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Proposed Amendments to Form N-PX Relating to Registered Investment Companies

Oct 26, 2021

As a shareholder of a public company, when presented with a proxy to vote on a matter, do you vote? Do you believe your vote matters?  When a registered investment company, including mutual funds and exchange traded funds (“funds”), are asked to vote, their vote can affect the outcome of the matter being voted on since they typically own a large number of shares in a public company.  Since funds are entrusted to vote on behalf of the funds’ investors, the investors should be better equipped to understand how funds are voting on these important corporate matters.

The proposed amendments (“amendments”) to Form N-PX, the annual report of proxy voting of registered management investment company, issued on September 29, 2021, would enhance the information funds provide about their votes including voting relating to executive compensation at a public company.  The amendments would require the funds and the investment manager to categorize matters voted on by type (so investors can identify votes of interest) and make such information comparable.

Examples of votes include categories relating to the board of directors, extraordinary transactions, say-on-pay, shareholder rights and defenses, and environment or climate matters. 

The amendments would prescribe how reports are organized and require the use of structure data language (XML) so filings are easier to analyze.

Finally, the proposal would require the funds and the investment manager to disclose how their securities lending activity impacted their voting decisions.  Such activity would include the number of shares voted as well as the number of shares loaned but not recalled.

The amendments, if adopted, would complete the implementation of section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

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Sheila Handler

Sheila Handler is a Financial Services Group Audit Director experienced with hedge funds, broker dealers, and mutual funds.

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