ATTEMPTS TO DISMANTEL DODD-FRANK THREATENS SHAREHOLDER RESOLUTIONS IN THE US

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15 May ATTEMPTS TO DISMANTEL DODD-FRANK THREATENS SHAREHOLDER RESOLUTIONS IN THE US

In American Banker, John K.S. Wilson writes about the threat to shareholder resolutions posed by Republican attempts to dismantle Dodd-Frank and replace it with the Financial Choice Act. According to Wilson, Shareholder proposals allow investors to put questions related to a company’s environmental, social and governance (ESG) policies to a vote of all shareholders. The new bill, authored by House Financial Services Committee Chairman Jeb Hensarling (R-Texas) would remove this right, as well as unwind much of the regulatory regime put in place after the financial crisis.

According to Wilson, for decades some shareholders have used the little-known but often very effective tool of shareholder resolutions to urge companies to protect the environment, improve working standards and increase corporate accountability. Section 844 of the Financial Choice act would establish a minimum threshold of 1% ownership over three years to file a shareholder proposal, replacing the current threshold at $2,000 worth of shares. This means that at many companies, only the very largest investors such as BlackRock or Sate Street would be able to file shareholder resolutions.

The House Financial Services Committee recently passed the Financial Choice Act and the bill is now up for a vote in the US Senate. Read more on American Banker, The Hill, TIME and Vox.