SEC Proposed Rule on Amendments to Form N-PX (Reporting of Proxy Voting Information)
At the end of September, the SEC released a proposed rule that, if adopted, would expand registered funds reporting of proxy voting information on Form N-PX and require funds filing Form 13F to annually report on Form N-PX (for the first time) how it voted on certain shareholder advisory votes related to executive compensation. Currently, Form N-PX is an annual report filed by mutual funds and requires funds to disclose votes considered at any shareholder meeting held during the reporting period with respect to which the fund was entitled to vote. For registered funds, the proposed rule would expand the proxy voting information a fund is required to report on Form N-PX by requiring them to:
- Employ the same language and order used on an issuer’s form of proxy to more easily identify the fund’s proxy voting record;
- Use a specified list of categories for each of the reported proxy voting matters;
- Disclose the number of shares that were loaned and not recalled in order to vote on the proxy;
- File using a structured data language; and,
- Disclose that a fund’s proxy voting record is publicly available on its website and/or available free of charge upon request.
While these and other technical amendments to Form N-PX would not impose new reporting requirements, they may impose expenses on fund complexes as they conform their reporting systems to the new requirements. SEC Chair Gary Gensler noted: “This proposal will make it easier and more efficient for investors to get crucial information about proxy votes from funds.” Criticizing the scope of the proposal, Commissioner Hester Peirce stated a fund manager “may feel pressured to expend more time considering the vote and figuring out how to catalog it than she would if the vote were not required to be made public and she were just focused on doing what was best for the fund.” Commissioner Peirce also noted concerns with outside stakeholders using Form N-PX data to politicize how funds vote on proxy matters.
Click here for an SEC Fact Sheet describing the proposal.
Click here for summary of the proposal from Ropes and Gray.