Yesterday, the Securities and Exchange Commission agreed to stay the effectiveness of its recently adopted shareholder proxy access rules pending judicial review of a claim challenging the validity of the new rules. The SEC’s action came in response to a petition for review filed last week in the U.S. Court of Appeals for the District of Columbia Circuit by the Business Roundtable and the Chamber of Commerce of the United States of America. In their petition, the business organizations asked the court to hold the SEC’s proxy access rules unlawful under the Securities Exchange Act of 1934 and other laws, alleging that the rules are, among other things, “arbitrary and capricious.”

These recent developments call into question whether the proxy access rules will be effective for the bulk of the 2011 proxy season (at least for spring 2011 proxy materials), since at this point it is difficult to predict how long an expedited review may take and how the court may ultimately rule regarding the validity of the proxy access rules.