On February 12, the Securities and Exchange Commission announced that at its Open Meeting, to be held on May 20, it will consider whether to propose changes to the federal proxy rules “to facilitate director nominations by shareholders”.
Access to registrants’ proxy statements for the purpose of including shareholder nominees has been a contentious issue for many years. The SEC had proposed two sets of access rules, once in 2003 and again in 2007, when the SEC proposed a two-step proxy access process, whereby a shareholder would have been permitted to include for consideration in a registrant’s proxy statement by-law changes to permit direct access to the registrant’s proxy statement for the purpose of nominating directors, subject to preconditions, including minimum ownership thresholds and disclosure requirements. After strong opposition, the SEC twice effectively withdrew its proposals, and currently, pursuant to Rule 14a-8(i)(8) of the SEC’s proxy rules, a registrant is permitted to omit from its proxy statement a shareholder proposal “if the proposal relates to a nomination or an election for membership on the company’s board of directors... or a procedure for such nomination or election.”
