The Securities and Exchange Commission today voted to adopt an amendment to Rule 14a-8(i)(8) under the Securities Exchange Act of 1934 to codify the Commission's longstanding interpretation of that rule. This action was taken to provide certainty to shareholders and companies following a 2006 decision by the U.S. Court of Appeals for the Second Circuit which did not defer to the Commission's interpretation of the rule. It will also ensure that current disclosure requirements and antifraud protections aren't upended.
"The decision today maintains the status quo of the past decade, preserving every right that shareholders presently enjoy, while ensuring there is no unintended breach in the disclosure and antifraud protections applicable to proxy contests," said SEC Chairman Christopher Cox. "If the Commission did nothing, then there would be no clear and authoritative interpretation of our rules. And there would be an easy end run around the Commission's required disclosures and our antifraud rules in proxy contests. We owe it to investors and the markets to at least ensure that this does not happen. Now that we have accomplished our investor protection objectives, I believe we can move forward and re-open this discussion in 2008 to consider how to strengthen the proxy rules to better vindicate the fundamental state law rights of shareholders to elect directors."
See full Press Release.
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