On July 13, 2022, the SEC took a number of actions that appear to demonstrate its fealty to the investor community. The areas affected by these actions are proxy voting advice – i.e., the voting recommendations issued by Institutional Shareholder Services, Glass Lewis, and others – and issuers’ ability to exclude certain shareholder proposals.
First, on July 13, 2022, the SEC announced that it had “adopted amendments…to its rules governing proxy voting advice as proposed in November 2021.” In fact, the “amendments” were actually rescissions of rules adopted in 2020. The rescinded rules conditioned proxy advisory firm exemptions from the information and filing requirements of the proxy rules on (1) making proxy advice available in a timely manner to the issuers as to which the advice was rendered, and (2) providing proxy advisory firm clients with a means of becoming aware of any written responses by registrants to proxy voting advice. In other words, issuers may not be able to get copies of the firms’ voting recommendations, but even if they do, the proxy advisory firm will be under no obligation to communicate disagreements or even factual errors to its clients. The SEC also deleted a note to Rule 14a-9 regarding liability for misleading proxy voting advice.
On the same day, the SEC proposed amendments to its shareholder proposal rules that would limit the ability of issuers to exclude proposals based upon “substantial implementation,” “duplication,” and “resubmission.” This proposal is subject to public comment.
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This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.
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