Corporate Governance

Law Professors Support the SEC?s New Proxy Access Rule

By Adam G. Kurtz

    Law professors from thirty-one (31) law school joined together to file a brief in support of the constitutionality of the SEC?s new proxy access rule.  Although the SEC voted to approve SEC Rule 14a-11 last year, its implementation has been stayed pending resolution of a lawsuit brought by the U.S. Chamber of Commerce and Business Roundtable challenging its constitutionality on First Amendment grounds. 

    In their brief, the law professors argue that Rule 14a-11 does not improperly regulate corporate speech by forcing companies to disclose in public documents information they disagreed with.  The law professors argue that the law holds that because shareholders are part-owners of a company, their speech qualifies as part of the company?s internal affairs.  In addition, corporate management and board members are free to disagree with shareholder board nominations.

    As discussed on these pages, SEC Rule 14a-11 allows shareholders who own 3 percent or more of a company?s voting shares to nominate board of director candidates, which the company must in turn disclose in proxy materials.

    For further information see The Harvard Law School Forum on Corporate Governance and Financial Regulation, Law Professors Submit Amicus Brief in Proxy Access Case.

Full post as published by PomTalk on February 11, 2011 (boomark / email).