SEC adopts amendments to enhance fund proxy vote information for investors

The Securities and Exchange Commission (SEC) adopted amendments that seek to enhance the information that mutual funds, exchange-traded funds, and other registered funds report about their proxy votes.

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The amendments to Form N-PX are designed to make the funds’ proxy voting records more usable and easier to analyze, which will help investors better monitor how their funds vote. The rule will also require institutional investment managers to disclose how they voted on executive compensation, which is a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

“I am pleased to support these amendments because they will allow investors to better understand and analyze how their funds and managers are voting on shares held on their behalf,” SEC Chair Gary Gensler said. “The amendments will provide investors with more detailed information about proxy votes, create more consistency around how funds describe their proxy votes, and structure Form N-PX in a machine-readable format. This rulemaking also will require institutional investment managers to disclose how they voted on ‘say-on-pay’ matters, which fulfills the mandate under Section 951 of the Dodd-Frank Act of 2010. Together, these enhancements to Form N-PX would make it more useful, and more usable, to investors.”

Among the changes, the amendments will require funds and managers to categorize each matter by type. Also, where a form of proxy or “proxy card” subject to the SEC’s proxy rules is available, they must tie the description and order of voting matters to the issuer’s form of proxy to help investors identify votes and compare voting records.

The adopted changes also prescribe how funds and managers must organize their reports and require them to use a structured data language to make the filings easier to analyze. In addition, funds and managers will also be required to disclose the number of shares that were voted or instructed to be voted, along with the number of shares that were not voted for whatever reason.

The new rules and form amendments will be effective July 1, 2023.