Shareholder Proposals & Staff Legal Bulletin No. 14H (CF): A Complete Copy of the Proposal (Part 10)

The guidance contains a number of useful references that hopefully will play a more important role in the no action process. Footnote 15 indicated that at least sometimes the staff would expect to receive the alternative proposal that management planned to submit.  As the guidance noted: 

• We remind companies that the staff may need a complete copy of a company’s proposal to evaluate a no-action request under Rule 14a-8(i)(9) and that the staff may not be able to agree that the company has met its burden of demonstrating that a shareholder proposal is excludable if those materials are not included with the company’s no-action request.  This same principle applies when the staff evaluates no-action requests under Rule 14a-8(i)(10). 

In submitting requests for exclusion under subsection (i)(9), companies are not explicitly required to submit the competing proposal.  As a result, the competing proposal, once drafted, can include terms and limitations that differ from the shareholder proposal (or at least the intent of the shareholder proposal).  The guidance suggests that companies that do not submit the competing proposal may not receive the requested no action relief, although the cirsumstances when this will occur are not specified.  At a minimum,  the failure to do so raises some additional risk.