SEC revises Form N-PX proxy voting reporting requirements for US-registered funds
04 November 2022 US
Image: freshidea/stock.adobe.com
The Securities and Exchange Commission has introduced changes to its proxy voting reporting requirements for buy-side firms.
These reforms are intended to make it easier for investors to evaluate and compare the proxy voting records of mutual funds, exchange-traded funds and other fund entities.
Through its Form N-PX reporting requirements, US-registered funds have been expected to disclose their proxy voting records for more than two decades. However, the SEC indicates that it has been difficult for investors to apply this information owing to lack of standardisation in how funds report the data.
With the new rules and form amendments, funds will be required to categorise the data they report by the type of vote. Funds and managers will need to disclose the number of shares voted or instructed, along with the number of shares on loan and not recalled. This data must be reported using a structured data language, thereby making it easier for users to analyse the reported data.
The rule changes will also require institutional investment managers to disclose how they voted on executive compensation, thereby meeting one of the remaining rulemaking mandates under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Commenting on these reforms to Form N-PX reporting, SEC chair Gary Gensler says: “These amendments [will] allow investors to better understand and analyse how their funds and managers are voting on shares held on their behalf.
“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 fulfils 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.”
These rule changes will be applicable for all voting exercised from 1 July 2023, with the first filings that will be subject to these amendments falling due during 2024.
These reforms are intended to make it easier for investors to evaluate and compare the proxy voting records of mutual funds, exchange-traded funds and other fund entities.
Through its Form N-PX reporting requirements, US-registered funds have been expected to disclose their proxy voting records for more than two decades. However, the SEC indicates that it has been difficult for investors to apply this information owing to lack of standardisation in how funds report the data.
With the new rules and form amendments, funds will be required to categorise the data they report by the type of vote. Funds and managers will need to disclose the number of shares voted or instructed, along with the number of shares on loan and not recalled. This data must be reported using a structured data language, thereby making it easier for users to analyse the reported data.
The rule changes will also require institutional investment managers to disclose how they voted on executive compensation, thereby meeting one of the remaining rulemaking mandates under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Commenting on these reforms to Form N-PX reporting, SEC chair Gary Gensler says: “These amendments [will] allow investors to better understand and analyse how their funds and managers are voting on shares held on their behalf.
“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 fulfils 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.”
These rule changes will be applicable for all voting exercised from 1 July 2023, with the first filings that will be subject to these amendments falling due during 2024.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Assegt Servicing Times
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Assegt Servicing Times
