SEC Will Not Appeal Proxy Access Decision; Shareholder Proposal Amendments Will Take Effect

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On September 6, 2011, Mary L. Schapiro, Chairman of the Securities and Exchange Commission (“SEC”), issued a statement1 indicating that the SEC would not seek rehearing of the recent decision of the United States Court of Appeals for the District of Columbia Circuit (the “Court”) that vacated the SEC’s “proxy access” rule, nor would the SEC seek Supreme Court review.2 Chairman Schapiro also indicated that the amendment to existing Rule 14a-8, adopted with Rule 14a-11, which provides that companies may not exclude from their proxy materials shareholder proposals for proxy access procedures, will go into effect when the Court’s decision is finalized, which is expected to be on September 13, 2011.

As adopted, Rule 14a-11 would have provided qualifying shareholders or groups holding at least three percent of the voting power of a company’s securities, and who have held their shares for at least three years, with the ability to request that public companies or investment companies include the shareholder or shareholders’ director nominees in their proxy materials, upon meeting certain other requirements. The rule would have applied to public companies and investment companies.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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