A U.S. Securities and Exchange Commission rule making it easier for shareholders to oust board members was rejected by a federal appeals court.

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

The rule, known as proxy access, was mandated by the Dodd- Frank financial-regulatory overhaul enacted last year amid criticism that some corporate boards failed to keep management in check in the run up to the 2008 financial crisis. The rule would have allowed investors or shareholder groups that own at least 3 percent of a company's stock for three years to put their own board nominees on proxy statements.