The SEC adopted amendments to Form N-PX on November 2nd. These changes will enhance the proxy vote information that mutual funds, exchange-traded funds, and certain other registered funds report by making proxy voting records more usable and easier to analyze. This will in turn enhance investors’ ability to monitor how funds vote and compare different funds’ voting records. In addition, institutional investment managers will be required to disclose how they voted on executive compensation (“say-on-pay”) matters, which fulfills one of the remaining rulemaking mandates under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Per the new rulemaking, funds and fund managers must now categorize each matter by type and, where a form of proxy or “proxy card” subject to the SEC’s proxy rules is available, link the description and order of voting matters to the issuer’s form of proxy. This will aid investors in identifying votes of interest and comparing voting records. The changes also prescribe how funds and managers must organize their reports and requires them to use an XML structured data language to make the filings easier to analyze. Previously, registered funds have disclosed proxy voting records on Form N-PX in an inconsistent manner and format.
Funds and fund managers will also have to disclose the number of shares that were voted or instructed to be voted. This is in addition to the number of shares loaned and not recalled and thus not voted, a requirement designed to provide shareholders with context to understand how securities lending activities could affect a fund’s or manager’s proxy voting practices.
In addition to complying with the other requirements of Form N-PX for their say-on-pay votes, new rule 14Ad-1 mandates that managers disclose annually on Form N-PX each say-on-pay vote over which the manager exercised voting power. It also requires additional disclosure such that a given manager’s full say-on-pay voting record can be identified.
The rule adoption release is available at sec.gov and will appear in the Federal Register. The rule and form amendments are effective for votes occurring on or after July 1, 2023. The first filings subject to the amendments will be due in 2024.