SEC to amend shareholder rights rule following appeals court decision

SEC to amend shareholder rights rule following appeals court decision

[JURIST] The US Securities and Exchange Commission (SEC) [official website; JURIST news archive] said Thursday that its Division of Corporation Finance [official website] will begin drafting an amendment [press release] to an SEC Rule under the Securities Exchange Act of 1934 [text, PDF] which says a company can deny its shareholders the right to vote on a proposal that "relates to an election," including elections of company directors. SEC Chairman Christopher Cox [official profile] said the proposed amendment to Rule 14a-8 will first be unveiled at an open meeting October 18, as he hopes to have the final version implemented before the 2007 proxy season.

Thursday's SEC announcement comes in response to a ruling [opinion, PDF] Tuesday by the US Court of Appeals for the Second Circuit [official website] in which the court held that current SEC interpretations of the rule deny shareholders important rights. The New York Times has more.