SEC Adopts Amendments to Proxy Solicitation Rules
On July 22, 2020, the SEC adopted amendments to the rules governing proxy solicitations. According to the SEC’s press release, the amendments are intended to ensure that clients of proxy advisory firms receive more transparent, accurate and complete information on which to make voting decisions.
Among other things, the amendments revise Rules 14a-2(b)(1) and (b)(3), which provide exemptions from the information and filing requirements of the proxy rules. Under the amendments, for proxy advisory firms to rely on these exemptions, they must satisfy the following conditions of new Rule 14a-2(b)(9):
- They must provide specified conflicts of interest disclosure; and
- They must have adopted and publicly disclosed written policies and procedures reasonably designed to ensure that:
- Registrants that are the subject of proxy voting advice have such advice made available to them at or prior to the time when such advice is disseminated to the proxy advisory firm’s clients; and
- The proxy advisory firm provides its clients with a mechanism by which they can reasonably be expected to become aware of any written statements regarding its proxy voting advice by registrants who are the subject of such advice, in a timely manner before the shareholder meeting.
The final amendments differ from the amendments proposed on November 5, 2019, which would have required proxy advisory firms to give registrants an opportunity to review and provide feedback on proxy voting advice before it is issued. For a more detailed discussion of the amendments as originally proposed, see this previous update.