the Division’s unexpected announcement early this year that it would not express any views regarding the application of Rule 14a-8(i)(9) during the 2015 proxy season. SLB 14H also expresses the Division’s view regarding the scope of Rule 14a-8(i)(7), which allows companies to exclude shareholder proposals relating to their ordinary business operations.