SEC Adopts Final Rule on Enhanced Proxy Voting Disclosure

The SEC announced a final rule requiring amendments to Form N-PX that will “enhance the information mutual funds, exchange-traded funds, and certain other registered funds report about their proxy votes.” Currently, registered funds are required to report information for each matter relating to a portfolio security considered at any shareholder meeting during the reporting period and with respect to which the fund was entitled to vote. The final rule expands on this by specifying that a fund is “entitled to vote” on matters relating to securities that are on loan as of the record date of the meeting, because the fund has the option to recall its loaned securities and vote them. The final rule is meant to address fund securities lending activity and the impact of lending shares (and whether or not to recall them) on proxy voting. Additionally, the rule will also require institutional investment managers to disclose how they voted on executive compensation (“say-on-pay” matters) fulfilling one of the remaining rulemaking mandates under the Dodd-Frank Act.

The effective date of the final rule is July 1, 2024, with managers and funds being required to file their first reports covering the period from July 1, 2023 to June 30, 2024, meaning that funds and managers will need to begin maintaining the necessary records relating to their proxy votes on July 1, 2023.

Click here to read through the SEC’s final rule on proxy voting disclosure.
Click here to read a Dechert client alert covering the final rule.
Click here to read an SEC fact sheet on the new rule.