By: Kevin Thomas, Director of Shareholder Engagement
Last week the Chair of the US House Financial Services Committee submitted draft legislation for the Financial Choice Act, which aims to revoke various financial sector reforms introduced under the Dodd Frank act after the 2008 financial crisis.
While we have many serious concerns with the draft legislation, SHARE wrote to the House Financial Services Committee specifically asking it to reject the seriously flawed anti-investor provisions in the draft legislation.
The draft bill as submitted contains legislative provisions effectively eliminating our clients’ fundamental right as owners to file shareholder proposals.
Shareholder proposals are an important means of raising legitimate investor concerns with the boards and management of the companies our clients own, and expressing shareholder support for important environmental, social and governance reforms that reduce risk and enhance accountability.
The proposed legislation would alter the ownership threshold for filing proposals so that virtually all shareholders would be prohibited from exercising this ownership right. For example, to file a proposal at a firm like Apple Inc. under the proposed legislation, an investor would need to own more than $7 Billion worth of Apple shares.
Stripping away ownership rights as proposed in this legislation would undermine shareholder/board dialogue, harm investors, and upset 70 years of Securities Exchange Commission rulemaking and deliberations on this important and well-functioning corporate democracy process.
That’s why SHARE vehemently opposes any such changes.