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Simple English definitions for legal terms
shareholder proposal
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A quick definition of shareholder proposal:
A shareholder proposal is when one or more people who own part of a company suggest a change to how the company does things. The company usually tells all the owners about the suggestion before they have a meeting to talk about it.
A more thorough explanation:
A shareholder proposal is a suggestion made by one or more individuals who own stock in a company. The proposal aims to change a policy or procedure within the company. The corporation usually informs all shareholders about the proposal before the next shareholder meeting.
Example 1: A group of shareholders in a company that produces plastic products propose that the company should reduce its use of plastic and invest in more sustainable materials. They submit a shareholder proposal to the company's board of directors.
Example 2: A shareholder proposes that the company should increase its charitable donations to support local communities. The proposal is included in the agenda for the next shareholder meeting, and all shareholders have the opportunity to vote on it.
These examples illustrate how shareholders can use their ownership in a company to influence its policies and practices. Shareholder proposals provide a way for investors to voice their concerns and suggest changes that align with their values and beliefs.