SEC Will Not Challenge Court Decision On Proxy Access

The U.S. Securities and Exchange Commission (SEC) announced last week that it will not seek a court rehearing on the validity of its proposed "proxy access" rules, which were rejected by the U.S. Court of Appeals in July. Under the rules, a company would have been required to include on its proxy a board candidate nominated by a shareholder who held more than 3% of a company's voting equity for a period of at least three years. The intent was to give long-term shareholders a greater voice in corporate governance. Critics feared it went too far and that the increase in proxy battles would create needless costs for companies. In striking down the proposed rules, the U.S. Court of Appeals held that, among other things, the SEC had failed to assess the economic effects of the rules.