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More Say Urged for Investors

September 14, 2006|From Bloomberg News

The Securities and Exchange Commission should look at ways to make it easier for shareholders to nominate corporate directors as it amends corporate proxy-access rules, SEC Commissioner Annette L. Nazareth said Wednesday.

"I'm quite certain that all the commissioners are interested in having effective shareholder democracy," Nazareth told reporters after giving a speech in Arlington, Va. "The question is: What is the mechanism to have effective shareholder democracy?"

A federal appeals court last week forced the SEC to reconsider whether shareholders should have more power to recommend board candidates. The agency will consider revised rules, which its staff has just begun writing, at a public meeting Oct. 18.

Under current SEC rules, the only way shareholders can challenge a company's selection of board members is to propose a separate slate of candidates and mail out a second proxy ballot. Proxy statements identify directors and proposals that shareholders will vote on at annual meetings.

Since 1990, the SEC has typically let companies exclude from proxy statements shareholder proposals that pertain to director elections, the court said.

Nazareth said it could be difficult for the SEC to do a broad overhaul of the rules between now and the October meeting.

The SEC must let the public comment on its amended rules before holding a second meeting to adopt them. SEC Chairman Christopher Cox said Sept. 7 that he wanted the revisions approved before companies issued their 2007 proxy statements.

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