Explanation and Practical Tips Regarding the SEC’s New Proxy Access Regime

On August 25, 2010, the United States Securities and Exchange Commission (the "SEC"), in a 3 to 2 vote along party lines, adopted fundamental changes to the federal proxy rules that will require public companies subject to the proxy rules to include director nominees by shareholders in their proxy materials.

Proxy access is the right of shareholders of a public company to use the company's proxy materials to nominate their own candidates for the board of directors, thus avoiding significant costs and procedural challenges that would otherwise be involved in proposing a director nominee. The SEC has considered proxy access on three previous occasions since 2003. The most recent impetus for proxy access was the enactment on July 21, 2010 of the Dodd-Frank Act, which granted express rulemaking authority to the SEC on proxy access, thereby significantly lowering the risk of a successful challenge to the constitutionality of the final rules and providing political catalyst