(The news featured below is a selection from the news covered in the Federal Securities Report Letter, which is distributed to subscribers of the Federal Securities Law Reports.)

Commission to Consider Proxy Access Rules

The SEC is expected to discuss a rule proposal concerning shareholder access to company proxy materials for director nominations at an open meeting on October 8, 2003. The actions follow a staff study of corporate governance and the proxy process. Previously, the Commission proposed rules on the proxy question concerning enhancements to existing disclosure requirements regarding the operation of board nominating committees and a new disclosure requirement concerning the means by which security holders may communicate with members of the board of directors (¶86,954 ).

A key issue before the SEC will be the question of whether to condition shareholder access on the occurrence of specific triggering events. As mentioned in the staff study, events such as a high enough percentage of withhold votes for directors or the failure of a board to adopt successful shareholder resolutions could serve as "triggers." Minimum holding requirements are also expected to be a significant issue in the Commission's deliberations.

Commissioner Harvey Goldschmid observed that proxy fights are currently very rare, prohibitively expensive and permit management to spend significant corporate assets in defending itself. He believes that the Commission's shareholder access final rule could be cast in a way to negate concerns by business of potential disruptiveness and offer shareholders a meaningful role and a new dynamic to effect change. Mr. Goldschmid characterized this effort as the SEC's " most dramatic step" in his professional lifetime.