A Trinity of Interpretations Finding the Current Status of the SEC’s Significant Social Policy Exception

Abstract

In 2015, the Third Circuit took a rare opportunity to consider the meaning of SEC Rule 14a-8(i)(7), which allows shareholder proposals which address ordinary business matters to be excluded from a proxy statement unless they target matters of sufficiently significant social policy. In doing so, a split panel broke from decades of SEC practice and provoked a response from the Division of Corporate Finance, which is charged with the Rule’s application. The Division attempted—and failed—to clarify what it understands the social policy exception to require. This Note analyzes the Division’s practice since its confused response to determine whether its interpretation of the significant social policy exception has changed.