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The SEC Reopens Comment Period on Proxy AccessSubmitted by: Ted Allen, Publications

In a move that surprised some observers, the Securities and Exchange Commission announced Dec. 14 that it would reopen the comment period on its controversial proxy access rule.

The extension of the comment period suggests that the SEC?s five commissioners may be giving greater consideration to permitting companies to seek shareholder approval to opt out of federal access standards.

Commissioner Elisse Walter, who was part of the 3-2 majority who voted in May to propose the access rule, said in October that she was giving ?careful consideration? to adjusting the rule to allow shareholders to approved restrictive access provisions. Corporate advocates and the SEC?s two Republican commissioners, who oppose the proposed rule, have urged the commission to refrain from adopting marketwide requirements and instead allow companies and shareholders the flexibility to craft their own rules. In response, access supporters have argued that federal minimum standards are necessary because many issuers impose barriers to shareholder-initiated access bylaws through supermajority requirements or dual-class share structures.

In a rulemaking notice, the SEC said it was allowing 30 days for additional input because it had received materials and analyses on or after the original Aug. 17 deadline for comments.
The SEC notice specifically mentioned four submissions that it had received:

* ?Report on Effects of Proposed SEC Rule 14a-11 on Efficiency, Competitiveness, and Capital Formation, in Support of Comments by Business Roundtable,? NERA Economic Consulting, submitted Aug. 17 by the Business Roundtable;

* ?Why Did Some Banks Perform Better During the Credit Crisis? A Cross-Country Study of the Impact of Governance and Regulation, Andrea Beltratti and Rene M. Stulz, submitted Sept. 11 by the Business Roundtable;

* ?The Limits of Private Ordering: Restrictions on Shareholders? Ability to Initiate Governance Change and Distortions of the Shareholder Voting Process,? submitted Nov. 18 by the Shareowner Education Network and the Council of Institutional Investors; and

* Supplemental analysis of share ownership and holding period patterns from Form 13F data by the SEC?s Division of Risk, Strategy, and Financial Innovation, Nov. 24, 2009.

The SEC already has received more than 500 comments on the access rulemaking. In early October, SEC officials said the agency staff needed more time to review all the comments, but said that they still hoped to bring a final rule to a vote in early 2010. With this additional comment period, it appears unlikely that the SEC staff would have time to review all the new submissions and prepare a final rule for a commission vote before March or April, SEC observers said.

Full post as published by Institutional Shareholder Services -- Corporate Governance Blog on December 14, 2009 (boomark / email).