The purpose of this paper is to consider the consequences of the July 22, 2011 decision of the US Court of Appeals for the DC Circuit in the case of Business Roundtable and Chamber of Commerce v. Securities and Exchange Commission (BRT v. SEC) on current and future SEC rulemakings. The case involved the vacating of the SEC's shareholder proxy access rule.
The paper reviews the court's findings regarding the SEC's rulemaking procedures and analyzes how those findings will inform the SEC's future actions to adopt rules in the proxy access area, as well as future SEC rulemaking in other areas.
The paper finds that the SEC is unlikely, at this time, to undertake future rulemaking involving shareholder access to the proxy statement. At the same time, the SEC may well lift the stay that it voluntarily placed on related amendments to its shareholder proposal rule. These amendments would permit shareholder proposals to companies regarding access to the proxy statement.
Companies should consider how they will respond to shareholder proposals to adopt proxy access regimes. Shareholders should consider what kinds of proposals they may wish to submit to companies regarding proxy access.
This paper should be of interest to public companies, including investment companies, and shareholders of such companies, and their advisers, in terms of corporate governance mechanisms and engagement with shareholder concerns and inputs.
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