Buzz Archive:
Proposal Would Subject Registered Investment Companies to New Proxy Access Regime

by Barry Y. Greenberg, Partner in the Investment Funds practice of Akin Gump Strauss Hauer & Feld LLP, 10/27/2009

On June 10, 2009, the Securities and Exchange Commission (SEC) unveiled the details of its proposal to allow shareholders to have their director nominees included in the proxy materials of investment companies registered with the SEC under the Investment Company Act of 1940 (the "Company Act") and issuers with a class of equity securities registered under the Securities Exchange Act of 1934 (the "Exchange Act"). The controversial proposal, which passed by a 3-2 vote of the commissioners at the SEC's May 20, 2009, open meeting would allow a shareholder (or group of shareholders) who owns at least 1 percent of the stock of a registered investment company that has a net asset value (NAV) of $700 million or more or a business development company or other subject issuer that is a large accelerated filer (or 3 percent and 5 percent for registered investment companies with smaller NAVs or smaller companies, respectively) and who has held the shares for at least one year, to use management's proxy materials for the nomination of up to 25 percent of the company's board of directors, provided the shareholder is not seeking a change of control of the company. If adopted, the proposal would dramatically change the landscape for the election of directors of registered investment companies.

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