The SEC posted an 83 page brief on January 19th in response to litigation initiated by the Business Roundtable in August of 2010 regarding proxy access and the adoption of Rule 14a-11. Oral arguments are scheduled for April 7, 2011.
The brief summarizes the rule, outlines modifications designed to minimize costs and enumerates why these are justified. It also explains why it rejected the policy argument that shareholders access to the company proxy should be determined by private ordering.
The commission has also stated that they have decided not to exclude investment companies from the rule noting that protections afforded by the Investment Company Act do not do away with the need for the rule.
The brief also attempts to refute the arguements the the rule violates state corporate governance laws and the First Amendment.
Few issues in corporate governance have been as controversial as proxy access. The stay of implementation in October was a surprise to many though the issue has been in hot debate for many years without being settled.
With higher than usual levels of directors voted down last year and say on pay on the horizon for all companies this year it is going to be a hot 2011 proxy season with lots of new rules and clarifications of policies.
If you aren't already a reader of the Harvard Law corporate governance blog, though a bit dated, this entry is a good one on how to educate your management and board on how to prepare for and respond to proxy access.
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