Shareholder Resolutions

A shareholder resolution is a request that shareholders vote on a recommendation that the corporation or the board undertake certain action. It appears in a company’s proxy statement to be presented at a company’s annual meeting. Resolutions, even those supported by a majority vote, are not binding on management, although the shareholders of some companies have proposed changes in corporate bylaws to make the proposals binding. Shareholder resolutions are governed and controlled by both state and federal law, [Page 3085]specifically by Rule 14a-8 of the 1934 Securities Exchange Act. The remainder of this entry focuses on the mechanics of a shareholder resolution, its history and evolution, the purposes underlying the tactic, and corporate responses to resolutions.