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Corporate Governance

: PomTalk

New SEC Proxy Access Rules on Hold: The Wait Continues.

By Adam G. Kurtz

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Today, October 5, 2010, the SEC issued a stay of its new proxy access rules. See SEC Order Granting Stay, dated Oct. 4, 2010. Last week, on September 29, 2010, the US Chamber of Commerce and the Business Roundtable simultaneously filed (1) a lawsuit challenging the SEC?s new proxy access rules on the grounds that they are arbitrary and capricious and (2) a request with the SEC seeking to stay the newly adopted proxy access rules, Rule 14a-11.

The SEC has agreed to the stay, pending judicial review, which will likely not be resolved until late spring 2011. This means that the new proxy access rules will not become effective until the 2012 proxy season, if they survive judicial review.

The new rules ? set to have gone into effect on November 15, 2010 ? would have required large public companies to include the nominees of significant, long-term shareholders ? those who own at least 3 % of the company's shares continuously for at least the prior 3 years ? in their proxy materials, alongside the nominees of management. According to the SEC?s August 25, 2010 press release ?[t]his ?proxy access? is designed to facilitate the ability of shareholders to exercise their traditional rights under state law to nominate and elect members to company boards of directors.? See SEC Press Release, ?SEC Adopts New Measures to Facilitate Director Nominations by Shareholders,? dated August 25, 2010.

Full post as published by PomTalk on October 05, 2010 (boomark / email).