For more than a decade, the SEC has been wrestling with whether and how to regulate the activities of the proxy advisory firms – principally ISS and Glass Lewis – that have come to play such an important role in shareholder voting at U.S. public companies.  On July 22, 2020, the SEC adopted rules and interpretive guidance that, together, are probably as far as it will go.

Very generally, the main impact of last week’s actions is that, beginning in the 2022 proxy season:

  • When a proxy advisory firm gives its clients voting advice about a typical shareholders’ meeting, it will have to provide the advice simultaneously to the company.
  • In case the company decides to respond to the proxy voting advice, the proxy advisory firm will need to develop procedures to alert its clients to the company’s response before the vote is cast.
  • If the client is a registered investment adviser, it will need to have procedures to consider any company response.

Please click here to read the full alert memorandum.