Insight
On July 22, 2020, the SEC announced the adoption of what will likely be controversial amendments to the rules governing proxy advisory firms. The amended rules will, among other things:
- codify and clarify the SEC’s “longstanding” view that proxy voting advice is generally a “solicitation”; and
- provide exemptions from the information and filing requirements of the proxy rules if the proxy advisor:
- provides conflicts of interest disclosure; and
- discloses written policies and procedures to (1) provide companies with proxy voting advice no later than the time it is provided to the proxy advisor’s clients, and (2) provide the proxy advisor’s clients “a mechanism by which they can be reasonably be expected to become aware” of a company’s written statements regarding the proxy advice “in a timely manner” prior to the shareholder meeting
The amendments provide non-exclusive safe harbors for proxy advisors, one of which would require companies to file definitive proxy materials at least 40 days prior to the shareholder meeting and to limit the use and distribution of the advice.
The amendments also provide examples of when certain information in proxy voting advice could be deemed misleading.
Please direct any questions or observations to Gunster securities law and corporate governance practice leader Bob Lamm.
