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This bill would direct the Securities and Exchange Commission to change its rules on shareholder proposals, making it harder for companies to be forced to include a large number of proposals on their proxy materials. Under the bill, a company would only have to include a limited number of shareholder proposals at each annual or special meeting, depending on its size, and only proposals that have a real financial effect on the company could qualify. The bill also says proposals with the same or very similar subject should count as one, and proposals from board members would not count. It also narrows what counts as “material” by focusing on financial risks and returns, not on goals like environmental, social, political, or ideological objectives.
- Companies would have to include no more than 2 shareholder proposals if they are smaller public companies, no more than 4 if they are mid-sized public companies, and no more than 7 if they are the largest public companies.
- A proposal could only be included if it has a material effect on the company’s financial performance.
- The company would decide how to choose among eligible proposals, and it would have to tell the SEC how that selection method works. The order in which proposals are received would not matter.
- Very similar proposals would be treated as one proposal, and proposals submitted by a board member would not be included under this limit.
Official Summaries
Stop Woke Investing Act
This bill requires the Securities and Exchange Commission (SEC) to amend regulations to limit the inclusion of shareholder proposals in proxy statements. A proxy statement is provided to shareholders prior to a public company holding a shareholder meeting and contains information relevant to a shareholder vote. Under current SEC rules, certain qualifying shareholder proposals must be included on a company's proxy statement, including proposals that raise significant social policy issues.
Under the bill, a shareholder proposal must have a material effect on the financial performance of the company to be included in a proxy statement. The bill also establishes a cap on the number of shareholder proposals required to be included in a shareholder meeting, depending on the size and type of the company. In addition, a proposal submitted by a member of the board of directors is prohibited from inclusion as a shareholder proposal.
Current Full Text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 52 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 52
To require the Securities and Exchange Commission to amend a rule of
the Commission relating to shareholder proposals, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 3, 2025
Mr. Biggs of Arizona (for himself, Mr. Ogles, and Mr. Crane) introduced
the following bill; which was referred to the Committee on Financial
Services
_______________________________________________________________________
A BILL
To require the Securities and Exchange Commission to amend a rule of
the Commission relating to shareholder proposals, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Stop Woke Investing Act''.
SEC. 2. SHAREHOLDER PROPOSALS.
(a) Definitions.--In this section:
(1) Accelerated filer; large accelerated filer.--The terms
``accelerated filer'' and ``large accelerated filer'' have the
meanings given the terms in section 240.12b-2 of title 17, Code
of Federal Regulations, or any successor regulation.
(2) Commission.--The term ``Commission'' means the
Securities and Exchange Commission.
(3) Material.--The term ``material'', when used to qualify
a financial risk or financial return--
(A) means a financial risk or financial return in
which there is a substantial likelihood that a
reasonable investor would attach importance when--
(i) evaluating the potential financial
risks or returns of an existing or prospective
investment; or
(ii) exercising, or declining to exercise,
any rights with respect to securities; and
(B) does not include--
(i) furthering nonpecuniary, environmental,
social, political, ideological, or other goals
or objectives; or
(ii) any portion of a financial risk or
financial return that primarily relates to
events that--
(I) involve a high degree of
uncertainty regarding what may occur in
the long-term future; and
(II) are systemic, general, or not
investment-specific in nature.
(4) Non-accelerated filer.--The term ``non-accelerated
filer'' means an issuer that is not an accelerated filer or a
large accelerated filer.
(b) Amendments Required.--Not later than 180 days after the date of
enactment of this Act, the Commission shall amend section 240.14a-8 of
title 17, Code of Federal Regulations, or any successor regulation, to
provide that the shareholder proposals that a company includes on the
proxy card of the company, and includes along with any supporting
statement in the proxy statement of the company, shall be determined in
accordance with the following:
(1) A company shall determine the proposals to include with
respect to any 1 annual or special meeting of shareholders as
follows:
(A) Subject to paragraph (2), if the company is a
non-accelerated filer, the company shall not be
required to include more than 2 proposals submitted by
shareholders.
(B) Subject to paragraph (2), if the company is an
accelerated filer, the company shall not be required to
include more than 4 proposals submitted by
shareholders.
(C) Subject to paragraph (2), if the company is a
large accelerated filer, the company shall not be
required to include more than 7 proposals submitted by
shareholders.
(2) A proposal may not be included under paragraph (1)
unless the proposal has a material effect on the financial
performance of the applicable company.
(3) The method for determining which proposals to include
under subparagraphs (A), (B), and (C) of paragraph (1) shall
be--
(A) determined by the company; and
(B) disclosed to the Commission.
(4) The order in which the company receives the proposals
shall have no bearing in determining whether a proposal is so
included.
(5) If any 2 or more proposals submitted are substantially
similar, all such proposals shall be considered to be a single
proposal for the purposes of this subsection.
(6) No proposal submitted by a member of the board of
directors of the company may be so included.
(c) Rules of Construction.--Nothing in this section may be
construed--
(1) to require a company to include a shareholder proposal
in the proxy statement of the company if, under rules
prescribed by the Commission, the proposal otherwise is not
required to be included in the proxy statement;
(2) to authorize or approve any Commission rule or claim of
authority to require a company to include the proposal of a
shareholder in the proxy statement of the company; or
(3) to restrict the ability of the Commission to repeal any
rule requiring a company to include the proposal of a
shareholder in the proxy statement of the company.
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