SEC Adopts Amendments to the Proxy Voting Advisor Rules

Updated: Jul 29, 2020

July 28th | 2020

The SEC recently voted to adopt amendments to its rules governing proxy solicitations designed to ensure that clients of proxy voting advice businesses have reasonable and timely access to better information on which to make voting decisions. The SEC says the “amendments aim to facilitate the ability of those who use proxy voting advice—investors and others who vote on investors’ behalf—to make informed voting decisions without imposing undue costs or delays that could adversely affect the timely provision of proxy voting advice”.

To that end, the amendments add conditions to the availability of certain existing exemptions from the information and filing requirements of the Federal proxy rules that are commonly used by proxy voting advice businesses. These conditions require compliance with several disclosure and procedural requirements as well as two principles-based requirements:

  • The first principles-based requirement calls for proxy voting advice businesses to adopt written policies and procedures designed to ensure that the proxy voting advice is made available to registrants.

  • The second principles-based calls for proxy voting advice businesses to adopt written policies and procedures designed to ensure that they provide clients with a mechanism by which the clients can reasonably be expected to become aware of a registrant’s views about the proxy voting advice so that they can take such views into account as they vote proxies.

The amendments also codify the SEC’s interpretation that that proxy voting advice generally constitutes a solicitation under applicable rules and that, in some instances depending on the facts and circumstances, failure to disclose certain information in proxy voting advice may be considered misleading within the meaning of the antifraud provision of the proxy rules. The final rule will become effective 60 days after publication in the Federal Register.

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