A federal judge has dismissed a lawsuit challenging U.S. Securities and Exchange Commission rule changes that impose stricter requirements on shareholders seeking to submit proposals at corporate annual meetings. U.S. District Judge Reggie Walton in Washington, D.C., ruled that the SEC had acted within its authority when it adopted the rules in November 2020, late in former President Donald Trump’s administration. The rules raised the threshold for stock ownership and holding duration needed to file proposals, and imposed tougher criteria for resubmitting previously rejected proposals. The SEC was required to determine whether the changes would “promote efficiency, competition, and capital formation, and it did so,” Judge Walton wrote in his 64-page decision.
The plaintiffs, including the Interfaith Center on Corporate Responsibility, As You Sow, and shareholder advocate James McRitchie, argued that the rule changes would limit shareholder influence on environmental, social, and governance matters and reduce long-term shareholder value. In a joint statement, the plaintiffs said the rules “only serve to hurt shareholders and companies alike.” Despite the ruling, they affirmed their commitment to engage companies on ESG concerns. The SEC, which had supported the rules across both Republican and Democratic administrations, declined to comment on the decision.
