DC Circuit's Proxy Access Decision To Stand, But SEC To Allow "Private Ordering" Of Proxy Access

As we previously reported, in July 2011 a three-judge panel of the United States Court of Appeals for the District of Columbia Circuit (DC Circuit) vacated Securities Exchange Act Rule 14a-11, known as the proxy access rule. The rule would have allowed qualifying long-term shareholders to nominate a limited number of directors and to include them in the proxy materials of public companies and investment companies. The Securities and Exchange Commission (SEC) had until September 6, 2011 to seek a rehearing of the DC Circuit's decision. On September 6, 2011, the Chairman of the SEC, Mary Schapiro, announced that the SEC would not seek a rehearing or a United States Supreme Court review of the decision. As a result, public companies and investment companies will not be faced with mandatory proxy access for the 2012 proxy season—although based on Chairman Schapiro's announcement the SEC may seek to adopt a mandatory proxy access rule again in the future.