The SEC recently liberalized its rules on proxy access for shareholders wishing to nominate their own candidates for election to public company boards of directors. If and when implemented, the new rules will require U.S. public companies to include shareholder nominees in their proxy statements, meaning that dissident shareholders will not have to prepare and mail their own proxy circulars. Proxy access would be available for shareholders or groups owning 3% or more of the company’s stock for at least three years. The maximum number of shareholder candidates would be one or 25% of the board, whichever is greater, and shareholders proposing a candidate could not have a change-of-control intent.

Proxy access was originally scheduled to commence with the 2011 proxy season, but the SEC has stayed the new rules pending the resolution of a legal challenge. U.S. market participants are now expecting proxy access to commence in 2012.

Although corporate statutes in Canada have long permitted shareholders to submit proposals that include nominations for the election of directors, we expect proxy access as introduced in the United States to be a focus of debate in Canada during 2011, as institutional investors continue to seek a greater voice in choosing the individuals who will serve on public company boards of directors.