Rule 14a-8 of the Securities Exchange Act of 1934, as amended, requires public companies to include shareholder proposals in proxy materials. The provision also contains thirteen grounds for exclusion. Subsection (i)(3) permits the omission of proposals and supporting statements that violate the proxy rules, including those containing “materially false or misleading statements.”
Subsection (i)(3) has at least two unique attributes. First, the exclusion applies both to the proposal and to the supporting statement. Despite this, inaccurate information in the supporting statement does not necessarily result in the exclusion of the entire proposal. Second, the provision expressly cross-references, and necessarily relies upon, Rule 14a-9, the antifraud provision set out in the proxy rules. Rule 14a-9 aims to protect investors by forbidding materially false or misleading statements in any proxy communication. Not a strict liability provision, Rule 14a-9 includes a state of mind requirement.