SEC Proposes Rules on Shareholder Access to Director Nomination Procedures

The Securities and Exchange Commission (the "SEC") recently published proposed rules that would require public companies to give their stockholders greater access to company proxy materials in order to nominate and elect directors. Specifically, proposed Exchange Act Rule 14a-11 would require companies to place the names of stockholder nominees for director in the company’s proxy materials in circumstances where:

• state law allows shareholders to nominate directors;
• the company is subject to Exchange Act proxy rules;
• the nominating stockholders meet certain eligibility requirements; and
• the director nominee meets certain eligibility requirements.

The proposed rule applies to all companies subject to Exchange Act proxy rules, including investment companies registered under Section 8 of the Investment Company Act. This memorandum, however, focuses on the potential impact of proposed Rule 14a-11 on issuers other than investment companies. The SEC is