Wednesday, May 27, 2009

Proxy Access Rule: Legal Comments

Two of our Blog and Tacklers have issued legal notes on the SEC's recently proposed proxy access rules.

Click here to read Schulte Roth & Zabel's Alert
Click here to read Gibson, Dunn & Crutcher's Alert

Background (provided by SRZ):
On May 20 the SEC voted 3-2 to solicit public comment on proposed rules that will, for the first time, allow shareholders to nominate directors for election by way of the company proxy materials. Generally, proposed Rule 14a-11 would allow shareholders who own 1%, 3% or 5% of a public company’s stock, depending on its market capitalization, to nominate up to 25% of the board seats up for election each year, subject to numerous conditions. In addition, Rule 14a-8(i)(8) would be amended to allow shareholder proposals regarding the director-nomination process. SEC Chairman Schapiro was joined by Commissioners Walter and Aguilar in approving publication of the proposed rules. Commissioners Casey and Paredes dissented, citing concerns over statutory authority and conflicts with state law. The proposed rules will be published in the next two weeks and public comments are due within 60 days thereafter.

Marc Weingarten from SRZ is a regular contributor to this blog. Eduardo Gallardo from Gibson Dunn is also a regular contributor to this blog.