Rockin’ the Proxy Boat

On September 29, 2021, the SEC’s new Chairman, Gary Gensler held an open meeting discussing proposed amendments to Form N-PX. These amendments would enhance the information that investment companies report about their proxy votes.

To provide insight on this topic, Form N-PX was implemented almost 20 years ago for the purpose of informing fund investors how funds voted shares held on their behalf, a.k.a. voting proxies. Prior to Form N-PX, funds did not have to disclose their proxy votes. As time has passed, however, funds have been required to disclose these votes at least annually. Now, the trend is leading to investors desiring more information about proxy votes.

To build on this, the proposed rule requires managers to report their votes on executive compensation matters to investors on Form N-PX.  The other part of the proposal aims to bring more consistency, transparency, and usability for the Form N-PX. This is an effort to allow investors to more easily understand the proxy voting information that is reported.

The end goal is to increase efficiency and usability of the Form. This claims to be doable through making the reporting more consistent from fund to fund, increasing details related to votes, and making the Form machine-readable.

The SEC’s regulatory agenda is stacked with developing regulations that, once passed, will have a lasting impact on your firm’s operations and compliance program. If your firm is voting proxies for a fund, this may affect your filings going forward. The concerns may include the amount of information required to be disclosed as well as the process for filing itself. Your firm should stay up to date on proposed rules, contribute to public comments as you see fit, and prepare to adopt new regulations when required.

If your firm requires assistance with understanding and staying up to date with SEC regulations, Fairview can help. We can help firms register with the SEC and support registered investment advisers by creating and implementing comprehensive, sustainable compliance programs with the help of our in-house regulatory experts. Contact us today for more information about our services.