United States: SEC Adopts Expanded Proxy Voting Reporting by Registered Funds and New Reporting of Executive Compensation Votes by Form 13F Filers

On November 2, by a vote of 3 to 2, the Securities and Exchange Commission adopted, largely as proposed, amendments to Form N-PX under the Investment Company Act of 1940 and new Rule 14Ad-1 under the Securities Exchange Act of 1934 (Amendments).  The Amendments expand the proxy voting information that registered investment companies (Funds) report on Form N-PX, and require, for the first time, Form 13F filers (Managers) to report annually on Form N-PX how they voted proxies concerning certain shareholder advisory votes on executive compensation (“say-on-pay” votes).

Amended Form N-PX will require reports to: (1) use the language, and present voting matters in the order presented, on an issuer’s proxy card; (2) identify the subject matter of each voting matter using a specified list of categories; (3) disclose the number of shares voted (or instructed to be voted), how those shares were voted, and the number of shares on loan that were not recalled; and (4) be filed in a custom machine-readable, or “structured,” data language.

The Amendments also will require: (1) proxy voting information to be reported in the order presented on Form N-PX; (2) that each series of a Fund present its voting record separately; (3) disclosure of whether a vote was for or against management’s recommendation; (4) the use of only one security identifier (CUSIP number or ISIN); and (5) disclosure that proxy voting records are publicly available on (or through) a website and available upon request, free of charge.

Managers will be required to report say-on-pay votes with respect to a security over which the Manager has the power to vote or direct the voting of a security and exercises this power to influence a voting decision.  Under certain circumstances, Managers or Managers and Funds have the option of filing jointly, and Managers may file a notice report omitting voting information. Reports on amended Form N-PX must be filed by August 31, 2024, and cover the period July 1, 2023 to June 30, 2024.

Crystal Liu also contributed to this article.