At last, Corporate America finally has the answer to a question it's been awaiting for weeks: When will the Securities and Exchange Commission's new proxy access rule take effect?

The answer—Nov. 15.—arrived with the rule's publication in the Federal Register on Sept. 16. That means shareholder nominees will be allowed at companies that mailed their 2010 proxy statements after March 15 of this year.

Under the rule, shareholders must submit nominees no later than 120 days before the anniversary date of the mailing of the company's proxy statement in the prior year. Shareholders can submit nominees for inclusion in the next year's proxy statement if the 120 day deadline falls on or after the effective date of the rules—which is 60 days after publication in the Federal Register.

The changes to the federal proxy rules to allow shareholders to nominate directors using the corporate proxy statement were adopted by the SEC in a 3-2 vote on Aug. 25. Under the rule, qualifying shareholders who have owned at least 3 percent of the company's voting stock for at least three years have access to the proxy to nominate the greater of one candidate or 25 percent of the board. The amended rules also allow shareholders to submit proposals to establish procedures for proxy access.

So, who's likely to have to deal with this issue in 2011?

"If the company has a Dec. 31 fiscal year end, then it has a chance of avoiding the rule for the 2011 proxy, but many companies (probably most) will be subject to the rule," says Martin Rosenbaum, a partner in the law firm Maslon Edelman Borman & Brand. "It's a really mixed bag."

For instance, he notes that based on their mailing dates, companies including General Electric, U.S. Bancorp, and Citigroup, won't be subject to the rule in 2011, while Wells Fargo, JP Morgan Chase, Goldman Sachs, and United Health Group will.

While it's not universal, Rosenbaum says larger companies tend to file and mail sooner than smaller companies. He notes that companies with January fiscal years, such as many large retailers, or later fiscal year ends, will almost certainly be subject to the rules in 2011.

The effective date for shareholder proposals to establish procedures for proxy access is the same, and Rule 14a-8 governing shareholder proposals has the same 120-day notice provision as new Rule 14a-11.

"My guess is that most activist shareholders will wait for a year or two to determine the effectiveness of Rule 14a-11 before they start to push for changes in particular companies' bylaws," says Rosenbaum. "The late date of adoption of these rules makes it even likelier that shareholders will wait."

"I believe that, when push comes to shove, activist shareholders will look at Rule 14a-11 more as a way to get leverage for particular corporate changes than an actual mechanism where shareholders will actually get elected to boards, but ... that's just a guess," he tells Compliance Week.

Still, he notes that, as RiskMetrics reported, at least some investors, such as Discovery Equity Partners, intend to use Rule 14a-11 for nominations right away.

As a reminder, the rules apply to all Exchange Act reporting companies, including investment companies, except debt-only companies and foreign private issuers. Smaller reporting companies (as defined in 17 CFR 240.12b-2) aren't subject to Rule 14a-11 until three years after the effective date.

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