AIO Financial ( is an active participant in shareholder advocacy on behalf of our clients.  Shareholder advocacy provides a way for company owners (shareholders) to make real impacts in companies.  Advocates can address: climate change, wage inequality, disclosing political contributions, board diversification, worker rights, …  That may all change if the Financial CHOICE Act, specifically Section 844 is passed.

At present, a shareholder can file a proposal (resolution) with a company if s/he has held 1% or $2,000 worth of shares in a company, whichever is lower, for at least a year. This threshold allows a broad range of shareholders to participate in the proposal process.

Section 844 would severely curtail shareholder democracy – only the largest shareholders (a small number of multi-billion dollar funds) would be able to file shareholder proposals with public companies. These changes would undermine your rights as a shareholder and prevent us, as your investment advisor, from effectively working with companies to address environmental, social, and governance (ESG) issues.

Specifically, Section 844 would change the existing rules as follows:

  • Require a 1% ownership (of total market capitalization) over three-years to submit a proposal: For context, a shareholder would have to hold over $7 billion worth of Apple shares to qualify. This ownership threshold limits access to the resolution process to a handful of mutual fund managers.
  • Increase resubmission thresholds: Proposals must garner increasing support to qualify for resubmission to the company the following year. The proposed changes would mean resubmission thresholds increase to 6% in year one (from 3%); to 15% in year two (from 6%); and to 30% in year three (from 10%). From 2007 through 2009, only about 17% of the proposals that came to a vote achieved the support of 30% of the shares voted, and from 2010 onwards, this has been approximately 30% of proposals filed. If these thresholds had been in place in recent years, proposals that have led to changes in corporate behavior, reduced risks, and created value would not have been brought back to the ballot.
  • Prohibit the submission of proposals on behalf of a shareholder: This provision would disqualify your investment advisor from filing resolutions on behalf of any client.

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