Changes to Rule 14a-8 (and related rules) Allowing Shareholder Proposals for Proxy Access now Effective

News Brief

By Cydney Posner

As reported by blog, the final rule release amending Rule 14a-8 to allow shareholder proposals for proxy access was published yesterday in the Federal Register, making yesterday the effective date of the amendment and specified related rules. As you probably recall, the amendment to Rule 14a-8 allows proxy access proposals to go forward by narrowing the "election exclusion" that was previously used by companies to exclude proxy access proposals. In effect, each company and its shareholders will be allowed to make the decision on proxy access -- and the applicable standards for proxy access -- on an individual basis (so-called "private ordering"). Rule 14a-11, the primary rule that would have mandated proxy access, was of course vacated by the DC Circuit and will not become effective.

Interestingly, some of the related rules that also became effective yesterday refer specifically (and only) to the vacated Rule 14a-11, so it may be difficult to understand their continued utility. In addition to the changes to Rule 14a-8, the following related rules also became effective yesterday: <

  • Rules 14a-18, 14n-1 through 14n-3, 14n-101: To include a shareholder nominee in a company's proxy materials under a procedure set forth under applicable state or foreign law or under provisions in the company's governing documents that address the inclusion of shareholder nominees for director in the company's proxy materials ("permitted shareholder nominees"), a nominating shareholder or shareholder group must notify the company of its intent on a Schedule 14N (Rule 14n-101), which also must be filed with the SEC on the date first transmitted to the company.
  • 14a-4: The form of proxy must include the names of permitted shareholder nominees. If the form of proxy includes one or more permitted shareholder nominees, it cannot provide for the grant of authority to vote for any nominees as a group or to withhold authority for any nominees as a group.
  • 14a-5: A company must include disclosure in its proxy statement of the deadline for submitting permitted shareholder nominees for inclusion in the proxy statement and form of proxy for the next annual meeting of shareholders.
  • 14a-6: Provides that a preliminary proxy is not required to be filed solely because a permitted shareholder nominee for director is included in the proxy statement. The inclusion of a permitted shareholder nominee does not constitute a "solicitation in opposition" for purposes of Rule 14a-6(a), even if the company opposes the permitted shareholder nominee and solicits against the nominee and in favor of a company nominee.
  • 14a-12: Inclusion of a permitted shareholder nominee, or solicitations by a nominating shareholder or nominating shareholder group that are made in connection with that nomination, constitute solicitations in opposition subject to Rule 14a-12(c), except for purposes of Rule 14a-6(a), as noted above.
  • 14a-101: Requires the company to include in its proxy statement the disclosure required from the nominating shareholder or nominating shareholder group under Item 5 of Schedule 14N with regard to the permitted shareholder nominee and the nominating shareholder or nominating shareholder group.
  • Conforming amendments to SEC Rule 82a (public availability of materials), Reg S-T Rule 13 (date of filing of Schedule 14N), Exchange Act Rules 13a-11 and 15d-11 (Form 8-K), 13d-1 (Filing of Schedules 13D and 13G), 14a-2 (certain solicitations) , 14a-9 (prohibition on false or misleading statements) and 13d-102 (Schedule 13G).
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