Exploring Corporate Governance Around the World

By Allison Garrett, Senior Vice President for Academic Affairs at Oklahoma Christian University

Friday, September 08, 2006

SEC Plans to Amend Rule 14a-8

The SEC has wasted no time in announcing plans to amend the portion of Rule 14a-8 (the shareholder proposal rule) that deals with director nominations. This is in response to the opinion earlier this week from the Second Circuit Court of Appeals. See my earlier posting regarding the decision.

SEC Chairman Christopher Cox was quoted in the SEC's press release as saying, "Rule 14a-8, the shareholder proposal rule, provides shareholders important rights in the proxy process. . . . hese rights are best secured under consistent national application of Rule 14a-8 to shareholder proposals. Therefore, to provide certainty with regard to shareholder proposals in every judicial circuit, I have directed the staff to prepare recommendations for revisions to Rule 14a-8 that will assure its consistent nationwide application. Following the publication of a proposed amendment and the opportunity for public comment, a final proposal will be considered at an open meeting of the Commission that will be scheduled to allow a final rule to go into effect in time for the 2007 proxy season."

An open meeting will be held on October 18. As I noted in my earlier posting, shareholder groups were piqued that the SEC's 2003 proposed ballot access rules were not adopted. Business groups campaigned vigorously in opposition to the 2003 proposal. The October 18 meeting promises to be very interesting.

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