The Securities and Exchange Commission on Wednesday proposed amendments to Form N-PX to enhance the information mutual funds, exchange-traded funds, and certain other funds report about their proxy votes.
A statement the commission indicated that proposed rulemaking would require funds 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.
In addition, the proposal would prescribe how funds organize their reports and require them to use a structured data language to make the filings easier to analyze while Funds would also be required to disclose how their securities lending activity impacted their voting.
Further, the rulemaking would require institutional investment managers to disclose how they voted on executive compensation, or so-called “say-on-pay” matters, which would fulfill one of the remaining rulemaking mandates under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Managers generally would be subject to the same Form N-PX reporting requirements as funds with respect to their say-on-pay votes.
Clarifying the investment market regulator’s stance on the proposed amendments, SEC Chairman, Gary Gensler said: “This proposal will make it easier and more efficient for investors to get crucial information about proxy votes from funds.
“I am pleased to support the staff’s recommendations and look forward to putting them out to public comment”, he added
Since 2003, funds have been required to file Form N-PX reports disclosing how they voted on proxy proposals relating to investments they hold, but investors may face difficulties analyzing these reports.
For instance, funds may report their votes in an inconsistent manner or in a format that is not machine readable, which can make it more difficult for investors to analyze the reported data.
According to the SEC, the proposal would also make funds’ proxy voting records more usable and easier to analyze, improving investors’ ability to monitor how their funds vote and compare different funds’ voting records.
The proposal will be published on SEC.gov and in the Federal Register. The public comment period will remain open for 60 days after publication in the Federal Register.
