On July 22, 2020, the SEC adopted amendments to its rules that exempt solicitors from furnishing proxy voting advice from the information and filing requirements of the federal proxy rules and issued supplemental guidance on Proxy Voting responsibilities of investment advisers.
The adopted amendments aim at providing investors transparent, accurate, and complete information without imposing unnecessary costs or delays:
Rule 14a-1(l):
- Amendments made include the definition of “solicit” and “solicitation” in Exchange Act Rule 14a-1(l) to specify that it includes proxy voting advice, with the requirement to disclose material information. This amendment reinforces the SEC’s view that proxy voting advice constitutes a solicitation.
- New paragraph (A) to Rule 14a-1(l)(1)(iii) specifies the circumstances in which a person providing proxy voting advice will be deemed to be engaged in a solicitation.
- A new paragraph (v) in Rule 14a-1(l)(2) states that proxy voting advice provided by a person only in response to an unprompted request will not be a solicitation.
Rules 14a-2(b)(1) and 14a-2(b)(3):
Until now, Rules 14a-2(b)(1) and (b)(3) of the proxy rules exempted proxy voting advice businesses from the information and filing requirements of the proxy rules. Exemptions are now available on compliance with new conditions mentioned in Rule 14a-2(b)(9). These amendments will ensure that investors have access to more transparent, accurate, and complete information. The conditions are: