WASHINGTON — A federal appeals court on Friday threw out an SEC regulation that would require companies to include in proxy materials information about shareholder-nominated candidates for election as directors.
It is the third time in six years that the U.S. Court of Appeals for the District of Columbia Circuit has rejected a rule recently approved by the Securities and Exchange Commission because it found the agency failed to adequately assess economic effects. The SEC approved the regulation 3-2 last year. It long had been sought by pension funds and other institutional investor groups and opposed by business lobbyists. The rule was scheduled to become effective in November. The agency stayed that until after the court challenge.
The Chamber of Commerce and the Business Roundtable filed the challenge. The appeals court heard it in April. The rule would have allowed groups owning at least 3 percent of the voting power of a company’s stock to nominate board candidates and have them included in the company’s proxy materials. They are mailed to shareholders at the company’s expense.