The US is about to go through another major upheaval, with watchdogs signalling boards can exclude shareholder proposals from their AGMs without regulator approval.

The decision was immediately slammed by observers as “counter-productive and offensive”.

The US Securities and Exchange Commission (SEC) announced on Monday that it will “not respond” to “no action requests”, meaning shareholder proposals ahead of an annual general meeting can be excluded by boards with no reference to regulators.

Companies must still notify the SEC that they intend to exclude proposals but the procedure will become a formality.

The move opens the doors to companies making their owns decisions on the validity of shareholder proposals and removes a formerly critical step in US shareholder-corporate relations.

The SEC says in its note that the decision had come about due to “current resource and timing considerations following the lengthy government shutdown and the large volume of registration statements and other filings requiring prompt staff attention, as well as the extensive body of guidance from the Commission and the staff available to both companies and proponents… .”

The move is yet another step in the reconfiguration of US corporate governance since Donald Trump took office as president for the second time in January.

Trump has moved to shut down DEI policies and programmes, while the Financial Times has reported the SEC is looking at ways to limit shareholder lawsuits against companies, a move that has attracted criticism from Democrat senator Elizabeth Warren. In addition, there are changes in progress to do away with quarterly reporting.

Proxy advisers and ESG

There are also signs that Congress may take action against proxy advisers, particularly ISS (Institutional Shareholder Services) and Glass Lewis and the part they play in advising the way share owners vote. Republican politicians have led a set of hearings in Congress, incensed at the ESG stance of proxies.

The SEC’s decision on non-action requests met with stiff criticism. A blog from ValueEdge Advisors, a consultancy for share owners, argues the reforms are part of a “wishlist for suppressing shareholder oversight”.

The blog adds: “This is a counter-productive and offensive decision that undermines the credibility of the public markets. It is taken without any input from investors, contrary to the Commission’s mandate.”

This is unlikely to be the last governance change under the existing administration, but it is further indication of the direction in which the current regime will travel, if one were needed.