On Friday, October 2, 2009, SEC Chairman Mary L. Schapiro announced a delay in the proposed amendments to the SEC's proxy rules intended to increase shareholder access to issuer proxy materials. The SEC also announced a final deadline in the long-delayed full implementation of Section 404 of the Sarbanes-Oxley Act (SOX).
Delay of Proposed Proxy Access Rule Changes The SEC announcement stated that the proposed proxy access rule changes would not be finalized until at least 2010, due at least in part to the need to consider the hundreds of comments the SEC received to the proposed changes. The delay means that the expanded access to issuer proxy materials will likely not impact the 2010 proxy season. The SEC had been targeting implementation in 2009 for the rule changes to be effective for the 2010 proxy season.
The proposed rule changes would require publicly traded companies to, in most cases, include director nominees that are proposed by shareholders meeting certain ownership-amount and holding-period thresholds in the companies' proxy materials.
Regardless of the delay in the proposed rule changes, publicly traded companies should continue preparations for a proxy access regime, as mandatory proxy access in some form still appears likely. The SEC has proposed proxy access rules several times in recent years, and legislation that would require the SEC to establish rules on proxy access has been introduced in the current session of Congress. Additionally, some states have adopted legislation concerning proxy access. For example, Delaware recently amended the Delaware General Corporation Law to permit, but not require, companies to provide for proxy access.
For additional information regarding the proposed rule changes, please see http://www.foley.com/publications/pub_detail.aspx?pubid=6145.
New Deadline for Full Compliance With SOX Section 404 On Friday, October 2, 2009, the...