Yesterday, the SEC voted 3-2 to release for public comment proposed rules that would grant to public company shareholders unprecedented access to company proxies. Specifically, the proposal would create a new Rule 14a-11 that would require, in certain circumstances, a company to include in its proxy materials nominees for election to the board of directors submitted by shareholders. The proposed rules also contain changes to Rule 14a-8(i)(8) that would require, in certain circumstances, shareholder proposals relating to the election of directors be included in a company's proxy materials. The comments of the SEC's Commissioners indicated a sharp divide between its members. Commissioners Aguilar and Walter joined Chairman Schapiro in expressing support for the proposal, all three agreeing that shareholder proxy access will provide greater accountability for corporate boards of directors. Commissioners Paredes and Casey, however, were vocal in their opposition to the measure, specifically citing their concerns with regard to federalism and the constitutionality of the federalization of corporate law via SEC rulemaking.

The proposed rules will be subject to a 60-day comment period, beginning with their publication in the Federal Register, which should occur in the next several weeks. As in previous years, this topic has been subject to a great deal of informal commentary by both the shareholder and business communities, and we expect this commentary to increase with the release of the proposed rules for comment. For a more in depth coverage of the proposed rules, see the Alston & Bird Special Alert prepared for this topic.