“SEC Proposes New Rule and Rule Amendment Allowing Shareholders to Nominate Directors on Proxy Statements”

At an open meeting on May 20th, the Securities and Exchange Commission (“SEC”) voted to propose a new rule and rule amendment that would, under certain circumstances, require public companies to include shareholder nominees for election to the board of directors in their proxy materials. This new rule and rule amendment come in response to increasing investor complaints that the failure of directors to exercise appropriate oversight over company management is partly to blame for the severe economic downturn currently facing the financial world. As noted by SEC Chairman Mary Shapiro at yesterday’s meeting, the economic downturn “has led many to raise serious questions and concerns about the accountability and responsiveness of some companies and boards of directors to the interests of shareholders.” This Stroock Special Bulletin provides an overview of the proposed new rule and rule amendment.