MFDF Granted No-Action Relief on Directed Voting Programs

On September 29, MFDF received a “no-action” letter from the Securities and Exchange Commission (SEC) Division of Investment Management that the Division would not recommend enforcement action to the Commission under rules 14a-3(a), 14a-4(d)(2), 14a-4(d)(3), 14a-4(f), 14a-6(o), 14a-10, and 14a-12(a) under the Securities Exchange Act of 1934, for registered investment companies, BDCs that elect to be regulated under the Investment Company Act, or a separate series of an investment company to implement a “Directed Voting Program”.

The Directed Voting Program is modeled after the no-action relief granted to ExxonMobil in September 2025. The program allows shareholders to give standing, revocable voting instructions for votes to be cast in favor of proposals approved by all of the fund’s independent directors. It cannot be used in contested director elections or changes to the advisory agreement with the fund’s primary adviser that require a shareholder vote. Additional limitations include approval by the board and a unanimous vote by the independent directors as well as the reexamination of the program every three years and reapproval based on a finding that it remains in the best interests of fund shareholders.

Shareholders are permitted to opt-out at any time and at no cost. They also are permitted to override their vote by using the proxy materials to vote at a particular meeting. Shareholders will still receive all proxy materials and have the ability to opt out and override their standing voting instructions at any time.

“We’re pleased with the response from the Commission and look forward to further discussing the implications of this no-action letter with all of our members and the broader fund community,” said MFDF President Carolyn McPhillips in a press release. MFDF extends its thanks to the Commission staff for their diligence and to Ropes & Gray for their assistance throughout the process.

Click here to read MFDF’s letter requesting no-action relief for directed voting programs.

Click here to read the Commission’s letter granting the directed voting no-action relief.

Click here to read a press release from MFDF covering the directed voting no-action relief.

Click here to register for MFDF’s webinar covering the relief on directed voting programs.

Click here to view a Ropes & Gray client alert covering the directed voting relief.