US - The Council of Institutional Investors (CII) has pledged its support to the SEC's new proxy access rules, which are to be challenged in court by US businesses.
The US Chamber of Commerce and the Business Roundtable this week filed a lawsuit against the SEC rules, which give shareowners a bigger voice in corporate board elections. The rules, adopted on August 25, make it easier for shareowners to nominate their own candidates for director when they are dissatisfied with the board's performance.
Under the rules, long-term investors can also place the names of their nominees for board seats on the company's proxy card, avoiding the enormous expense of sending out their own proxy materials.
The CII branded the legal action as a "vicious assault on a fundamental shareowner right" and pledged to back the rules in court by filing an amicus curiae brief - which allows a party not directly involved in proceedings to volunteer information to assist a court in deciding on a case - in order to uphold the rules.
"The Council fought long and hard for US shareowners to gain the right to have their board candidates considered alongside those of management," said council executive director Ann Yerger.
"Proxy access will make companies more responsive to their shareowners and more vigilant in their oversight of companies. This basic right is widely accepted in many other countries and the Council will fight to preserve it here."
Yerger added the global financial crisis underscored the urgency of following through on such important corporate governance reform.
"The market meltdown represented a massive failure of oversight-by boards as well as by regulators," she said.
"Proxy access gives investors a way to hold directors accountable so they will be motivated to do a better job of monitoring and, if necessary, reining in management."
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