"Access" Likely Delayed Until After The 2011 Proxy Season

Tuesday, November 2, 2010 - 01:00

Weil, Gotshal &Manges LLP

On October 4, 2010, the U.S. Securities and Exchange Commission put on hold the effectiveness of its recent adoption of Rule 14a-11 (the "proxy access" rule) and the related amendments to other SEC rules adopted at the same time, including the amendment of Rule 14a-8, pending resolution by the U.S. Court of Appeals of the petition the Business Roundtable and the U.S. Chamber of Commerce filed on September 29 challenging the lawfulness of the proxy access rule. The parties will seek expedited review by the court and an SEC spokesperson has indicated that the matter may be resolved by late spring, according to a media report. If so, even if the proxy access rule is sustained by the court, for the bulk of public companies, proxy access will be delayed until at least the 2012 proxy season; for non-calendar year companies, access would become available later in 2011.

(A copy of the SEC's order is available at http://www.sec.gov/rules/other/ 2010/33-9149.pdf.)

Under Exchange Act Rule 14a-11, a public company would be required to, at its own expense, include on the company's proxy card director nominees selected by a shareholder or a group of shareholders that meet certain eligibility requirements and to include information about such nominees in the company's proxy statement (i.e., provide "access" to company proxy materials). The amendment to Rule 14a-8(i)(8) would require a company to include proposals that seek to establish procedures for the inclusion in the company's proxy materials of director nominees of a shareholder or group of shareholders (unless such proposal seeks to limit the availability of Rule 14a-11).

For more information about proxy access and Rule 14a-8, please see our Weil Briefing dated August 27, 2010, available at http://www.weil.com/files/ upload/Weilbriefing_SEC_CG_8_27_v7.pdf.