Earlier this month, the SEC proposed amendments affecting the process by which shareholder proposals are evaluated for inclusion in public company proxy statements.

In the proposed amendments, the SEC has maintained the $2,000 minimum ownership requirement, but shareholders seeking a place in the proxy process must have held those shares for at least a three year period so as to demonstrate a long-term investment in the company.  Further, the requirements for affirmative shareholder votes for re-submission of defeated shareholder proposals have been increased in a sliding scale of between 5% and 25% prior support before resubmission is permitted.

Comments to the SEC can be made until in early January.  The import of these changes appears related to an attempt to bar shareholder proposals propounded by small shareholders who take a stock position just for the purpose of exerting policy pressure on the issuer, divorced from any true interest in the shareholder’s economic stake.