News & Resources

SEC Adopts Rule Amendments on Proxy Voting Process


On July 22, 2020, the United States Securities and Exchange Commission adopted rule amendments and issued additional guidance on the proxy voting responsibilities of investment advisers and third-party proxy voting advice service providers. The goal of the new provisions is to provide greater transparency to investors while minimizing potential cost and operational burdens of the proxy voting process.

The amendments focus on changing definitions of “solicit” and “solicitation” in the rule; exempting proxy voting advice companies, such as ISS and Glass Lewis, from the information and filing requirements of the federal proxy voting rules, with certain conditions; and adding new provisions to protect against conflicts of interest. Below are key takeaways from the new requirements:


  • The SEC changed the meanings of “solicit” and “solicitation” within the proxy voting rule, Rule 14a, to reflect the circumstances under which a person or entity providing voting advice is deemed to be engaged in a solicitation. The amendment clarifies that giving proxy voting advice in response to an unprompted request is not a solicitation.
  • Proxy voting providers may now be exempt from information and filing requirements, with the following conditions:
    • Conflict of interest disclosures must be made in proxy voting advice or through the electronic means used to deliver the advice; and
    • Policies and procedures must be adopted to ensure that: (1) those receiving voting advice do so before or at the same time the advice is provided to the proxy provider’s clients and (2) that the provider make clients aware of statements made by registrants about the advice they received.
  • The policies and procedures requirements include additional safe harbors for proxy voting service providers, allowing for greater flexibility in the rule.
  • Additional amendments name examples of when omitting certain information in proxy advice could be considered misleading in the context of the rule. These include material information about the proxy provider’s business practices and conflicts of interest.


When choosing to engage a proxy advisory firm, investment advisers should adequately review the potential service provider’s policies and procedures regarding conflicts of interest. Depending on the firm’s circumstances, this review could include assessing whether:

  • The proxy provider has policies and procedures in place to address conflicts of interest like those relating to business activities other than proxy voting services and those created by the provider’s affiliations with other entities;
  • The proxy provider’s policies and procedures address conflicts of interest in specific and detailed terms, not through standard or generic terms; or
  • The proxy provider’s policies and procedures use technology to communicate information about conflicts of interest in a timely and accessible manner.

The SEC adopted the amendments with the intention of removing cost and time burdens and barriers from voting investors and those voting on behalf of investors, such as registered investment advisers. However, opponents of the provisions argue the amendments add an unneeded step for service providers and could obstruct the proxy voting process overall.

The new amendments go into effect for proxy voting service providers later this year; they will be required to comply with the rule on Dec. 1, 2021.

If your firm engages a third party proxy voting service, these provisions may affect what information and how frequently they are required to communicate with you. Contact FilePoint with questions about how the new requirements may impact your firm’s proxy voting process.