Lawsuits filed by the National Association of Manufacturers (NAM) and the National Center for Public Policy Research (NCPPR), a right-wing think tank, seek to remove protections that allow a shareholder to bring critical issues to a vote at the annual shareholder meeting.
At issue is the authority of the Securities and Exchange Commission (SEC) to adjudicate the process of shareholder resolutions. NAM’s lawsuit argues that “The SEC lacks power to compel any corporation to speak, or subsidize shareholder speech, about any shareholder-submitted proposal.” NAM contends that the proxy process is a matter governed by state law, not the SEC.
In response, the Interfaith Center on Corporate Responsibility (ICCR), of which UCF is a member organization, filed an amicus brief arguing that the SEC does have that authority – and details ways in which the shareholder resolution process has value for both companies and investors. The case is being argued at the 5th Circuit Court of Appeals, based in New Orleans
“This is part of an organized, national campaign to undermine responsible investing,” said Matthew Illian, UCF’s Director of Responsible Investing. “Moreover, this effort disempowers shareholders from having a voice in the policies and practices of the corporations in which they invest. Since shareholder resolutions are a key component in our responsible investment strategies, we join ICCR in opposing these lawsuits.”
Prior to filing the amicus brief, ICCR and shareholder organization Ceres sent letters to 50 of NAM’s largest members, alerting them of their trade association’s actions. “We urge you to use your voice as Board and Executive Committee members to express your disagreement with NAM’s action,” the letter read in part. “We also ask that you clarify your own company’s position on this lawsuit so we can better understand your perspective.”
UCF will continue to monitor this situation and inform our clients of any significant developments in the case.