As has been widely reported, the Securities and Exchange Commission (“SEC”) recently made some rumblings about undertaking a rulemaking requiring corporations to disclose their funding and participation in political activities to shareholders.  The move has been heralded by corporate governance reform groups and decried by some from the business sector.  But what exactly does this all mean in practice?

For starters, we should be clear on exactly what the SEC did.  In August 2011, a group of academics filed a Petition for Rulemaking asking the agency to “develop rules to require public companies to disclose to shareholders the use of corporate resources for political activities.”  No action was taken until a few weeks ago, when the SEC asked the Office of Information and Regulatory Affairs (“OIRA”)—housed within the Office of Management and Budget as part of the Executive Office of the President—to note a proposed rule on the semi-annual, federal-government-wide “Unified Agenda,” along with dozens of other agenda items on a variety of topics the SEC might tackle over the next year.

How to read the tea leaves is, as usual, somewhat unclear at this point.  Placement of a proposed rule on the Unified Agenda is a necessary first step if the SEC wants to engage in rulemaking, but it does not obligate the agency to act.  The list of agenda items is customarily assembled by agency staff and forwarded to OIRA with the SEC Commissioners’ informally-conferred blessing, and simply preserves the SEC’s ability to take action if it ultimately chooses.  The agenda item does project an April 2013 date, but history shows that to be an estimate, at best.  In the past decade it has taken years for the SEC to complete numerous items on the Unified Agenda, and in a number of cases, items see no further action.  Throw in the fact that the SEC has a host of statutorily-required rulemakings to complete under the Dodd-Frank Act, and that the agency has but 4 Commissioners at this point (that some suggest may be split 2-2 on this issue), and the waters muddy even more.

The takeaway, then, is that the SEC has indicated this issue is on its radar.  What further steps (if any) it decides to take, and when it might take them, remains to be seen.