SEC Adopts Controversial ‘Proxy Access’ Rules

On August 25, the SEC adopted the highly controversial "proxy access" rules requiring company proxy materials to provide shareholders with information about, and an ability to vote for, shareholder-nominated candidates for director. The new rules also permit shareholder proposals to establish procedures that are less restrictive than the SEC-mandated procedures for including shareholder nominees in the company's proxy materials. The stated purpose of the new rules is to facilitate the exercise of shareholders' rights under state law to nominate and elect directors.

Prior to adoption of these rules, shareholders who wanted to nominate their own candidates for director (without the support of the Company's nominating committee) had to launch a proxy contest, requiring them to prepare and distribute their own proxy statements — normally an expensive and daunting prospect. The new rules make it significantly easier for shareholders to nominate candidates and solicit