Main Content

Introduction to the Law of Corporations: Cases and Materials

Shareholder Proposals

At the annual stockholder meeting, directors ask stockholders to vote on certain matters, including the election of directors and other matters, like the ratification of the board's selection of a corporate auditor. But, directors do not have exclusive control over the agenda at a stockholder meeting. Stockholders also have the right to put proposals and questions before the meeting. Some matters that are proposed by stockholders, including amendments to bylaws are expressly permitted by the state corporate law. Others are governed by bylaws, for example stockholder nomination of candidates for the position of director.  

For publicly-traded corporations, the process by which a stockholder can get access to the company's proxy statement to put a question before the shareholders at a meeting is governed by SEC regulation. The SEC's 14a-8 rules have been developed to govern when a board is required to put a shareholder proposal on the corporate proxy statement, or to be more precise rules governing when a board is permitted to exclude a shareholder proposal from the corporation's proxy materials sent to stockholders. 

Although many shareholder proposals are focused on traditional corporate governance issues, there is a long history of social activists, especially faith-based groups like the Interfaith Center on Corporate Responsibility, using the shareholder proposal process to put important social issues on the agendas of corporate America. For example, during the 1970s, shareholders used the shareholder proposal process to raise questions about corporate support for the war in Vietnam. In the 1980s, the anti-Apartheid movement used the shareholder proposal process to raise awareness of the evils of Apartheid in South Africa.