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As has been widely reported, on October 4, 2010, the Securities and Exchange Commission entered a stay of its new Rule 14a-11, together with its amended Rule 14a-8 and other related amendments (often termed the "proxy access" rules). These were scheduled to become effective on November 15, 2010. The stay was entered as a result of a petition filed on September 29, 2010 by Business Roundtable and the Chamber of Commerce of the United States of America, with the United States Court of Appeals for the District of Columbia Circuit seeking judicial review of the rules. Petitioners in the lawsuit filed with the Commission a motion requesting that the Commission stay the effect of Rule 14a-11 and associated amendments pending such review, but did not seek a stay of the amendment to Rule 14a-8. Without addressing the merits of petitioners' challenge to the rules, the Commission granted the stay for all of the proxy access rules, finding that the Rule 14a-8 amendments were intertwined with Rule 14a-11, and that there was a potential for confusion if the amendment to Rule 14a-8 was to become effective while Rule 14a-11 was stayed. Following this action, speculation has arisen concerning the likely duration of the stay, based on estimates of the likely duration of the court proceedings.
On October 8, 2010, the petitioners and the Commission jointly filed a Motion for Expedited Consideration with the court. The motion seeks court approval of a briefing schedule negotiated by the parties that calls for the petitioners' opening brief to be filed by November 30, 2010, and contemplates that briefing will be completed by February 25, 2011. The motion also requested that oral argument be scheduled in the case on the earliest available date following the completion of briefing. In the Motion, the parties jointly stated that the stay granted by the Commission pending review by the court, even with the review being on an expedited basis, necessarily means that the Commission's rule changes will not be available for use by shareholders during the 2010-2011 proxy season, but that expedited review would help ensure that outstanding uncertainty about the rules' validity will be resolved before the 2011-2012 proxy season.
This article is presented for informational purposes only and is not intended to constitute legal advice.
