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Document Type

Article

Publication Date

Fall 2009

Publication Citation

84 Indiana Law Journal 1259 (2009)

Abstract

In 2007, the Securities and Exchange Commission (SEC) considered, and ultimately rejected, a rule that would have required corporations to include shareholder-nominated candidates on the ballot. This Article seeks to ascertain the impact of this rejection. On the one hand, the SEC's rejection appears to be a stunning blow to the shareholders' rights campaign. This is because many shareholders' rights advocates have long considered access to the corporate ballot as the "holy grail" of their campaign for increased shareholder power. Such advocates believe that access to the corporate ballot is critical to ensuring that shareholders can participate legitimately in the corporate electoral process and thereby influence corporate affairs. On the other hand, some corporate experts contend that the SEC' rejection should not be viewed as a major setback. Such experts maintain that characterizingp roxy access as the sine qua non of shareholder influence fails to appreciate the significance of recent developments, such as the success of majority voting and the adoption of the e-proxy rules. Because these developments provide shareholders with alternative methods for influencing corporate affairs, some have even argued that they may make the issue of proxy access moot. This Article reveals the fallacies of such an argument, and hence the importance of the continued pursuit of proxy access. Indeed, after carefully considering the impact of such developments, and critically examining the probable impact of proxy access on shareholders 'efforts to enhance their influence on corporate governance, this Article concludes that although other devices may prove useful, it is not likely that they will be as effective as proxy access in empowering shareholders.I n this respect,future shareholder democracy campaigns must continue to focus on the historical battle for proxy access.

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