Earlier this week the U.S. Securities and Exchange Commission (“SEC”) announced that it will not seek a rehearing or appeal of the decision by the D.C. Circuit Court, which vacated Rule 14a-11, which would have required companies to include shareholders' director nominees in company proxy materials. The decision by the court was based on the rule-making process, rather than the substance of the rule, which means the SEC could re-propose the rule and address the concerns of the court through a new rule-making process.
The SEC stated that it continues to believe that providing shareholders easier access to the director nominee process is in the best interests of investors and the markets. That said, with a full plate of Dodd-Frank rule-making obligations, it is unclear whether the SEC will re-propose Rule 14a-11.
For a summary of the D.C. Circuit decision and further discussion of Rule 14a-11 please see our prior Securities Update.