Alert September 27, 2011

Rule 14a-8 Amendment Allowing Shareholder Proposals for Proxy Access Becomes Effective

An amendment to Rule 14a-8 (also known as the shareholder proposal rule) adopted concurrently with the proxy access rule (Rule 14a-11) that was vacated by the U.S. Court of Appeals for the District of Columbia became effective September 20, 2011 upon its publication in the Federal Register.  The SEC had previously announced that it would not seek a rehearing of the D.C. Circuit’s decision on Rule 14a-11 or appeal the decision to the U.S. Supreme Court (as discussed in the September 9, 2011 Goodwin Procter Alert).  Under the Rule 14a-8 amendment, a shareholder may submit a proposal for inclusion in a company’s proxy materials that seeks to amend a company’s by-laws or other governing documents to establish procedures allowing shareholder director nominees in company proxy materials - in essence, permitting shareholders who meet Rule 14a-8’s eligibility and procedural requirements to propose proxy access procedures on a company-by-company basis.  (The Rule 14a-8 amendment also codifies certain prior SEC staff interpretations regarding shareholder proposals relating to director nominations that will continue to be excludable from company proxy materials under Rule 14a-8.)  The Rule 14a-8 amendment is discussed in more detail in an article describing it and the proxy access rule that appeared in the September 7, 2011 Financial Services Alert.