The SEC has proposed revisions to Form N-PX to broaden the form’s scope and make it easier and more efficient for investors to get vital information from mutual funds, exchange-traded funds, and other funds that report about their proxy votes. Funds have been required since 2003 to file Form N-PX reports to disclose their voting practices for proxy proposals concerning their investments. However, funds may be inconsistent in the way in which they disclose information about their votes, or they may use a format that is not machine readable, which can make it sometimes difficult for investors to analyze reported data. The rule would render funds’ proxy voting records more usable and easier to analyze. In addition, investors would be able to more easily monitor how their funds vote and compare different funds’ voting records.
The proposed rule would result in the following changes:
funds and managers would be required to tie the description of each voting matter to the issuer’s form of proxy and to categorize each matter by type to help investors identify votes of interest and compare voting records
the amendments would dictate how funds organize reports and require them to use a structured data language to make the filings easier to analyze
funds and managers would be required to disclose how their securities lending activity impacted their voting
Currently, fund reports are filed in plain-text or HTML format. The proposal would require that reporting persons file their reports using an XML structured data language. Also, the new rule would standardize the order of disclosure requirements on Form N-PX and mandate that a fund offering multiple series of shares must disclose the complete voting record of each series individually. Amendments have also been proposed to Forms N-1A, N-2, and N-3 that would require funds to indicate that they will post proxy voting records on their websites and make such information records available to investors free of charge.
Also, under the new rule, institutional investment managers would need to disclose how they voted on executive compensation, or “say-on-pay” matters, which would fulfill one of the remaining rulemaking mandates pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. Managers generally would be held to the same Form N-PX reporting requirements as funds concerning their say-on-pay votes.
Interested parties may submit remarks on matters related to the proposed rule during the public comment period, which will remain open for 60 days following publication of the request for comment in the Federal Register. Comments may be submitted electronically via the SEC’s internet submission form or emailed to email@example.com. Paper submissions may be mailed to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. All submissions should refer to File Number S7-11-21. Information submitted will become part of the public record and posted on the SEC’s website at sec.gov.
For more details, see the Proposed Amendments to Form N-PX fact sheet and the Proposed Rule, both on sec.gov. To make an inquiry, contact Nathan R. Schuur (Senior Counsel), Angela Mokodean (Branch Chief), or Brian M. Johnson (Assistant Director), all of the Investment Company Regulation Office at (202) 551-6792. Questions may also be directed to Terri G. Jordan (Branch Chief) of the Chief Counsel’s Office, Division of Investment Management, at (202) 551-6825, IMOCC@sec.gov, or Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.