Access is Here: Proposed Rule 14a-11 and Amendments to 14a-8

Yesterday, Chairman Shapiro announced Proposed Exchange Act Rule 14a-11, to give shareholders access to management’s proxy materials. The release, as well as the speech are available here.

In her speech, Chairman Shapiro stated:

• “This proposal represents nearly seven years of debate about whether the federal proxy rules should support — or stand in the way of — shareholders exercising their fundamental right to nominate directors.”

14a-11 permits eligible shareholders to include either 1 director nominee or nominees consisting up to 25% of the board, whichever is greater. Eligible shareholders include:

• 1% owners of voting securities for large accelerated filers (>$700 million)

• 3% owners of voting securities for accelerated filers ($75-$700 million)

•  5% owners of voting securities for non-accelerated filers (<$75 million

In addition:

• “As is the case when directors nominate candidates, the nominating shareholder or group would be liable for any false or misleading statements in information provided to the company that is then included in the company's proxy materials.”

The SEC also plans to remove the language from 14a-8 that allows boards to reject any shareholder proposal relating to election of directors.

The Commission will accept comments up to 60 days after the proposed amendments are published in the Federal Register.