SEC Allows Dell to Dismiss Bitcoin Shareholder Proposal

SEC Allows Dell to Dismiss Bitcoin Shareholder Proposal

The U.S. Securities and Exchange Commission (SEC) has permitted Dell Technologies to exclude a shareholder proposal advocating for the company to explore Bitcoin as a treasury reserve asset. This decision, detailed in a recent letter from the SEC, marks another instance where a major corporation has opted against direct shareholder involvement in cryptocurrency investment strategy.

Key Takeaways

• The National Center for Public Policy Research (NCPPR) proposed that Dell evaluate Bitcoin for its treasury.
• Dell argued the proposal interfered with ordinary business operations, a stance supported by the SEC.
• The SEC's decision highlights the ongoing debate surrounding corporate Bitcoin adoption.

The proposal, submitted by the NCPPR in January, urged Dell's board to assess the potential benefits of adding Bitcoin to its balance sheet. The NCPPR, known for its advocacy of Bitcoin adoption by major corporations including Meta, Amazon, McDonald's, and Microsoft, cited rising inflation and growing institutional interest in Bitcoin— such as BlackRock's recent endorsement of a 2% Bitcoin allocation—as justification.

Dell, however, countered that decisions regarding cash management and investment strategies are best left to management's discretion, arguing that these are complex matters unsuitable for direct shareholder intervention. The company further contended that the proposal amounted to micromanagement by dictating a specific investment (Bitcoin) and inappropriately invoking fiduciary duty.

The SEC's decision to not recommend enforcement action aligns with Dell's position, classifying the proposal as falling under the purview of ordinary business operations. This ruling underscores the SEC's prevailing view on shareholder proposals concerning specific investment strategies.

Interestingly, Dell CEO Michael Dell previously sparked speculation about Bitcoin investment with a June tweet featuring a meme of Cookie Monster consuming Bitcoin, alongside discussions about scarcity and value with Michael Saylor.

In contrast to Dell's and McDonald's experience with similar shareholder proposals (McDonald's also received SEC approval to exclude a Bitcoin proposal in April), Microsoft handled a comparable proposal differently. While ultimately rejected by shareholders in 2024, Microsoft allowed the proposal to proceed to a vote, even providing Saylor the opportunity to present his case to the board.

Codeum’s Note: This highlights the evolving regulatory landscape and corporate governance considerations surrounding cryptocurrency investments. Codeum offers comprehensive smart contract audits and security consulting services to help blockchain projects navigate these complexities and build secure, compliant applications. Our services include smart contract audits, KYC verification, custom smart contract and DApp development, tokenomics and security consultation, and partnerships with launchpads and crypto agencies.