Interested persons have until Oct. 2 to submit comments on the Securities and Exchange Commission’s alternate rulemaking proposals on the question of whether shareholders should have the right to nominate any member of the board of directors. One of those proposals would give large shareholders the right to nominate a few directors; the other would foreclose access to all shareholders.

The question of proxy access has been kicking around for several years, shadowed by fierce opposition from the corporate community, and was the subject of a proposed 2003 rulemaking that died on the vine. While now revived, proxy access suddenly has been superseded by controversy over other issues broached in the notice of the rulemaking that would provide for limited proxy access. Among other things, those proposals ask for comment on allowing corporations to adopt bylaw amendments that could enable them to bypass the SEC-supervised shareholder resolution process for non-binding, or “precatory,” proposals, which constitute most resolutions on social issues; substituting an electronic chat room for the proxy process; and raising the percentages a resolution must win to qualify for resubmission. If the SEC staff develops a formal proposal out of comments on those questions, it would lead to the first full-scale review of Rule 14a-8, its shareholder proposal rule, since a largely aborted rulemaking in 1997-98. Earlier reconsiderations of the rule occurred in 1976 and 1983.

To access the entire article, SEC Proxy Access Proposals Stir New Controversies, please visit “Additional Resources” in the Corporate Governance section of RiskMetrics Group’s Knowledge Center.