This bill adds a new section to the Investment Advisers Act of 1940 about how proxies for passively managed funds are handled. An investment adviser that can vote proxies for covered securities in a passive fund must do one of four things: follow the voting instructions of the beneficial owner (or their designee), follow the voting recommendations of the issuer's board, abstain while reasonably trying to be present for quorum purposes, or (under rules from the Securities and Exchange Commission) instruct vote tabulators to mirror other shareholders' votes. The rule does not apply to "routine matters." The bill creates a safe harbor that limits adviser liability if the adviser follows these requirements. It exempts foreign private issuers when the adviser fully and fairly discloses any different published voting policy. Advisers must provide investors (or relevant intermediaries) a form to select a published voting policy and give at least 5 business days to return it; materials may be provided electronically. The bill defines key terms, including "passively managed fund" (index-based or substantially index-tracking funds that commit not to exercise control), "published voting policy," "covered security," and "routine matter." The amendment would take effect one year after enactment.
If you own shares in a qualifying passive fund or manage one, the adviser that votes proxies for holdings in that fund will generally need to follow the choices described in the bill. Investors should be offered a form to choose a published voting policy and have at least 5 business days to return it. Passive funds are defined by index-tracking features or having at least 60% of assets in an index-tracking strategy and by a commitment not to try to control issuers. The rule does not apply to routine matters and has a one-year delayed start after enactment.
No publicly available information on direct costs or budgetary effects is included in the bill text or provided metadata.
No publicly available information.
No publicly available information.