Corporate America get ready: Like it or not, proxy access has finally arrived.

In a 3-2 vote, the Securities and Exchange Commission adopted a 451-page rule to allow shareholders access to a company's proxy materials to include their nominees to the corporate board of directors.

Under the new rules, a qualifying shareholder or group of shareholders who have continually owned at least 3 percent of the company's voting stock for at least 3 years will have access to the company's proxy to nominate one candidate or 25 percent of the board, whichever number is greater.

The previous proposal floated by the SEC last year would've required ownership of 5 percent at the smallest companies and 1 percent for the largest companies and would've required shares to be held for just one year.

Under the rule, while shareholders may opt to adopt access rules that provide for greater access, either through a management recommendation or Rule 14a-8 shareholder proposal, they can't limit the availability of the new proxy access rule. That "one-way flexibility" was one of the major criticisms by the two dissenting commissioners, Kathleen Casey and Troy Paredes.

Corporation Finance Division Director Meredith Cross noted that there will be a no-action letter process for issuers to get informal staff advice on whether a nominee must be included.

The new rules are deferred for "smaller reporting companies" for three years to allow the Commission to monitor implementation of the rules at larger companies and make changes, if necessary. The previous proposal didn't include any delay.

The rules will become effective 60 days after publication in the Federal Register.

Under the rule, nominating shareholders must provide notice to the company of intent to use new rule 14-a-8 no earlier than 150 days prior to the anniversary of the mailing of the prior year's proxy statement and no later than 120 days prior to that date.

Shareholders can't borrow stock to achieve the 3 percent threshold. However, stock lent may be counted, if the nominating shareholder can recall the stock if the company includes the shareholders' nominee in its proxy.

Today's vote marked the agency's fourth attempt since 2003 to address the contentious issue of proxy access. The move follows last month's passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which affirmed the SEC's authority to adopt an access rule.

SEC Chairman Mary Schapiro said the agency will closely monitor how the new rules are implemented."We will monitor not only in the context of future application to smaller companies ... but also so that we can make prompt changes for all companies, if practice demonstrates the need to do so," she said in her opening remarks.

Compliance Week will provide readers with detailed coverage of the new rules in its Aug. 31 edition.

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