SEC Delays Implementation Of Proxy Access For Shareholder Board Nominations After Receiving Extensive Comments

As discussed in our July 20, 2009 Update, the Securities and Exchange Commission in June 2009 proposed amendments to the federal proxy rules to expand access to the board of directors nomination process for eligible shareholders. The proposed rule changes, including the addition of a new Rule 14a-11 and an amendment to Rule 14a-8, would make it possible, under certain circumstances, for eligible shareholders to nominate directors for inclusion in a company's proxy materials and to use shareholder proposals to modify the company's nomination procedures or disclosure requirements for shareholder nominations.

On October 2, 2009, the SEC announced that it will not vote on the proposed rule changes relating to shareholder nominations of directors for inclusion in a company's proxy materials this year. Presumably, the SEC will want to finalize changes to Rule 14a-8 and the addition of Rule 14a-11 at the same time. Because the Commissioners are unlikely to vote on the proposed rules until 2010, the rule changes should not be in place for the 2010 proxy season for calendar‑year companies.

Delaying the vote will allow the SEC's staff more time to review and consider the over 500 comment letters received. SEC spokesman John Nester declined to specify when the SEC would address proxy access, saying "[t]he goal is to adopt an enduring rule that ensures investors can exercise their rights over the long run." Meanwhile, Chairman Mary L. Schapiro said that her "hope [is] to finalize the rules early in the new year." Commissioner Elisse B. Walter echoed Chairman Schapiro's statement by noting that "[a]lthough I can't give you a definitive date, I expect we will likely move forward and consider an adopting release sometime in early 2010."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.