November 22, 2019

Shareholder Proposals: First “Informal” No-Action Response!

Yesterday, Corp Fin unveiled its “Shareholder Proposal No-Action Responses Chart” – and posted the first “informal” no-action response under its new process for Rule 14a-8. DLA Piper’s Sanjay Shirodkar shared this Staff email that accompanied the response:

The staff completed its review of the company’s submission. Our response will be posted after 4:30 PM this afternoon in our 2019-2020 Shareholder Proposal No-Action Responses Chart, which is available on our website at Copies of all correspondence relating to this submission will be made available at the same address after a short delay. If you have any questions, please call the Office of Chief Counsel in the Division of Corporation Finance at (202) 551-3520.

We also held a big webcast on this topic just yesterday – “Shareholder Proposals – What Now?” – with Corp Fin’s Chief Counsel David Fredrickson, Davis Polk’s Ning Chiu, Morrison & Foerster’s Marty Dunn and Gibson Dunn’s Beth Ising. If you missed it, the audio archive is already available – and the transcript should be coming a week or so after Thanksgiving.

“Say” Earnings Calls: Not Just For Retail Anymore!

We’ve blogged a couple of times about the “Say” platform that allows shareholders to submit questions during earnings calls, investor days, webinars and annual meetings. Originally, Say focused on increasing retail participation in these events – but it recently announced full access to its Q&A polling for institutional investors as well.

Say also announced that it would collaborate with “Just Capital” on a new type of “shareholder engagement” platform – quarterly calls that allow CEOs to speak with investors about ESG & “stakeholder” value. Last week, Paypal’s CEO broke ground as the first participant.

State “Securities Act” Litigation: Another One Bites the Dust

A few months ago, I blogged about a ’33 Act case being dismissed from state court in New York – offering some hope to companies who are worried about a deluge of state litigation due to the Supreme Court’s 2018 Cyan decision. This D&O Diary blog from Kevin LaCroix recounts another story of hope – this time, a recent dismissal in Connecticut. Here’s the takeaway:

These various dismissal motions rulings are of course themselves without precedential value and are subject to appeal. However, one can hope that these rulings may send a message that the plaintiffs should reconsider whatever perceived advantages they may think they have in proceeding in state court rather than federal court.

Unfortunately, despite these rulings, Cyan still creates significant risks for companies. This blog gives a real-life, recent example of a company facing a heap of lawsuits on the heels of its IPO. And because simultaneous state & federal securities lawsuits can’t be consolidated, it’s extra messy. Kevin notes that Congress could fix the problem by making a “simple” tweak to Section 22 of the ’33 Act that eliminates concurrent state court jurisdiction…

Liz Dunshee