Us Congress 2023-2024 Regular Session

Us Congress House Bill HB4648

Introduced
7/14/23  

Caption

To amend the Securities Exchange Act of 1934 to provide for duties of certain investment advisors, asset managers, and pension funds with respect to voting on shareholder proposals, and for other purposes.

Impact

If adopted, this legislation is expected to significantly influence how institutional investors approach voting on shareholder proposals. With the new disclosures required by the bill, institutional investment managers will have to carefully consider proxy advisory recommendations and their fiduciary duties, balancing between adhering to these advisories while attending to the economic interests of their stakeholders. This change may lead to a more informed voting process but could also increase administrative burdens on managers as they comply with additional reporting responsibilities.

Summary

House Bill 4648 proposes amendments to the Securities Exchange Act of 1934 aimed at enhancing the responsibilities of institutional investment managers, asset managers, and pension funds concerning their voting behavior on shareholder proposals. The bill mandates that these entities file annual reports with the Securities and Exchange Commission detailing how they voted on various proposals, the degree of alignment with proxy advisory firms, and an analysis of whether those votes serve the best economic interests of shareholders. This is an effort to increase accountability and transparency in the way investment managers exercise their voting rights.

Contention

Notably, the bill may face criticism regarding its implications for how investment managers interact with proxy advisory firms. Proponents argue that increased transparency will enhance corporate governance and protect shareholder interests, while opponents might contend that the requirements could pressure managers to conform to advisory recommendations rather than making independent, informed decisions. The effectiveness of the bill will largely depend on the ability of institutional investors to balance regulatory compliance with their fiduciary responsibilities amidst potentially conflicting advice from proxy advisory firms.

Companion Bills

US HB4767

Related Protecting Americans’ Retirement Savings from Politics Act

Previously Filed As

US HB4589

To amend the Securities Exchange Act of 1934 to provide for the registration of proxy advisory firms, and for other purposes.

US HB3402

To amend the Securities Exchange Act of 1934 to require certain disclosures by institutional investment managers in connection with proxy advisory firms, and for other purposes.

US HB4590

To amend the Securities Exchange Act of 1934 to provide for liability for certain failures to disclose material information in connection with proxy voting advice, and for other purposes.

US HB448

Putting Investors First Act of 2023 This bill requires a proxy advisory firm to register with the Securities and Exchange Commission and prohibits an unregistered proxy advisory firm from using interstate commerce to provide proxy-voting advice, research, analysis, or recommendations to any client. With respect to these firms, the bill (1) establishes procedures for both registration and termination of registration; (2) requires each firm to employ an ombudsman, designate a compliance officer, and publicly disclose conflicts of interest; (3) allows issuers to assess and comment on proxy voting recommendations; and (4) prohibits unfair, coercive, or abusive practices. The bill establishes a private right of action against a proxy advisory firm that endorses an approved proposal that is not supported by the issuer and is found to be illegal.

US HB4645

Empowering Shareholders Act of 2023

US HB2622

To amend the Investment Advisers Act of 1940 to codify certain Securities and Exchange Commission no-action letters that exclude brokers and dealers compensated for certain research services from the definition of investment adviser, and for other purposes.

US HB4628

To amend the Securities Exchange Act of 1934 to require the Securities and Exchange Commission to disclose and report on non-material disclosure mandates, and for other purposes.

US HB1702

To amend PROMESA to include certain ethics provisions to provide for the disqualification of certain advisors to the Financial Oversight and Management Board, and for other purposes.

US HB52

Stop Woke Investing ActThis bill requires the Securities and Exchange Commission (SEC) to amend regulations to limit the inclusion of shareholder proposals in proxy statements. A proxy statement is provided to shareholders prior to a public company holding a shareholder meeting and contains information relevant to a shareholder vote. Under current SEC rules, certain qualifying shareholder proposals must be included on a company's proxy statement, including proposals that raise significant social policy issues.Under the bill, a shareholder proposal must have a material effect on the financial performance of the company to be included in a proxy statement. The bill also establishes a cap on the number of shareholder proposals required to be included in a shareholder meeting, depending on the size and type of the company. In addition, a proposal submitted by a member of the board of directors is prohibited from inclusion as a shareholder proposal.

US HB2694

To amend the Infrastructure Investment and Jobs Act to authorize the use of funds for certain additional Carey Act projects, and for other purposes.

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US HB3402

To amend the Securities Exchange Act of 1934 to require certain disclosures by institutional investment managers in connection with proxy advisory firms, and for other purposes.

IA HF352

A bill for an act relating to an entity-level taxation election for pass-through entities and allowing a partner or shareholder to claim a credit against the individual and corporate income taxes and the franchise tax, and including effective date and retroactive applicability provisions. (Formerly HSB 69.) Effective date: 05/11/2023. Applicability date: 01/01/2022.