Court Vacates SEC Shareholder Nomination Rule


The U.S. Court of Appeals for the District of Columbia Circuit sharply criticized the Securities and Exchange Commission and vacated Exchange Act Rule 14a-11, which permitted certain shareholders of public companies to nominate candidates for the board of directors outside a company's normal nomination process. As noted in last week's edition of the Corporate and Financial Weekly Digest, the court held that the SEC was "arbitrary and capricious" in promulgating Rule 14a-11 and thus violated the Administrative Procedure Act in failing to adequately consider the Rule's effect upon efficiency, competition and capital formation.

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