SEC Proposes Amendments to Proxy Solicitation Rules

November 15, 2019

On November 5, the SEC proposed amendments to the rules governing proxy solicitations. The amendments are intended to help ensure that proxy voting advice used by investors and others who vote on investors’ behalf is accurate, transparent and materially complete.

Among other things, the proposed amendments would require proxy advisory firms to:

  • Include disclosure of material conflicts of interest in their proxy voting advice;
  • Give registrants and certain other soliciting persons an opportunity to review and provide feedback on proxy voting advice before it is issued (with the length of the review period dependent on the number of days between the filing of the definitive proxy statement and the date of the shareholder meeting); and
  • Include in their voting advice a hyperlink directing the recipient of the advice to a written statement that sets forth the registrant’s or soliciting person’s views on the proxy voting advice.

The SEC’s press release quotes Chairman Jay Clayton: “Today’s proposals are rooted in key principles of our federal securities laws – disclosure of material conflicts of interest and constructive shareholder-issuer engagement – and benefit from the considerable experience of the staff and the feedback the Commission has received for more than a decade. These proposals recognize the important role proxy voting advice businesses play in our markets and would benefit our Main Street investors – who, more and more, invest through funds where the asset managers rely on the advice, services and reports of proxy voting advice businesses.”

The proposal is subject to a 60-day public comment period.

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