Enhancing Proxy Voting Transparency: SEC’s Amendments to Form N-PX

Who is Required to File Form N-PX?

Institutional investment managers who file Form 13F are now required to annually file a Form N-PX disclosing how they have voted on certain pay-related proposals held by the companies whose securities they hold.

When are Form N-PX Filings Due?

Form N-PX filings are due annually by August 31, providing regular updates on proxy voting activities. This annual reporting schedule helps maintain a continuous flow of information to investors.

Key Amendments to Form N-PX

The SEC’s adopted rule and form amendments to Form N-PX introduce several important changes:

• Standardized and Structured Disclosures: Under the new rules, mutual funds are required to categorize and disclose their proxy votes in a structured and uniform format. This standardization ensures that voting records are presented in a consistent manner, making them easier for investors to read and comprehend.

• Machine-Readable Format: Mutual fund managers must now file Form N-PX in a machine-readable format, such as XML. This transition from traditional filing formats to machine-readable language enhances data accessibility and analysis capabilities. Investors can efficiently locate and analyze voting information, promoting greater transparency.

• Disclosure of Voting Details: The amendments mandate mutual funds to disclose not only the number of shares voted but also how those shares were voted. This level of granularity offers insights into the fund’s voting decisions on specific issues, empowering investors to make more informed choices.

• Shares Out on Loan: In an effort to provide additional context, mutual funds are now required to disclose the number of shares out on loan and not recalled for the vote. This disclosure sheds light on the potential impact of securities lending activities on voting outcomes.

Adapting to Form N-PX Amendments

Investment managers must now implement solutions to manage and report proxy voting data efficiently and leverage systems and workflows that can streamline the process of categorizing, recording, and filing votes in the required machine-readable formats. Finally, implementing robust data analytics tools can enable managers to analyze voting patterns and decisions more effectively, ensuring compliance with the new regulations.