In a split vote, the Securities and Exchange Commission (SEC) issued its final rules on allowing shareholders to have access to a company's proxy materials. The new rules allow 'long-term significant shareholders' to nominate candidates for boards of directors and have those nominees appear on the proxy materials distributed to all shareholders by companies. Investors can only nominate a limited number of candidates up to 25 percent of the board. According to SEC Chairman Shapiro's statement, "Shareholders will not be able to use the new rules if they hold their stock with the intent of changing control of the company or gaining more seats on the board than is permitted under this new process."
In August 2009, CIEBA, the voice of the AFP on employee benefit plan asset management and investment issues, submitted a comment letter to the SEC on their proposed proxy access rules. It the letter, CIEBA urged the commission to raise ownership thresholds and holding periods. CIEBA asked the Commission to set a three percent ownership threshold for larger organizations and a five percent threshold for smaller enterprises. The final rules sets a three percent ownership threshold for larger companies and delays implementation of the new rule for smaller companies for three years. CIEBA also stated that the original holding period of one year was "too short" and "We urge the Commission to consider a longer holding period of not less than two years." The new rules set a three-year holding period. Investors are not allowed to borrow stock to meet the ownership threshold.
Click here for SEC Final Rules on Proxy Access.