US - SEC Adopts Amendments to Proxy Rules Governing Proxy Voting Advice
The Securities and Exchange Commission voted the 13 July 2022 to adopt amendments to its rules governing proxy voting advice. The final amendments aim to avoid burdens on proxy voting advice businesses that may impair the timeliness and independence of their advice. The amendments also address misperceptions about liability standards applicable to proxy voting advice while also preserving investors’ confidence in the integrity of such advice.
The final amendments rescind two rules applicable to proxy voting advice businesses that the Commission adopted in 2020. Specifically, the final amendments rescind conditions to the availability of two exemptions from the proxy rules’ information and filing requirements on which proxy voting advice businesses often rely. Those conditions require that: (1) registrants that are the subject of proxy voting advice have such advice made available to them in a timely manner; and (2) clients of proxy voting advice businesses are provided with a means of becoming aware of any written responses by registrants to proxy voting advice. Institutional investors and other clients of proxy voting advice businesses have continued to express concerns that these conditions could impose increased compliance costs on proxy voting advice businesses and impair the independence and timeliness of their proxy voting advice.
The final amendments also suppress the 2020 changes made to the proxy rules’ liability provision, because they created a risk of confusion regarding the application of this provision to proxy voting advice. The final amendments address the confusion while affirming that proxy voting advice generally is subject to liability under the proxy rules.
Finally, the adopting release rescinds guidance that the Commission issued in 2020 to investment advisers regarding their proxy voting obligations.
The final amendments and rescission of the guidance will become effective 60 days after publication in the Federal Register.