SEC Stays Proxy Access Rules
As we noted last week, the Business Roundtable and the Chamber of Commerce of the United States of America (the “petitioners”) filed a petition with the United States Court of Appeals for the District of Columbia Circuit seeking review of recent changes to the SEC’s proxy and related rules. On the same date, those groups filed with the SEC a motion to stay the effect of newly adopted Rule 14a-11 and associated amendments to the SEC’s rules pending such review. Those groups did not seek a stay of the amendment to Rule 14a-8 that the SEC adopted at the same time as Rule 14a-11.
The SEC has issued an order finding that, under all of the circumstances, a stay of Rule 14a-11 and related rule amendments is consistent with what justice requires. Among other things, a stay avoids potentially unnecessary costs, regulatory uncertainty, and disruption that could occur if the rules were to become effective during the pendency of a challenge to their validity. Because the SEC and petitioners will seek expedited review of petitioners’ challenge, questions about the rules’ validity will be resolved as quickly as possible.
The SEC also found that, under all of the circumstances of this matter, it is consistent with what justice requires to stay the effectiveness of the amendment to Rule 14a-8 adopted contemporaneously with Rule 14a-11 because the amendment to Rule 14a-8 was designed to complement Rule 14a-11 and is intertwined, and there is a potential for confusion if the amendment to Rule 14a-8 were to become effective while Rule 14a-11 is stayed.
Accordingly, the SEC ordered that that the motion of petitioners filed on September 29, 2010 for a stay of the effect of SEC Rule 14a-11 and related amendments pending resolution of petitioners’ petition for review by the Court of Appeals was granted. The SEC also ordered that the amendment to SEC Rule 14a-8 adopted on August 25, 2010 is stayed pending resolution of petitioners’ petition for review by the Court of Appeals.
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