Dodd-Frank Update: Appeals Court Vacates SEC Proxy Access Rule

On July 22, the US Court of Appeals for the District of Columbia Circuit, in Business Roundtable v. Securities & Exchange Commission, vacated the SEC’s shareholder proxy access rule. For your reference, a roundup of legal commentary and analysis regarding the ruling:

D.C. Circuit Invalidates SEC’s Proxy Access Rules (Sheppard Mullin Richter & Hampton LLP):

“Earlier today, in Business Roundtable v. Securities & Exchange Commission, No. 10-1305 (D.C. Cir. July 22, 2011), the United States Court of Appeals for the District of Columbia Circuit issued its decision invalidating the SEC’s proxy access rules adopted in August 2010 with the intention that they be effective for the 2011 proxy season.” Read more»

U.S. Court of Appeals Vacates SEC Proxy Access Rule (Dechert LLP):

“The decision was grounded on the Court’s determination that the Securities and Exchange Commission acted arbitrarily and capriciously, in violation of the Administrative Procedure Act, by failing to adequately consider the effect of the rule upon efficiency, competition and capital formation, as required by the Securities Exchange Act of 1934 and the Investment Company Act of 1940.” Read more»

SEC Proxy Access Rule Vacated (Morrison Foerster LLP):

“This “proxy access” rule was adopted shortly after Section 971 of the Dodd-Frank Act clarified the SEC’s authority to promulgate the rule. The Court held that the SEC was arbitrary and capricious in adopting the rule, thus leaving the SEC to now consider how it will proceed on the issue of proxy access.” Read more»

Court Vacates SEC’s Proxy Access Rules (Wilson Sonsini Goodrich & Rosati):

“The rules … would have given public company shareholders the right, under certain circumstances, to require the company to include in its proxy statement and on its proxy card shareholder nominees for a portion of the seats on the board of directors. The SEC had stayed the effectiveness of the rules pending the court’s decision in the case.” Read more»

U.S. Court Of Appeals Rejects SEC Proxy Access Rule (Womble Carlyle Sandridge & Rice, PLLC):

“The SEC’s proxy access initiatives would have implemented Rule 14a-11, under which shareholders owning at least three percent of a company’s voting power for at least three years (and who meet other requirements) generally could have their nominees included in the company proxy materials that are sent to all voters. … The proxy access rules were slated to become effective November 15, 2010 and would have applied to many companies’ 2011 annual meetings.” Read more»

SEC Proxy Access Rule Vacated by Federal Court (Bryan Cave):

“At the same time that the SEC adopted Rule 14a-11, it also amended Rule 14a-8 to prevent companies from excluding from their proxy materials shareholder proposals to establish a procedure for shareholders to nominate directors. This companion rule was not challenged, and the Court did not alter or comment on Rule 14a-8 as amended.” Read more»


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