In response to a lawsuit filed last week by the U.S. Chamber of Commerce and the Business Roundtable, the SEC agreed to delay the implementation of recently adopted proxy access rules, pending court review. As SEC spokesman John Nester stated, the “action eliminates any uncertainty, unnecessary cost or disruption that could result for companies and shareholders while the rules are subject to litigation.”
The lawsuit asks the court to review the rules, which the business groups argue are “arbitrary and capricious.” Further, the suit alleges the SEC failed to consider the economic costs associated with proxy access, as required by law.
The SEC and the two business groups challenging the law joined in petitioning the court for an expedited ruling. However, staying implementation of the rule delays the original
November 15, 2010 effective date until the suit is resolved. The SEC expects a resolution by next spring.
For information on the adopted proxy access rules, see our compliance alert here.