• Federal Court Excludes Shareholder Proposal For Failure to Satisfy Eligibility Requirements of Rule 14a-8(b)(2)
  • April 27, 2010
  • Law Firm: Shearman & Sterling LLP - New York Office
  • The U.S. District Court for the Southern District of Texas recently allowed Apache Corporation to exclude a shareholder proposal from its proxy materials because the shareholder failed to present adequate proof of eligibility of stock ownership on a timely basis as required by Rule 14a-8(b)(2) of the Securities Exchange Act of 1934, as amended. The Court rejected Apache’s argument that Rule 14a-8(b)(2) requires a letter from the Depository Trust Company (“DTC”) confirming a shareholder’s ownership, but ruled against the shareholder in what it described as a “narrow” holding that found the shareholder’s written statement from an unregistered entity that was not a DTC participant inadequate to establish stock ownership eligibility under Rule 14a-8(b)(2). The Court did not rule on what would have been sufficient to establish the shareholder’s eligibility to submit shareholder proposals.