Texas 2025 - 89th Regular

Texas Senate Bill SB2337 Compare Versions

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1	1	By: Hughes S.B. No. 2337
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6	6	A BILL TO BE ENTITLED
7	7	AN ACT
8	8	relating to the provision of proxy advisory services in connection
9	9	with certain entities domiciled in this state.
10	10	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	11	SECTION 1. Title 2, Chapter 21, Business Organizations
12	12	Code, is amended by adding Subchapter T to read as follows:
13	13	SUBCHAPTER T: PROXY ADVISORS
14	14	Sec. 21.1001. DEFINITIONS. In this subchapter:
15	15	(1) "Company" means a publicly traded, for-profit
16	16	company organized or created under the laws of this state or having
17	17	a principal place of business in this state.
18	18	(2) "Company proposal" means any proposal made by a
19	19	company that is included in a company's proxy statement, including
20	20	but not limited to proposals regarding director elections,
21	21	executive compensation, corporate transactions and structure,
22	22	auditor selections, and other similar measures.
23	23	(3) "Investment manager" means a person or company
24	24	who, for compensation, provides professional investment
25	25	management services. The term does not include:
26	26	(A) an employee or member of an advisory
27	27	committee of a public retirement system; or
28	28	(b) a seller of security interests.
29	29	(4) "Proxy advisor" means a person or entity who, for
30	30	compensation, provides proxy advisory services to the shareholders
31	31	of a company, or to other interested parties, including but not
32	32	limited to investment managers.
33	33	(5) "Proxy advisory services" includes the provision
34	34	of any of the following services in connection with or relating to
35	35	a company:
36	36	(A) advice or recommendations on how to vote with
37	37	regard to measures under shareholder consideration, including
38	38	proxy proposals and company proposals;
39	39	(B) proxy statement research and analyses,
40	40	including with regard to proxy proposals and company proposals;
41	41	(C) corporate governance ratings and research or
42	42	other similar services;
43	43	(D) proxy voting policy development; or
44	44	(E) proxy vote administration, including through
45	45	the use pf proxy vote management software or other similar
46	46	services.
47	47	(6) "Proxy proposal" means any proposal made by a
48	48	shareholder to a company that is included in the company's proxy
49	49	statement.
50	50	(7) "Shareholder" includes a shareholder, unitholder,
51	51	limited partner, or other equity owner of a company.
52	52	Sec. 21.1002. OBLIGATION TO DISCHARGE DUTY BASED SOLELY ON
53	53	CERTAIN FINANCIAL INTERESTS. (a) Except as otherwise provided in
54	54	this section, a proxy advisor shall provide proxy advisory services
55	55	solely in the best financial interest of the shareholders of a
56	56	company, based on quantitative, impartial standards, for the sole
57	57	purpose of maximizing financial return and control associated
58	58	levels of risk.
59	59	(b) For purposes of this section, proxy advisory services
60	60	are not provided solely in the best financial interest of the
61	61	shareholders if based, all or in part, on non-financial factors,
62	62	including any commitments, initiatives, policies, targets, or
63	63	subjective or value-based standards pertaining to:
64	64	(1) environmental, social, or governance (ESG)
65	65	investment principles;
66	66	(2) diversity, equity, or inclusion;
67	67	(3) social credit or sustainability scores; or
68	68	(4) membership in, or association with, any non-profit
69	69	organization, coalition, initiative, institution, industry, or
70	70	similar organization that bases its evaluation or assessment of a
71	71	company's value on non-financial factors.
72	72	(c) For any proxy advisory services that are not provided
73	73	solely in the best financial interest of the shareholders, the
74	74	proxy advisor shall:
75	75	(1) include a conspicuous warning with the provision
76	76	of each such proxy advisory services that they are not made solely,
77	77	and may not be, in the best financial interest of the shareholders;
78	78	(2) use best efforts to obtain a prompt, written
79	79	acknowledgment of the warning required by subpart (a) herein from
80	80	each recipient shareholder or other interested party, as
81	81	applicable;
82	82	(3) immediately notify the company that is the subject
83	83	of such proxy advisory services, including full disclosure of all
84	84	related proxy advisory services, the basis of the proxy advisor's
85	85	advice and recommendations under this subsection, and all
86	86	recipients of each such proxy advisory services; and
87	87	(4) publicly and conspicuously disclose on the
88	88	homepage or front page of the proxy advisor's website that its proxy
89	89	advisory services include advice and recommendations that are not
90	90	made solely, and may not be, in the best financial interest of
91	91	shareholders.
92	92	Sec. 21.1003. VOTING RECOMMENDATIONS; CONFLICTS. (a) If a
93	93	proxy advisor provides proxy advisory services regarding a company
94	94	to multiple shareholders or other interested parties that include
95	95	voting recommendations that differ in any material respect
96	96	regarding the same proxy proposal or company proposal, the proxy
97	97	advisory services shall be considered not to be in the best
98	98	financial interest of the shareholders.
99	99	(b) For any proxy advisory services described in Subsection
100	100	(a), in addition to complying with the requirements of Section
101	101	21.1002(c), the proxy advisor shall immediately:
102	102	(1) notify each recipient shareholder or other
103	103	interested party in writing of the conflicting advice or
104	104	recommendations, including full disclosure of all related advice or
105	105	recommendations and the proxy advisor's basis for such advice or
106	106	recommendations;
107	107	(2) notify the company that is the subject of the proxy
108	108	advisory services in writing of the conflicting advice or
109	109	recommendations, including disclosure of all related
110	110	recommendations, the proxy advisor's basis for the
111	111	recommendations, and the recipients of each recommendation; and
112	112	(3) publicly and conspicuously disclose on the landing
113	113	page or front page of the proxy advisor's website that its proxy
114	114	advisory services include advice and recommendations that are in
115	115	material conflict with proxy advisory services provided to other
116	116	shareholders or interested parties.
117	117	Sec. 21.1004. VIOLATIONS; DECLARATORY JUDGMENT. An
118	118	affected party, including the company that is the subject of the
119	119	proxy advisory services, any shareholders of the company, or other
120	120	interested parties, may bring an action under Chapter 37, Civil
121	121	Practice and Remedies Code, to determine whether a proxy advisor
122	122	has committed a violation of this subchapter.
123	123	SECTION 2. The changes in law made by this Act apply only to
124	124	proxy advisory services rendered on or after the effective date of
125	125	this Act. Proxy advisory services rendered before the effective
126	126	date of this Act are governed by the law in effect on the date the
127	127	contract or other agreement for the services was entered into, and
128	128	the former law is continued in effect for that purpose.
129	129	SECTION 3. This Act takes effect immediately if it receives
130	130	a vote of two-thirds of all the members elected to each house, as
131	131	provided by Section 39, Article III, Texas Constitution. If this
132	132	Act does not receive the vote necessary for immediate effect, this
133	133	Act takes effect September 1, 2025.