The SEC has confirmed it will not challenge the decision of an appeals court that struck down the commission’s proxy access rule.
The rule would have opened up corporate proxy materials to shareholders’ director nominations, but it was nixed after a legal challenge from the Business Roundtable and the US Chamber of Commerce.
In a statement, SEC chairman Mary Schapiro says she ‘remained committed’ to making it easier for shareholders to nominate board candidates.
‘I firmly believe providing a meaningful opportunity for shareholders to exercise their right to nominate directors at their companies is in the best interest of investors and our markets,’ she says. ‘It is a process that helps make boards more accountable for the risks undertaken by the companies they manage.’
The rule, which was originally passed by the SEC in August last year, would have given shareholders that meet certain ownership criteria the ability to nominate up to 25 percent of the board or one director, depending on which was greater.
The DC Circuit Court of Appeals struck down the rule in July this year, however. The court said the SEC ‘acted arbitrarily and capriciously’ for failing to adequately assess the economic effects of the new rule.
Despite this setback for proxy access advocates, shareholders look set to be able to seek board nominations through filing proxy access bylaws in the 2012 proxy season.
A rule allowing shareholder proposals for proxy access on a company-by-company basis was not challenged in court and is expected to come into effect sometime next week.
