On July 22, 2020, the U.S. Securities and Exchange Commission adopted amendments to its rules under the Securities Exchange Act of 1934 that exempt persons furnishing proxy voting advice from the information and filing requirements of the federal proxy rules. The most prominent proxy advisory firms that provide such proxy voting advice in the United States today are Institutional Shareholder Services and Glass Lewis & Co. Pursuant to the amendments, the SEC codified its view that proxy voting advice generally constitutes a "solicitation," imposed new conditions to exemptions under Exchange Act Rule 14a-2(b) and added examples of what may be "misleading" within the meaning of Exchange Act Rule 14a-9. The SEC also published supplemental guidance to assist investment advisers on assessing how to consider registrant responses to proxy voting advice in light of the new amendments to the proxy rules.
The new rules have the potential to alter the dynamics between public companies and proxy advisory firms, with public companies gaining some leverage. The new rules have been criticized by some industry participants with an interest in maintaining the prior system.
Duane Morris' client alert on these new rules was issued on July 30, 2020 and is available here.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.