Filing a shareholder proposal in the US

This country factsheet provides an overview of the key legal and technical processes related to filing a shareholder proposal in the US. Seven additional country factsheets are available, covering Australia, Canada, France, Germany, Japan, South Africa, and the UK.

For more information on how to use shareholder proposals to effect positive change at investee companies, read our guide to filing impactful shareholder proposals.

The information on regulatory requirements in this guidance is correct as of 2022.

Please note: in July 2022, The Securities and Exchange Commission proposed amendments to Exchange Act Rule 14a-8, the shareholder proposal rule, which requires companies subject to the federal proxy rules to include shareholder proposals in their proxy statements, subject to certain procedural and substantive requirements.

Overview of key legal and technical processes in the US
Key legislation	Rule 14a-8 Securities Exchange Act
Right to file? Can a shareholder propose an issue to be included and voted upon at a general meeting?	Shareholders are permitted to introduce a proposal to a company. This is a closely regulated process. Each shareholder can only present one resolution a year to a company.
Resolution ‘ask’ What power do shareholders have to request a company to take a certain action?	Shareholders: Can request action from the board (not ‘compel’) Must not address the firm’s ordinary business unless it can be argued that the matter intersects with a significant public issue Cannot be overly prescriptive Typically present proposals as an advisory, non-binding resolution
Threshold requirements What level of shareholding is required to file?	USD$2,000 of the company’s stock for at least three years; USD$15,000 of the company’s stock for at least two years; or USD$25,000 of the company’s stock for at least one year. Note: the threshold was previously USD$2,000 of the company’s stock and there was a ‘grandfather’ transition period in place until 1 Jan 2023.
Ownership period Are there any rules around how long shares must have been held for?	Shareholders must continuously hold stock through the AGM or be barred from re-submitting the resolution for two years.
Demonstrating ownership What paperwork must proponents provide to demonstrate their holding?	Proponents must provide a letter from the broker or a custodian letter – this can be sent by the broker directly to the company or enclosed in the filing packet. It is recommended that you receive the proof of ownership to check for any errors.
Filing packet What formal documents are required to submit a proposal and in what form should they be sent?	The documents should be presented to the corporate secretary (or another person as advised in the proxy statement) in written form (English language). The proposal can be in hard copy or electronic form, with sign-upon-receipt mail advised for proof of hard copy submission. The submission should include a cover letter, the draft resolution (500-word limit), supporting statements and, where applicable, a custodian letter.
Key filing dates When must the resolution be received by?	A proposal should be received before, or by close of business of the company’s filing deadline. Companies publish their filing deadlines in their proxy statements and these dates vary from year to year. Proposals must be received no less than 120 days before the release of the previous year’s proxy statement.
Right to reject or appeal? Can companies reject the proposal and is there a formal appeals process?	The US has a formal appeals system for shareholder proposals. Companies can submit a ‘no-action’ letter within 14 days to the SEC and the filer then has 30 days to reply. If agreed, the resolution will be omitted from the proxy statement and cannot be re-filed for three years. Common reasons for rejection:^[1] False or misleading statements. Relevance (operations that account for less than 5%). Ordinary business. Duplicates another resolution that has been submitted.^[2] Substantively implemented. The shareholder bears any legal costs associated with any proposal review carried out by the SEC.
Resubmission Can a proponent re-file at a future AGM if it fails to gather enough support to pass?	Yes, although resubmission thresholds^[3] apply. Filers can resubmit in subsequent years if: the first-year vote achieves 5% of the votes cast; the second-year vote achieves 15% of the votes cast; or the third-year vote (and each time thereafter) achieves 25% of the votes cast. A resolution that is omitted cannot be refiled for 3 years.
Withdrawal Can a shareholder withdraw a resolution after it is filed?	Yes. After the company has received the proposal, it may contact the filing proponents and offer to negotiate in return for the withdrawal of the proposal. This is a common approach where grounds for withdrawal can be agreed, i.e., in return for substantive commitment or action on the issue at hand. If withdrawn, the proposal does not appear on the proxy statement.
Representation Is the filer of a shareholder resolution proposal required to attend the AGM?	In the US, the filer, or a representative, must attend the annual meeting to move the resolution as required by SEC rules. This requires a prepared statement to be read where typically three minutes is allowed, but the filer should check with the corporate secretary.
Voting thresholds What voting threshold is required to pass the resolution?	50% of the total voting rights. A simple majority.
Useful resources	Interfaith Centre on Corporate Responsibility (2022), How to file a shareholder resolution ICCR (2017), Proxy Resolutions and Voting Guide US Securities and Exchange Commission (Accessed 2022), Rule 14a-8

Overview of key legal and technical processes in the US

Key legislation

Rule 14a-8 Securities Exchange Act

Right to file?

Can a shareholder propose an issue to be included and voted upon at a general meeting?

Shareholders are permitted to introduce a proposal to a company. This is a closely regulated process.

Each shareholder can only present one resolution a year to a company.

Resolution ‘ask’

What power do shareholders have to request a company to take a certain action?

Shareholders:

Can request action from the board (not ‘compel’)
Must not address the firm’s ordinary business unless it can be argued that the matter intersects with a significant public issue
Cannot be overly prescriptive
Typically present proposals as an advisory, non-binding resolution

Threshold requirements

What level of shareholding is required to file?

USD$2,000 of the company’s stock for at least three years;
USD$15,000 of the company’s stock for at least two years; or
USD$25,000 of the company’s stock for at least one year.

Note: the threshold was previously USD$2,000 of the company’s stock and there was a ‘grandfather’ transition period in place until 1 Jan 2023.

Ownership period

Are there any rules around how long shares must have been held for?

Shareholders must continuously hold stock through the AGM or be barred from re-submitting the resolution for two years.

Demonstrating ownership

What paperwork must proponents provide to demonstrate their holding?

Proponents must provide a letter from the broker or a custodian letter – this can be sent by the broker directly to the company or enclosed in the filing packet. It is recommended that you receive the proof of ownership to check for any errors.

Filing packet

What formal documents are required to submit a proposal and in what form should they be sent?

The documents should be presented to the corporate secretary (or another person as advised in the proxy statement) in written form (English language).

The proposal can be in hard copy or electronic form, with sign-upon-receipt mail advised for proof of hard copy submission.

The submission should include a cover letter, the draft resolution (500-word limit), supporting statements and, where applicable, a custodian letter.

Key filing dates

When must the resolution be received by?

A proposal should be received before, or by close of business of the company’s filing deadline. Companies publish their filing deadlines in their proxy statements and these dates vary from year to year.

Proposals must be received no less than 120 days before the release of the previous year’s proxy statement.

Right to reject or appeal?

Can companies reject the proposal and is there a formal appeals process?

The US has a formal appeals system for shareholder proposals.

Companies can submit a ‘no-action’ letter within 14 days to the SEC and the filer then has 30 days to reply. If agreed, the resolution will be omitted from the proxy statement and cannot be re-filed for three years.

Common reasons for rejection:^[1]

False or misleading statements.
Relevance (operations that account for less than 5%).
Ordinary business.
Duplicates another resolution that has been submitted.^[2]
Substantively implemented.

The shareholder bears any legal costs associated with any proposal review carried out by the SEC.

Resubmission

Can a proponent re-file at a future AGM if it fails to gather enough support to pass?

Yes, although resubmission thresholds^[3] apply. Filers can resubmit in subsequent years if:

the first-year vote achieves 5% of the votes cast;
the second-year vote achieves 15% of the votes cast; or
the third-year vote (and each time thereafter) achieves 25% of the votes cast.

A resolution that is omitted cannot be refiled for 3 years.

Withdrawal

Can a shareholder withdraw a resolution after it is filed?

Yes. After the company has received the proposal, it may contact the filing proponents and offer to negotiate in return for the withdrawal of the proposal. This is a common approach where grounds for withdrawal can be agreed, i.e., in return for substantive commitment or action on the issue at hand. If withdrawn, the proposal does not appear on the proxy statement.

Representation

Is the filer of a shareholder resolution proposal required to attend the AGM?

In the US, the filer, or a representative, must attend the annual meeting to move the resolution as required by SEC rules.

This requires a prepared statement to be read where typically three minutes is allowed, but the filer should check with the corporate secretary.

Voting thresholds

What voting threshold is required to pass the resolution?

50% of the total voting rights. A simple majority.

Useful resources

Interfaith Centre on Corporate Responsibility (2022), How to file a shareholder resolution

ICCR (2017), Proxy Resolutions and Voting Guide

US Securities and Exchange Commission (Accessed 2022), Rule 14a-8

References

^[1] Rule 14a-8 provides several bases for exclusion. In July 2022, the SEC proposed amendments which would revise three of the bases for exclusion. The rationale is “to promote more consistency and predictability in application”

^[2] ‘Trojan horse’ or ‘antisocial’ shareholder proposals are defined by Glass Lewis as proposals that often mimic the form of traditional resolutions on a variety of topics, but often implicitly or explicitly promote an agenda that is often at odds with that of the traditional resolutions. Generally, proponents of Trojan Horse proposals are critical of companies’ efforts with respect to environmental and social issues. As such, these proposals are generally aimed at curbing those efforts

^[3] The resubmission threshold applies to any proposal with “substantially the same subject matter” as the new proposal. If the July 2022 SEC proposed amendments are adopted, the resubmission threshold would apply only to a proposal that “addresses the same subject matter and seeks the same objective by the same means”