New Proxy Voting Reporting Requirements For Investment Managers For 2023-24 Annual Meeting Season

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On November 2, 2022, the U.S. Securities and Exchange Commission (SEC) announced the adoption of amendments to Form N-PX and related rules to extend public company stockholder...
United States Corporate/Commercial Law
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On November 2, 2022, the U.S. Securities and Exchange Commission (SEC) announced the adoption of amendments to Form N-PX and related rules to extend public company stockholder vote disclosure filing requirements beyond registered investment companies that own stock in such companies to include disclosure of votes cast by an array of private institutional investment managers on say-on-pay, say-on-frequency, and golden parachute votes. However, the proposed expansion is limited to those institutional investment managers that are otherwise required to file Form 13F under the Securities Exchange Act of 1934 (Exchange Act). Persons not required to file Form 13F will also not be required to file Form N-PX.

These rules, as applicable, will apply to votes cast at meetings occurring during the current annual meeting season.


Mutual funds and other registered investment companies have long had an obligation to report their votes at public company stockholder meetings on Form N-PX. The SEC's new rules extend the reporting obligation to a range of new investors but limit the filing requirement to votes related to say on pay.

The new rules apply to all institutional investment managers that are required to file a Form 13F with the SEC. An "institutional investment manager" is any person, other than a natural person, investing in or buying and selling securities for its own account as well as any person exercising investment discretion with respect to the account of any other person. The SEC has noted that entities serving as managers could include, for example, banks, insurance companies, and broker-dealers that invest in or buy and sell securities for their own accounts; corporations and pension funds that manage their own investment portfolios; or investment advisers (regardless of whether they are SEC-registered) that manage private funds, separately managed accounts, mutual fund assets, or pension plan assets.

Section 13(f) of the Exchange Act provides that institutional investment managers that exercise investment discretion over $100 million or more in Section 13(f) securities must file Form 13F to report their ownership of certain equity securities. The SEC publishes an official list of Section 13(f) securities, but the list primarily includes US exchange-traded stocks, shares of closed-end investment companies, and shares of exchange-traded funds (ETFs) as well as certain related convertible debt securities, equity options, and warrants.

Institutional investment managers that are required to file Form 13F (what we will call "covered managers") must now comply with the new Form N-PX requirement. Conversely, persons that are not required to file Form 13F are not required to file the new Form N-PX.

Filing Requirements

The following is an overview of the new obligations:

  • Say-on-Pay Vote Disclosure Requirement for Covered Managers

New Rule 14Ad-1 requires covered managers to report annually on Form N-PX each say-on-pay and say-on-frequency vote over which the covered manager exercised voting power. The requirement also extends to votes to approve golden-parachute compensation in connection with a merger or acquisition. The rule permits joint reporting of say-on-pay votes by covered managers, or by covered managers and funds, under identified circumstances to avoid duplicative reporting.

The filing requirement is not limited to those securities that are listed on the covered manager's Form 13F; it applies to any security of a company over which it exercised voting power on a say-on-pay matter presented under Section 14A. The SEC rejected suggestions that the disclosures have exceptions for de minimis holdings, votes in respect of securities that are not of the type required to be reported on Form 13F, or votes in respect of securities the covered manager no longer held at quarter end.

The SEC did acknowledge that issuers of securities that are exempt from registration under Section 12 of the Exchange Act — such as foreign private issuers — are not required to conduct say-on-pay votes in the first instance, and if such an issuer were to conduct a say-on-pay vote voluntarily, covered managers would not be required to report that vote because new Section 14A(d) requires managers to report only votes pursuant to Sections 14A(a) and 14A(b).

The new rules include a two-part test for determining whether a covered manager "exercised voting power" over a security; a covered manager is required to report a say-on-pay vote for a security only if it (1) has the power to vote, or direct the voting of, a security, and (2) actually "exercised" this power — including by voting or determining not to vote — to influence a voting decision for the security. The SEC notes that the ability to vote a security or direct the voting of a security includes the ability to determine whether to vote the security at all or to recall a loaned security before a vote; voting power can exist or be exercised either directly or indirectly by way of a contract, arrangement, understanding, or relationship. With respect to the actual voting component of the test, a covered manager will have no reporting obligation with respect to a voting decision that is entirely determined by its client or another party.

Note that covered managers that have a disclosed policy of not voting proxies and that, in line with those policies, have in fact not voted proxies during the reporting period need not submit a full security-by-security report on Form N-PX. Instead, they will be able to file a notice report under the Form N-PX cover page with the required signature.

The covered manager's filing must conform to the updated Form N-PX requirements for registered investment funds. The new Form N-PX is available on the SEC's website here.

  • New Form N-PX Requirements

Mutual funds and other registered investment companies will need to continue reporting all of their votes; however, they will do so on a new Form N-PX that will be used by both registered funds and covered managers.

On the new Form N-PX, filers that own multiple series of shares must provide each series' Form N-PX disclosure separately by series. In addition, information required or permitted to be reported on Form N-PX must be reported in the order presented on the form. Finally, a reporting person is required to report only one security identifier, the security's Committee on Uniform Securities Identification Procedures (CUSIP) number or its International Securities Identification Number (ISIN), as opposed to the form's current requirement to report both a security's CUSIP and ticker symbol.

Last, the new form includes a required summary page that is intended to facilitate the new joint-reporting framework to enable investors to readily identify which fund series are intended to be covered by the report as well as any managers (besides the reporting person) with say-on-pay votes included on the Form N-PX report.

  • Availability of Proxy Voting Records

The new rules mandate that each Form N-PX filer must disclose that its proxy voting records are publicly available on its website and available upon request (free of charge).

  • Certain Streamlined Requirements

A short-form filing is available for covered managers in any of the following circumstances:

  • All proxy votes are reported by other reporting persons.
  • The covered manager did not exercise voting power for any reportable voting matter and therefore does not have any proxy votes to report.
  • The covered manager has a clearly disclosed policy of not voting and did not actually vote on any proxy voting matters.

In addition, joint reporting on a single Form N-PX is permitted for two or more covered managers that are affiliated persons. A covered manager is also not required to report proxy votes that are reported on a Form N-PX report by a registered fund, provided that such registered fund needs to include the covered manager's identifying information in its summary.

  • Structured Data Language and Standardized Reporting Format

The amendments will require funds to file their Form N-PX reports using an XML structured data language, which will ease data analysis. The form amendments also standardize the order of disclosure requirements on Form N-PX and require that each fund — including each series of a multi-series trust — present its complete voting record separately.

Effective Date

The new rules and form amendments became effective for votes occurring during the 12-month period beginning on July 1, 2023. Therefore, subject to certain transition rules for managers, first reports on amended Form N-PX must be filed by August 31, 2024, with these reports covering shareholder meetings occurring during the period of July 1, 2023, to June 30, 2024.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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