An SEC final rule designed to improve the accuracy and transparency of information provided by proxy advisory firms was published in the Federal Register. The final rule will go into effect on November 2, 2020.
As previously covered, under the final rule, the SEC amended:
- SEA Rule 14a-1(l) ("Definition") by (i) expanding the definition of "solicit" generally to include the provision of proxy voting advice, (ii) clarifying the circumstances in which a proxy advisor is engaged in a solicitation, and (iii) providing that a person's proxy voting advice in response to an "unprompted request" is not considered to be a solicitation;
- SEA Rules 14a-2(b)(1) and 14a-2(b)(3) ("Solicitations to Which § 240.14a-3 to § 240.14a-15 Apply") by (i) establishing conditions that a proxy voting advice business must satisfy in order to rely on exemptions from information and filing requirements and (ii) providing "non-exclusive safe harbors" that a proxy voting advisor may rely upon to benefit from the exemptions; and
- SEA Rule 14a-9 ("False or Misleading Statements") by providing examples of when a failure to disclose proxy-related material information could be deemed misleading.
In addition, supplemental guidance reflecting the changes made under the final rule was published in the Federal Register and is effective immediately.
Primary Sources
- Federal Register: Exemptions from the Proxy Rules for Proxy Voting Advice
- Federal Register: Supplement to Commission Guidance regarding Proxy Voting Responsibilities of Investment Advisers
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.