Press Releases

Washington, D.C. – On Thursday, Rep. Ralph Norman's (SC-05) legislation, the Businesses Over Activists Act, was included as a part of the Prioritizing Economic Growth Over Woke Policies Act. This package passed the U.S. House of Representatives by a vote of 215 to 203.

Background

The Businesses Over Activists Act reigns in the Securities and Exchange Commission's (SEC) ability to force corporate speech on politicized issues within the shareholder proposal process and allows corporations to return their focus to financial performance.

Under the Exchange Act, the ability of the SEC to oversee proxy solicitations is very limited. In Section 14 of the Exchange Act, Congress empowered the SEC to prevent misleading or insufficient disclosure in proxy solicitations, which are used to obtain authorization for corporate actions. However, Congress never. grated the SEC authority to make it mandatory for companies to include shareholder proposals in their corporate proxy statements.

Unfortunately, the SEC has made it extremely difficult for companies to exclude irrelevant and politically charged shareholder proposals. While shareholder engagement remains an important aspect of corporate governance, this process has become overwhelmingly exploited by activists driven by social or political agendas, leading to hundreds of resolutions being filed related to environmental, social, and political issues, rather than focusing on a company's growth and competitiveness. These activists lack a vested interest in the performance and return of the company and design proposals to force companies to take stances on unrelated political issues. A single shareholder proposal can impose costs of more than $100,000, with many firms reporting significantly higher costs, which is ultimately borne by that company's shareholders.

The Businesses Over Activists Act ultimately reaffirms the proper role of the SEC and ensures the agency cannot exceed its authority by compelling companies to include certain shareholder proposals against their will.

Statements

"Hardworking Americans continue to suffer the most from the woke Democrat agenda. They are sacrificing economic progress and prosperity at the altar of diversity, equity, and inclusion - and the effects are disastrous," said Speaker Mike Johnson in a statement on Friday. "Our struggling economy cannot afford these unnecessary burdens any longer, and I commend Rep. Norman's leadership in protecting the market from these restrictions. H.R. 4655 is critical to remove woke, politicized policies and ensure economic growth moving forward."

"The Biden-Harris Administration's focus on costly non-material environmental, social, and political issues at the expense of sound financial regulation has troubling consequences," said Rep. Ralph Norman. "It is imperative that corporate boardrooms are not turned into partisan platforms where political agendas overshadow sound financial management. The First Amendment rights of these companies must not be violated by the government forcing them to include in their proxies irrelevant and politically charged shareholder proposals that have no bearing on their core operations."