The U.S. Securities and Exchange Commission (SEC) rejected an application from Apple this week. In the application, Apple hopes to prevent three proposals from activist investors from being presented at the next annual general meeting of shareholders. This also shows that other companies that want to use the SEC to fend off activist investors will encounter obstacles.
These shareholder proposals respectively require Apple to report in detail why certain apps are removed from the App Store in China, and the risks that may result from the introduction of non-disclosure agreements in the context of suspected workplace harassment and discrimination.
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In October of this year, there were media reports that Apple applied for the SEC to allow it to block six shareholder proposals. Apple’s reasoning is that it has substantially fulfilled the requirements of these proposals. Of the remaining three proposals, one has been rejected and two are still pending.
The SEC’s rejection of Apple’s email is expected to be announced as early as this Wednesday. The letter stated that Apple’s current policies and procedures are not better than the requirements of the relevant proposals.
Apple is expected to hold an annual general meeting of shareholders in the first quarter of 2022. The company declined to comment on this news. The SEC’s response to Apple may not bode well for other companies under pressure from activist investors. Last month, the SEC adjusted its policy, making it more difficult for companies to obtain SEC support in rejecting shareholder proposals.
After the SEC’s policy adjustments, it seems that more companies are acquiescing to the demands of activist investors. In response to the fourth shareholder proposal on product maintenance rights, Apple announced last month that it would start a project to help customers repair equipment. Goldman Sachs released a report on mandatory arbitration procedures this week. Earlier, a shareholder proposal requested Goldman Sachs to provide more information about this policy.
In response to shareholder proposals regarding app removals, Apple argued that it has detailed how many apps have been removed from app stores in China in its annual transparency report. However, Joshua Brockwell, who submitted the proposal on behalf of Azzad Asset Management, said that the information provided in these reports is far from enough. He said: “They like to add or subtract numbers, but what do numbers mean? You can’t get enough insights from them.”