September 15, 2010

Proxy Access: Not Yet Published in the Federal Register – Many Are Counting the Days…

I’ve received too many emails to count from members wondering if the SEC’s proxy access adopting release has been published in the Federal Register yet given that the SEC approved the adopting release at an open Commission meeting three weeks ago (answer: it has not). Even more folks have asked why it hasn’t yet, given that it seemed like the SEC was in a rush to do so so that the clock would start ticking towards when access would apply during the proxy season (answer: I don’t know, but the delay is unusual).

This email from a member gives the explanation of the math involved, tied to the final rules being published in the Federal Register:

As you are aware, the final proxy access rules indicate (pages 224-225) that if the window period for 14a-11 nominations has elapsed prior to the effective date of the rules (60 days following publication in the Federal Register), then shareholders of this company won’t be able to make 14a-11 nominations for the 2011 proxy season).

So, given the 120-150 day window period, by my math, if the rules were published in the Federal Register, say on September 15th, the rules would be effective on November 14th, which would mean that companies who mailed their 2010 proxy statement prior to March 14, 2010 would have a window period that fully pre-dated the effective date of the rules for this proxy season – thus meaning that these companies would not be subject to proxy access for the 2011 proxy season (this would include a fair number of calendar year-end companies, increasing by the day). While I don’t think the rules are ambiguous in their application, I find it surprising that the final rules have not yet been published, given the Commission’s previous stated desire that proxy access rules be in effect for the 2011 proxy season.

By the way, I do know that the access rules won’t be published in the Federal Register today because a preview of the following day’s content is made available each day on this site and it wasn’t listed yesterday…

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