A U.S. Securities and Exchange Commission rule making it easierfor shareholders to oust board members was rejected by a federalappeals court.

The U.S. Court of Appeals in Washington today agreed with theU.S. Chamber of Commerce and the Business Roundtable that the SECfailed to study the cost to companies of fighting a challenge fromshareholders and connect those costs to “efficiency, competition,and capital formation.”

The rule, known as proxy access, was mandated by the Dodd- Frankfinancial-regulatory overhaul enacted last year amid criticism thatsome corporate boards failed to keep management in check in the runup to the 2008 financial crisis. The rule would have allowedinvestors or shareholder groups that own at least 3 percent of acompany's stock for three years to put their own board nominees onproxy statements.