Document ID: SEC-2021-1424-0001
Agency: sec
Document Type: Proposed Rule
Title: Reporting of Executive Compensation Votes by Institutional Investment Managers: Enhanced Reporting of Proxy Votes by Registered Management Investment Companies
Posted Date: 2021-10-15T04:00Z

[Federal Register Volume 86, Number 197 (Friday, October 15, 2021)]
[Proposed Rules]
[Pages 57478-57524]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-21549]

[[Page 57477]]

Vol. 86

Friday,

No. 197

October 15, 2021

Part II

 Securities and Exchange Commission

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17 CFR Parts 232, 240, 249, et al.

Enhanced Reporting of Proxy Votes by Registered Management Investment 
Companies; Reporting of Executive Compensation Votes by Institutional 
Investment Managers; Proposed Rule

  Federal Register / Vol. 86 , No. 197 / Friday, October 15, 2021 / 
Proposed Rules  

[[Page 57478]]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 232, 240, 249, 270, and 274

[Release Nos. 34-93169; IC-34389; File No. S7-11-21]
RIN 3235-AK67

Enhanced Reporting of Proxy Votes by Registered Management 
Investment Companies; Reporting of Executive Compensation Votes by 
Institutional Investment Managers

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

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SUMMARY: The Securities and Exchange Commission (``Commission'') is 
proposing to amend Form N-PX under the Investment Company Act of 1940 
(``Investment Company Act'') to enhance the information mutual funds, 
exchange-traded funds (``ETFs''), and certain other funds currently 
report annually about their proxy votes and to make that information 
easier to analyze. The Commission also is proposing rule and form 
amendments under the Securities Exchange Act of 1934 (``Exchange Act'') 
that would require an institutional investment manager subject to the 
Exchange Act to report annually on Form N-PX how it voted proxies 
relating to executive compensation matters, as required by the Exchange 
Act. The proposed reporting requirements for institutional investment 
managers, if adopted, would complete implementation of those 
requirements under the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (``Dodd-Frank Act'').

DATES: Comments should be received on or before December 14, 2021.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/submitcomments.htm); or
     Send an email to [email protected]. Please include 
File Number S7-11-21 on the subject line; or

Paper Comments

     Send paper comments to, Secretary, Securities and Exchange 
Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number S7-11-21. This file number 
should be included on the subject line if email is used. To help us 
process and review your comments more efficiently, please use only one 
method. The Commission will post all comments on the Commission's 
website (http://www.sec.gov/rules/proposed.shtml). Comments are also 
available for website viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE, Room 1580, Washington, DC 20549, on 
official business days between the hours of 10 a.m. and 3 p.m. 
Operating conditions may limit access to the Commission's public 
reference room. All comments received will be posted without change. 
Persons submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly.
    Studies, memoranda, or other substantive items may be added by the 
Commission or staff to the comment file during this rulemaking. A 
notification of the inclusion in the comment file of any such materials 
will be made available on the Commission's website. To ensure direct 
electronic receipt of such notifications, sign up through the ``Stay 
Connected'' option at www.sec.gov to receive notifications by email.

FOR FURTHER INFORMATION CONTACT: Nathan R. Schuur, Senior Counsel; 
Angela Mokodean, Branch Chief; or Brian M. Johnson, Assistant Director, 
at (202) 551-6792, Investment Company Regulation Office; Terri G. 
Jordan, Branch Chief, at (202) 551-6825 or [email protected], Chief 
Counsel's Office, Division of Investment Management, Securities and 
Exchange Commission, 100 F Street NE, Washington, DC 20549.

SUPPLEMENTARY INFORMATION: The Commission is proposing new 17 CFR 
240.14Ad-1 [new rule 14Ad-1] under the Exchange Act.\1\ We are also 
proposing amendments to the following rules and forms:
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    \1\ 15 U.S.C. 78a et seq.
    \2\ Form N-PX was adopted under the Investment Company Act only. 
In this release, we are proposing to amend Form N-PX under both the 
Exchange Act and the Investment Company Act. 15 U.S.C. 80a-1 et seq.
    \3\ 15 U.S.C. 77a et seq.

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                   Commission reference                                     CFR citation [17 CFR]
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Investment Company Act:
    Rule 30b1-4...........................................  Sec.   270.30b1-4.
Exchange Act and Investment Company Act:
    Form N-PX \2\.........................................  Sec.  Sec.   274.129 and 249.326.
Securities Act of 1933 (``Securities Act'') \3\ and
 Investment Company Act:
    Form N-1A.............................................  Sec.  Sec.   239.15A and 274.11A.
    Form N-2..............................................  Sec.  Sec.   239.14 and 274.11a-1.
    Form N-3..............................................  Sec.  Sec.   239.17a and 274.11b.
Securities Act:
    Rule 101 of Regulation S-T............................  Sec.   232.101.
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Table of Contents

I. Introduction and Background
II. Discussion
    A. Scope of Funds' Form N-PX Reporting Obligations
    B. Scope of Managers' Form N-PX Reporting Obligations
     1. Managers Subject to Form N-PX and Categories of Votes They 
Must Report
     2. Managers' Exercise of Voting Power
     3. Additional Scoping Matters for Manager Reporting of Say-on-
Pay Votes
    C. Proxy Voting Information Reported on Form N-PX
     1. Identification of Proxy Voting Matters
     2. Identification of Proxy Voting Categories
     3. Quantitative Disclosures
     4. Additional Proposed Amendments to Form N-PX
    D. Joint Reporting and Related Form N-PX Amendments To 
Accommodate Manager Reporting
     1. Joint Reporting Provisions
     2. The Cover Page
     3. The Summary Page
     4. Other Proposed Amendments to Form N-PX To Accommodate 
Manager Reporting
    E. Form N-PX Reporting Data Language
    F. Time of Reporting

[[Page 57479]]

    G. Requests for Confidential Treatment
    H. Proposed Website Availability of Fund Proxy Voting Records
    I. Compliance Dates
    J. Transition Rules for Managers
    K. Technical and Conforming Amendments
III. General Request for Comments
IV. Economic Analysis
    A. Introduction
    B. Economic Baseline and Affected Parties
     1. Funds' Reporting of Proxy Voting Records
     2. Managers' Reporting of Say-on-Pay Votes
    C. Costs and Benefits
     1. Amendments to Funds' Reporting of Proxy Votes
     2. Amendments To Require Manager Reporting of Say-on-Pay Votes
    D. Effects on Efficiency, Competition, and Capital Formation
     1. Amendments to Funds' Reporting of Proxy Votes
     2. Amendments To Require Manager Reporting of Say-on-Pay Votes
    E. Reasonable Alternatives
     1. Scope of Managers' Say-on-Pay Reporting Obligations
     2. Amendments to Proxy Voting Information Reported on Form N-PX
     3. Amendments to the Time of Reporting on Form N-PX or 
Placement of Funds' Voting Records
    F. Request for Comment
V. Paperwork Reduction Act
VI. Regulatory Flexibility Act Certification for Managers and 
Initial Regulatory Flexibility Analysis for Funds
    A. Regulatory Flexibility Act Certification for Managers
    B. Initial Regulatory Flexibility Act Analysis for Funds
     1. Reasons for and Objectives of the Proposed Actions
     2. Legal Basis
     3. Small Entities Subject to the Rule
     4. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
     5. Duplicative, Overlapping, or Conflicting Federal Rules
     6. Significant Alternatives
     7. General Request for Comment
VII. Consideration of Impact on the Economy
VIII. Statutory Authority

I. Introduction and Background

    Mutual funds, ETFs, and other registered management investment 
companies (collectively, ``funds'') hold substantial institutional 
voting power that they exercise on behalf of millions of fund 
investors.\4\ Funds own around 30 percent of U.S. corporate equities 
and in some cases funds hold a larger percent of a single company's 
stock.\5\ As a result, funds can influence the outcome of a wide 
variety of matters that companies submit to a shareholder vote, 
including matters related to governance, corporate actions, and 
shareholder proposals. Funds' proxy voting decisions can play an 
important role in maximizing the value of their investments, affecting 
the more than 45 percent of U.S. households that own funds, as well as 
other investors in U.S. equity markets.\6\
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    \4\ Mutual funds and most ETFs are open-end management 
investment companies registered on Form N-1A. An open-end management 
investment company is an investment company, other than a unit 
investment trust or face-amount certificate company, that offers for 
sale or has outstanding any redeemable security of which it is the 
issuer. See sections 4 and 5(a)(1) of the Investment Company Act [15 
U.S.C. 80a-4 and 80a-5(a)(1)]. The amendments proposed in this 
release would also apply to registered closed-end management 
investment companies (which register on Form N-2) and insurance 
company separate accounts organized as management investment 
companies that offer variable annuity contracts (which register on 
Form N-3).
    \5\ ICI 2021 Fact Book, available at https://www.ici.org/system/files/2021-05/2021_factbook.pdf, at figure 2.7 (stating that mutual 
funds and other registered investment companies held 30 percent of 
U.S. corporate equities as of year-end 2020).
    \6\ Id., at figure 7.1 (stating that 45.7 percent of U.S. 
households owned funds in 2020).
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    For certain types of funds and their investors, proxy voting can 
have particularly heightened importance. For example, because index 
funds' investment policies typically do not permit them to sell 
investments in the relevant index, these funds cannot sell a stock if 
they are dissatisfied with management. Instead, index funds may use 
their voting power to become active in corporate governance in order to 
increase the value of their investments.\7\ Index funds have grown 
significantly in recent years. Index funds make up nearly half of the 
assets in equity funds.\8\ More generally, the net assets of index 
funds as a share of mutual funds and ETFs have more than doubled since 
2010.\9\
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    \7\ See Disclosure of Proxy Voting Policies and Proxy Voting 
Records by Registered Management Investment Companies, Investment 
Company Act Release No. 25922 (Jan. 31, 2003) [68 FR 6563 (Feb. 7, 
2003)] (``Form N-PX Adopting Release'') at nn.17-18 and accompanying 
text (noting that, because passive funds have investment policies 
that do not permit them to sell their shares, they may become more 
active in corporate governance as a way to maximize value for their 
shareholders).
    \8\ See Kenechukwu Anadu, Mathias Kruttli, Patrick McCabe, and 
Emilio Osambela, ``The Shift from Active to Passive Investing: 
Potential Risks to Financial Stability?'', Finance and Economics 
Discussion Series 2018-060r1, Washington: Board of Governors of the 
Federal Reserve System (2020), available at https://doi.org/10.17016/FEDS.2018.060r1 (citing statistics as of March 2020); see 
also ICI 2021 Fact Book, supra footnote 6, at figure 2.8 (stating 
that index funds represented 40% of the mutual fund and ETF market, 
excluding money market funds, in 2020).
    \9\ See ICI 2021 Fact Book, supra footnote 5, at figure 2.8 
(noting index fund growth as a share of the mutual fund and ETF 
market between 2010 and 2020, excluding money market funds).
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    Due to funds' significant voting power and the effects of funds' 
proxy voting practices on the actions of corporate issuers and the 
value of these issuers' securities, investors have an interest in how 
funds vote.\10\ In addition, in recent years, investors have increased 
their focus on how funds vote on environmental, social, and governance-
oriented matters (i.e., ESG matters). Many funds now incorporate 
sustainability or other ESG factors or put these factors at the center 
of their investment approach.
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    \10\ Some investors review funds' voting practices by accessing 
Form N-PX reports directly on EDGAR, while others may obtain 
information about funds' voting practices through analysis or 
synthesis of Form N-PX reports by data aggregators or others. A 
variety of market participants and other stakeholders also use data 
reported on Form N-PX. See infra Section IV.C.1.a.
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    In most cases, a fund's adviser votes proxies relating to the 
fund's portfolio securities on the fund's behalf.\11\ Investment 
advisers are fiduciaries that owe duties of care and loyalty to each 
client.\12\ To satisfy its fiduciary duty in making any voting 
determination on behalf of a fund, an investment adviser must make 
determinations in the best interest of its client. Further, an 
investment adviser cannot place its own interests ahead of the 
interests of its client.\13\ An investment adviser that assumes proxy 
voting authority must adopt and implement policies and procedures 
reasonably designed to ensure it votes client securities in the best 
interest of clients.\14\
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    \11\ See Form N-PX Adopting Release, supra footnote 7, at nn.11-
13 and accompanying text (recognizing that while the fund's board of 
directors, acting on the fund's behalf, has the right and the 
obligation to vote proxies relating to the fund's portfolio 
securities, this function is typically delegated to the fund's 
investment adviser).
    \12\ Commission Interpretation Regarding Standard of Conduct for 
Investment Advisers, Investment Advisers Act Release No. 5248 (June 
5, 2019) [84 FR 33669 (July 12, 2019)] (``2019 Fiduciary 
Interpretation'').
    \13\ Commission Guidance Regarding Proxy Voting Responsibilities 
of Investment Advisers, Investment Advisers Act Release No. 5325 
(Aug. 21, 2019) [85 FR 55155 (Sept. 3, 2019)] (``Proxy Voting 
Interpretation'').
    \14\ See 17 CFR 275.206(4)-6.
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    In 2003, the Commission adopted Form N-PX, which requires funds to 
report publicly their proxy voting records annually. Form N-PX is 
designed to improve transparency and enable fund shareholders to 
monitor their funds' involvement in the governance activities of 
portfolio companies.\15\ Since its adoption, Form

[[Page 57480]]

N-PX has advanced transparency into fund voting. However, these reports 
can be difficult for investors to use and can provide an incomplete 
picture of a fund's voting practices.
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    \15\ See Form N-PX Adopting Release, supra footnote 7, at 
paragraph accompanying n.34. Although the Commission proposed to 
require funds to disclose their proxy voting records in their annual 
and semiannual shareholders reports, after considering comments, the 
Commission adopted a separate form--Form N-PX--for funds to use in 
filing this information with the Commission. See id. at Section 
II.B. In the same release, the Commission also adopted amendments to 
require funds to disclose the policies and procedures they use to 
determine how to vote proxies. In that release, the Commission 
discussed several benefits of providing transparency on how funds 
vote, including illuminating potential conflicts of interest, 
discouraging voting that is inconsistent with fund shareholders' 
best interests, and encouraging funds to become more engaged in 
corporate governance of issuers held in their portfolios. Id. at 
Section I.
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    Investors may face difficulties using Form N-PX reports to find a 
particular fund's voting record, find a specific vote or type of vote 
that is of interest, or compare funds' voting records for several 
reasons. First, the organization and presentation of funds' proxy 
voting records in Form N-PX reports can vary significantly. For 
example, funds may provide unclear and inconsistent descriptions of 
voting matters (e.g., by using abbreviations or other shorthand). As 
another example, although the instructions to the form require separate 
presentations for each fund, some funds interpret this requirement as 
providing flexibility to organize voting information first by security, 
with each fund holding that security listed separately.\16\ As a 
result, a given fund's voting record can be spread throughout the 
report instead of presented together in one place. Second, Form N-PX 
reports can be overwhelmingly long due to the number of voting matters 
and funds the reports often cover.\17\ A single fund may own hundreds 
of securities, each of which may have ten or more proposals each year, 
and a single Form N-PX report often includes information about several 
different funds' voting records.\18\ Third, reports on Form N-PX are 
not currently filed in a machine readable, or ``structured,'' data 
language. This can make it more difficult for investors to analyze 
efficiently the reported data, particularly in light of the 
inconsistencies and length of Form N-PX reports.\19\
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    \16\ Many fund complexes include information about several 
different funds in a single Form N-PX report, given the structure of 
many funds as series of a trust. See Instruction 1 to current Form 
N-PX (``In the case of a registrant that offers multiple series of 
shares, provide the information required by this Item separately for 
each series. The term `series' means shares offered by a registrant 
that represent undivided interests in a portfolio of investments and 
that are preferred over all other series of shares for assets 
specifically allocated to that series in accordance with Rule 18f-
2(a) under the Act (17 CFR 270.18f-2(a)).'').
    \17\ Based on staff analysis of reports on Form N-PX, larger 
funds can have filings in excess of 1,000 pages.
    \18\ For example, during the 2017 proxy season, funds cast more 
than 7.6 million votes for proxy proposals, and the average fund 
voted on 1,504 separate proxy proposals for U.S. listed portfolio 
companies. Letter dated Mar. 15, 2019, from Paul Schott Stevens, 
President and CEO, Investment Company Institute, submitted in 
response to the Statement Announcing SEC Staff Roundtable on the 
Proxy Process, available at https://www.sec.gov/comments/4-725/4-725.htm.
    \19\ While some structured data is available commercially, 
investors seeking to use this information may incur costs, as well 
as potential limits on the comprehensiveness and timeliness of 
available information.
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    In addition to difficulties in accessing and analyzing the data 
provided on Form N-PX, certain gaps in the required disclosure may 
result in an incomplete picture of a fund's proxy voting practices. 
Funds commonly engage in securities lending activities to generate 
additional revenue for the fund.\20\ When a fund lends its portfolio 
securities, it transfers incidents of ownership relating to the loaned 
securities, including proxy voting rights, for the duration of the 
loan. As a result, while the securities are on loan, the fund is not 
able to vote the proxies of such securities. If a fund determines that 
it wants to vote loaned securities, it must recall the securities and 
receive them prior to the record date for the vote. Recalling loaned 
securities may decrease the revenue a fund generates from securities 
lending activity. The decision of whether to recall a security on loan 
to vote it is not currently disclosed on Form N-PX, although some 
investors have expressed interest in information about the relationship 
between a fund's securities lending and proxy voting.\21\
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    \20\ According to Form N-CEN filings, 67.2% of funds were 
authorized to engage in securities lending in their most recent 
fiscal year, and 40.2% of funds reported lending securities over 
that same period. These funds reported, in the aggregate, net income 
from securities lending of $2.663 billion. See also Reena Aggarwal 
et al., The Role of Institutional Investors in Voting, J. of 
Finance, at 2310 (2015) (noting that ``[m]ost large pension funds, 
mutual funds, and other institutional investors have a lending 
program and consider it an important source of revenue, with 
estimates of $800 million in annual revenue for pension funds.'').
    \21\ See, e.g., Letter of the Shareowner Education Network (Oct. 
20, 2010) (File No. S7-14-10) (``Shareowner Education Letter on 
Concept Release'') (``Funds should disclose all aspects of 
securities lending that affect their investors, such as the number 
of shares on loan over the record date and lending fees, as well as 
the number of shares from any other missed voting opportunities and 
the actual number of shares that were voted for each meeting. This 
information is important to investors who are monitoring the 
stewardship responsibilities of funds.''). See also infra footnote 
99.
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    To improve the utility of Form N-PX information for investors, we 
are proposing amendments to enhance the information funds currently 
report about their proxy votes on Form N-PX and to make that 
information easier to analyze. For example, we are proposing to require 
funds to tie the description of the voting matter to the issuer's form 
of proxy and to categorize voting matters by type. We are also 
proposing to require reporting of information on Form N-PX in a 
structured data language either via a Commission-supplied web-based 
form or as an Extensible Markup Language (``XML'') file.\22\ In 
addition, we are proposing to require disclosure of the number of 
shares that were voted (or, if not known, the number of shares that 
were instructed to be cast) and the number of shares that were loaned 
and not recalled. To enhance investors' access to funds' proxy voting 
records, we also are proposing to require a fund to provide its voting 
record on (or through) its website.
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    \22\ Cf. Recommendations of the Investor Advisory Committee 
Regarding the SEC and the Need for the Cost Effective Retrieval of 
Information by Investors (adopted July 25, 2013), available at 
https://www.sec.gov/spotlight/investor-advisory-committee-2012/data-tagging-resolution-72513.pdf, at 5 (recommending amendments to Form 
N-PX to provide for the tagging of data).
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    In addition to proposing to amend Form N-PX to enhance disclosure 
of funds' proxy voting records, we are proposing rule and form changes 
to require an institutional investment manager subject to section 13(f) 
reporting requirements (``manager'') to report annually on Form N-PX 
how it voted proxies relating to shareholder advisory votes on 
executive compensation (or ``say-on-pay'') matters.\23\ Similar to 
funds, managers have substantial voting power. As of March 31, 2021, 
managers exercised investment discretion over approximately $39.79 
trillion in section 13(f) securities.\24\ This aspect of the

[[Page 57481]]

proposal is aimed at completing implementation of section 951 of the 
Dodd-Frank Act. The Commission first proposed rule and form changes in 
October 2010 to implement the Dodd-Frank Act's manager reporting 
requirements.\25\ This proposal takes into account the comments we 
received in response to that proposal.
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    \23\ The term ``institutional investment manager'' includes any 
person, other than a natural person, investing in or buying and 
selling securities for its own account, and any person exercising 
investment discretion with respect to the account of any other 
person. See section 13(f)(6)(A) of the Exchange Act [15 U.S.C. 
78m(f)(6)]. The term ``person'' includes any natural person, 
company, government, or political subdivision, agency, or 
instrumentality of a government. See section 3(a)(9) of the Exchange 
Act [15 U.S.C. 78c(a)(9)]. 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 that manage private accounts, 
mutual fund assets, or pension plan assets. In addition to 
amendments to Form N-PX, we are proposing new rule 14Ad-1 under the 
Exchange Act to require managers to annually report their say-on-pay 
votes on Form N-PX.
    \24\ This number does not include put or call options and is 
based on staff review of managers' reports on Form 13F covering the 
first quarter of 2021. Section 13(f) of the Exchange Act requires a 
manager to file a report with the Commission if it exercises 
investment discretion with respect to accounts holding certain 
equity securities (``section 13(f) securities'') having an aggregate 
fair market value on the last trading day of any month of any 
calendar year of at least $100 million. Rule 13f-1 requires that 
managers file quarterly reports on Form 13F if the accounts over 
which they exercise investment discretion hold an aggregate of more 
than $100 million in section 13(f) securities. See 17 CFR 240.13f-1. 
Section 14A(d) of the Exchange Act requires that ``every 
institutional investment manager subject to section 13(f)'' of the 
Exchange Act report its say-on-pay votes.
    \25\ See Exchange Act Release No. 63123 (Oct. 18, 2010) [75 FR 
66622 (Oct. 28, 2010)] (``2010 Proposing Release'').
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    Section 951 of the Dodd-Frank Act added new section 14A to the 
Exchange Act. This section generally requires public companies to hold 
non-binding shareholder advisory votes to: (1) Approve the compensation 
of its named executive officers; (2) determine the frequency of such 
votes, with the option of every 1, 2, or 3 years; and (3) approve 
``golden parachute'' compensation in connection with a merger or 
acquisition (collectively, ``say-on-pay votes'').\26\ Section 14A(d) of 
the Exchange Act requires that every manager report at least annually 
how it voted on say-on-pay votes, unless such vote is otherwise 
required to be reported publicly. The Commission's 2010 proposal to 
implement this provision would have required managers to file their 
record of say-on-pay votes with the Commission annually on Form N-PX, 
and would have amended Form N-PX to accommodate the new manager 
filings.\27\
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    \26\ See section 14A(a) and (b) of the Exchange Act; 17 CFR 
240.14a-21; see also Item 402(a)(3) of Regulation S-K (defining the 
term ``named executive officers'').
    \27\ See 2010 Proposing Release, supra footnote 25. Unless 
otherwise indicated, comments cited in this release are the public 
comments the Commission received in response to the 2010 Proposing 
Release, which are available at http://www.sec.gov/comments/s7-30-10/s73010.shtml. In addition, to facilitate public input on the 
Dodd-Frank Act, the Commission provided a series of email links, 
organized by topic, on its website. The public comments received on 
section 951 of the Dodd-Frank Act are available at http://www.sec.gov/comments/df-title-ix/executive-compensation/executive-compensation.shtml.
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    Most commenters on the 2010 proposal expressed overall support for 
the Commission's proposal to implement this requirement through 
reporting on modified Form N-PX.\28\ As discussed further below, some 
commenters expressed concerns with particular aspects of the proposal. 
The rule and form amendments we are proposing include certain 
modifications from the 2010 proposal, including modifications that take 
into consideration commenters' suggestions. In response to comments, we 
propose to require managers to report say-on-pay votes for securities 
over which the manager exercised voting power. The proposed definition 
of exercise of voting power focuses on instances when the manager uses 
voting power to influence a voting decision. To reduce the potential 
for duplicative reporting when more than one manager exercises voting 
power or when a manager exercises voting power on behalf of a fund, we 
propose to allow managers to rely on joint reporting provisions under 
these circumstances. We also propose that the amendments to Form N-PX 
for funds would apply to managers reporting say-on-pay votes on Form N-
PX.
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    \28\ See, e.g., Letter of California Public Employees' 
Retirement System (Nov. 18, 2010) (``CalPERS Letter''); Letter of 
Council of Institutional Investors (Nov. 12, 2010) (``CII Letter''); 
Letter of Glass Lewis & Co. (Nov. 18, 2010) (``Glass Lewis Letter 
I''); Letter of Investment Company Institute (Nov. 18, 2010) (``ICI 
Letter''); Letter of Senator Carl Levin (Nov. 18, 2010) (``Levin 
Letter''); Letter of Heidi Preston (Oct. 26, 2010). Two commenters 
acknowledged that the Commission's proposal was required under the 
Dodd-Frank Act. Letter of Investment Adviser Association (Nov. 16, 
2010) (``IAA Letter''); Letter of Oli Stone (Nov. 17, 2010) (``Stone 
Letter''). One commenter generally opposed the proposal. Letter of 
Dennis Reiland (Nov. 8, 2010) (``Reiland Letter'').
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II. Discussion

A. Scope of Funds' Form N-PX Reporting Obligations

    Currently, every registered management investment company, other 
than a small business investment company registered on Form N-5, must 
file its proxy voting record annually on Form N-PX.\29\ We are not 
proposing to modify the scope of registered investment companies 
subject to Form N-PX reporting requirements.
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    \29\ See rule 30b1-4 under the Investment Company Act [17 CFR 
270.30b1-4].
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    We are, however, proposing to amend the scope of voting decisions 
these funds must report. Currently, funds are required to report 
information for each matter relating to a portfolio security considered 
at any shareholder meeting held during the reporting period and with 
respect to which the fund was entitled to vote.\30\ We are proposing to 
amend this standard to provide that, for purposes of Form N-PX, a fund 
would be entitled to vote on a matter if its portfolio securities are 
on loan as of the record date for the meeting because the fund could 
recall them and vote them.\31\ This proposed amendment is designed to 
ensure that a fund's filings on Form N-PX reflect the effect of its 
securities lending activities on its proxy voting, providing context to 
the information funds already provide about revenue from securities 
lending.
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    \30\ See Item 1 of current Form N-PX.
    \31\ See Item 1 of proposed Form N-PX.
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    We request comment on the proposed amendments to the scope of 
funds' reporting obligations on Form N-PX, including the following:
    1. Should we continue to require all registered management 
investment companies, other than small business investment companies 
registered on Form N-5, to report on Form N-PX? Are there other types 
of registered investment companies, such as unit investment trusts, 
that we should require to report their proxy votes on Form N-PX? If we 
do so, would these other types of investment companies face unique 
challenges in reporting their proxy votes? If we extended Form N-PX 
reporting requirements to unit investment trusts, should we exclude 
unit investment trusts that invest exclusively in mutual funds, such as 
those that offer variable annuities and variable life insurance, since 
the underlying mutual funds would be covered?
    2. As proposed, should we amend Form N-PX to provide that a fund 
will be entitled to vote on a matter if its portfolio securities are on 
loan as of the record date? If not, why should the form not consider a 
fund to be entitled to vote loaned securities where the fund could 
recall the securities in order to vote them?

B. Scope of Managers' Form N-PX Reporting Obligations

1. Managers Subject to Form N-PX and Categories of Votes They Must 
Report
    We are proposing that Form N-PX reporting obligations for say-on-
pay votes would extend to each person that (i) is an ``institutional 
investment manager'' as defined in the Exchange Act; and (ii) is 
required to file reports under section 13(f) of the Exchange Act.\32\ 
This is consistent with the scope of the reporting obligation in 
section 14A(d) of the Exchange Act. Thus, a manager that is otherwise 
required to report on Form 13F would be required to disclose its say-
on-pay votes on Form N-PX.\33\
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    \32\ See proposed rule 14Ad-1(a); 15 U.S.C. 78m(f).
    \33\ Proposed rule 14Ad-1(a).
---------------------------------------------------------------------------

    We are proposing, consistent with the 2010 proposal, to require a 
manager's report on Form N-PX to include the manager's voting record 
for say-on-pay votes.\34\ The types of votes that the

[[Page 57482]]

proposal would require managers to report are the same as the types 
provided by section 14A(d) of the Exchange Act. The manager, therefore, 
would be required to report votes required by section 14A(a) on the 
approval of executive compensation and on the frequency of such 
executive compensation approval votes, as well as votes required by 
section 14A(b) on the approval of executive compensation that relates 
to an acquisition, merger, consolidation, or proposed sale or other 
disposition of all or substantially all the issuer's assets.
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    \34\ Proposed rule 14Ad-1(a); Item 1 of proposed Form N-PX. 
Shareholder votes on executive compensation that are not required by 
sections 14A(a) and (b), such as in the case of foreign private 
issuers (as defined in rule 3b-4(c) under the Exchange Act [17 CFR 
240.3b-4(c)]) that are exempt from the proxy solicitation rules, 
would not be required to be reported on proposed Form N-PX.
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    A few commenters expressed support for broader disclosure of 
managers' proxy votes, beyond say-on-pay votes.\35\ In the 2010 
proposal, the Commission did not propose to require reporting of votes 
other than say-on-pay votes by managers because the purpose of that 
rulemaking was primarily to implement a statutory mandate.\36\ We 
continue to believe that it is appropriate to focus on managers' say-
on-pay votes, consistent with the statutory mandate.
---------------------------------------------------------------------------

    \35\ See ICI Letter (expressing the belief that all 
institutional investors should be required to disclose every proxy 
vote they cast, as funds currently do); Stone Letter (suggesting 
that manager reporting requirements should cover all proxy items 
over which the manager has voting authority, rather than just say-
on-pay votes).
    \36\ See, e.g., 2010 Proposing Release, supra footnote 25, at 
Section II.B.1 (``The scope of votes that would be required to be 
reported under the proposal is the same as the scope provided by new 
Section 14A(d) of the Exchange Act.'').
---------------------------------------------------------------------------

    We request comment on the class of managers who would be required 
to file reports on Form N-PX and the types of votes they would be 
required to report under the proposal:
    3. Is the proposed scope of managers that would be required to 
report say-on-pay votes on Form N-PX appropriate? Does it sufficiently 
capture all managers? Does it capture managers that should not be 
covered? Why or why not?
    4. Is there a more appropriate standard for proposed rule 14Ad-1's 
manager reporting requirements? If so, please explain.
    5. Should we, as we are proposing, require managers to report all 
of their say-on-pay votes? Are any exclusions warranted? If so, please 
explain.
    6. Should we require managers to report say-on-pay votes on Form N-
PX, as proposed? Should managers use a different form for reporting 
these votes? For example, would there be advantages to requiring 
managers to report say-on-pay votes on Form 13F instead?
    7. In addition to requiring managers to report their say-on-pay 
votes, should we require managers to report any votes other than say-
on-pay votes? If so, please identify any other votes that managers 
should be required to report and the basis for the Commission to 
introduce such a reporting requirement.
    8. Are there circumstances in which managers may want to 
voluntarily disclose other types of votes, beyond say-on-pay votes, on 
Form N-PX? If so, are there any impediments in the proposal that would 
prevent or discourage managers from voluntarily disclosing information 
about other types of votes?
2. Managers' Exercise of Voting Power
    We are proposing to require that a manager report a say-on-pay vote 
for a security only if the manager ``exercised voting power'' over the 
security--that is, if the manager both has voting power and exercises 
that power.\37\ Under the proposal, voting power would exist when a 
manager has the ability to vote the security or direct the voting of 
the security, including the ability to determine whether to vote the 
security at all, or to recall a loaned security before a vote.\38\ The 
proposal would define exercise of voting power to mean the actual use 
of voting power to influence a voting decision.\39\ Voting power could 
exist or be exercised directly or through a contract, arrangement, 
understanding, or relationship, and multiple parties could have voting 
power over the same securities. For example, a party could exercise 
voting power if it influences the way a third party votes the security, 
even where the manager is not the sole decision-maker.\40\ The proposed 
rule thus adopts a two-part test for determining whether a vote must be 
reported, requiring both power to vote a security (or to cause another 
party to vote such security) and the actual use of such power to 
influence the voting decision in the case of the specific vote.\41\
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    \37\ See proposed rule 14Ad-1(a).
    \38\ See proposed rule 14Ad-1(d)(1) (defining voting power).
    \39\ See proposed rule 14Ad-1(d)(2) (defining exercise of voting 
power).
    \40\ If two managers exercise voting power over the same 
security, they could rely on the joint reporting provisions in the 
proposal to reduce reporting burdens and address duplicative 
reporting. See infra Section II.D.1.
    \41\ Proposed rule 14Ad-1(a); Item 1 of proposed Form N-PX.
---------------------------------------------------------------------------

    The proposed voting power standard differs from the approach the 
Commission proposed in 2010 and from how the Commission has identified 
voting power in certain other contexts. In 2010, the Commission 
proposed to require that a manager report a say-on-pay vote for a 
security only if the manager ``had or shared the power to vote, or to 
direct the voting of'' the security, using language similar to 17 CFR 
240.13d-3(a) (rule 13d-3(a)) under the Exchange Act.\42\ Some 
commenters on the 2010 Proposing Release supported the proposed focus 
on voting power as the standard for determining whether a manager must 
report say-on-pay votes, with one noting that in practice, shared 
voting arrangements are rare.\43\ Other commenters suggested that it 
would be more appropriate to focus on who actually voted the security, 
rather than who had the power to vote the security.\44\ Another 
commenter noted that in certain cases, managers cast votes based on 
client instructions, and that in such cases the manager's voting power 
is ministerial in nature.\45\
---------------------------------------------------------------------------

    \42\ See 2010 Proposing Release, supra footnote 25, at n.18 and 
accompanying text.
    \43\ See, e.g., Letter of Chris Barnard (Nov. 13, 2010) 
(``Barnard Letter''); CalPERS Letter; CII Letter.
    \44\ See, e.g., Stone Letter; Letter of Managed Funds 
Association (Dec. 22, 2010) (``MFA Letter''); ABA Letter; Glass 
Lewis Letter I.
    \45\ See, e.g., Mayer Brown Letter.
---------------------------------------------------------------------------

    The revised standard we are proposing is intended to clarify the 
scope of the say-on-pay vote reporting obligation by focusing more 
specifically on the exercise, rather than mere possession, of voting 
power. Our proposed standard is intended to align responsibility for 
deciding how to vote securities with responsibility for reporting such 
votes.\46\ The proposed approach is tailored to considerations 
associated with section 14A(d) of the Exchange Act and the scope of 
say-on-pay vote reporting obligations. As a result, our proposed 
definition of ``voting power'' and the ``exercise'' of voting power do 
not affect the meaning of these or similar terms used in other 
Commission rules.
---------------------------------------------------------------------------

    \46\ Glass Lewis Letter I (supporting this approach).
---------------------------------------------------------------------------

    The proposed test focuses on exercise, rather than mere possession, 
of voting power to address shared voting power situations and to make 
managers' reports of say-on-pay votes more useful for clients and other 
investors. As an example of the proposed approach, if a manager votes a 
client's separate account's shares based on its own judgment or in 
accordance with its own guidelines, the manager exercised voting power 
over the security and would be required to report those votes. 
Conversely, if the manager's voting decision on a say-on-pay vote is 
entirely determined by its client, either because the client 
communicates its wishes directly to the manager or because the client 
has a written policy regarding the voting decision that does not call 
for

[[Page 57483]]

any independent judgment by the manager, the manager is not exercising 
voting power over the security because the manager is not influencing 
the voting decision. The proposal would not require a manager to report 
these votes. This is the case even if the manager is the party that 
carries out the actual vote in accordance with its client's wishes. 
However, if the manager influences the voting decision in this context 
by, for example, exercising its own judgment in determining how the 
client's policies should apply to the say-on-pay vote, then the manager 
would exercise voting power when it carries out the policy and report 
the vote accordingly. This may be the case, for instance, if a client 
has a policy of opposing pay packages that are unreasonable but 
determining if a package is ``unreasonable'' involves exercise of the 
manager's judgment. When determining whether the manager exercised 
voting power, the manager should assess whether it was using its voting 
power to influence the voting decision--such as by exercising 
independent judgment or expertise in a way that affects how the 
security was voted--or whether it was instead simply applying a policy 
on a formulaic or mechanical basis. As another example, a manager would 
exercise voting power where the manager casts a vote in accordance with 
voting policies developed by the manager and adopted by the client. A 
manager with voting power may also exercise that voting power through 
other influence over the voting decision, separate from any discretion 
the manager may have in determining or applying a client's voting 
policies. The fact patterns in this discussion are meant to be 
illustrative examples and are not meant to cover all scenarios in which 
a manager would be required to report say-on-pay votes because it has 
voting power and uses that power to influence a voting decision.
    The proposed test also provides that a manager exercises voting 
power when it influences the decision of whether to vote a security. 
For example, a manager that determines not to vote on a say-on-pay 
matter would exercise voting power under the proposal. A manager also 
would exercise voting power when it decides whether to recall loaned 
securities in advance of a vote in order to vote the shares.\47\
---------------------------------------------------------------------------

    \47\ See also infra Section C.3.b (discussing proposed 
disclosure about the number of shares a reporting person has loaned 
and not recalled, and the benefits of that disclosure).
---------------------------------------------------------------------------

    A manager would not exercise voting power if a third party makes 
all decisions of whether to vote the security. For example, certain 
clients may have relationships with securities lending agents, and the 
client or the securities lending agent would determine whether to 
recall loaned securities, without any involvement by the manager.\48\ 
In this case, the manager would not exercise voting power with respect 
to the loaned securities because it would not influence the decision of 
whether to recall the loaned shares.
---------------------------------------------------------------------------

    \48\ See ABA Letter.
---------------------------------------------------------------------------

    The framework we are proposing is intended to provide additional 
insight into how managers are exercising the voting discretion they 
have been granted by their clients without attributing to managers 
votes that are dictated fully by their clients or by other managers. 
The framework is intended to avoid potential confusion that could 
result from a manager reporting votes where the manager did not 
influence the voting decision. We believe requiring a manager who does 
not exercise voting power, for instance because its votes are entirely 
dictated by a client's policy, to report those votes on Form N-PX would 
be of limited benefit to the manager's clients and potential clients, 
as well as other investors. It would not provide insight into--and in 
fact may obscure--how a manager exercises its discretion.\49\
---------------------------------------------------------------------------

    \49\ See, e.g., ISS Letter; Mayer Brown Letter (commenting that 
managers sometimes effectuate client voting decisions by completing 
the proxy card, but do not have control over or decide how shares 
will be voted).
---------------------------------------------------------------------------

    In certain cases, we expect our proposed framework will result in 
multiple parties determining they exercise voting power (e.g., because 
more than one manager provides input on applying a client's voting 
policies). In these circumstances, all such managers would come within 
the scope of the reporting requirements under the proposal, although 
they could rely on the joint reporting provisions discussed below to 
reduce reporting burdens.
    The focus on a manager's exercise of voting power could result in 
the manager's reports on Form N-PX differing from its reports on Form 
13F. For example, if a manager exercises investment discretion over a 
particular section 13(f) security held in a client's account, but the 
client retains all rights to vote proxies for that security, the 
manager generally would report that security on its holdings report on 
Form 13F. However, it would not be required to report any say-on-pay 
votes with respect to that security. Conversely, a manager that 
exercises voting power over a security, but is not required to report 
the security on Form 13F because it does not have investment discretion 
over the security or because it did not hold the security at the end of 
a calendar quarter, would nonetheless be required to report say-on-pay 
votes on Form N-PX for that security.\50\
---------------------------------------------------------------------------

    \50\ See also discussion infra Section II.B.3 (discussing 
differences in reporting between Form 13F and Form N-PX).
---------------------------------------------------------------------------

    The 2010 proposal asked whether it would be appropriate to use a 
different standard, such as investment discretion, as the test for 
reporting say-on-pay votes.\51\ We believe that using investment 
discretion as the test would result in managers having to report votes 
cast by clients in cases where the manager retains investment 
discretion but not voting power. We believe this would be confusing to 
investors and could inaccurately imply that the manager filing the 
report actually made or influenced the decision it was reporting.\52\ 
We also are not proposing to base the reporting requirement upon 
whether a manager, in fact, votes rather than on whether the manager 
exercises voting power.\53\ A test based on who physically marks the 
proxy card (or its electronic equivalent) would omit from its scope 
managers that participated in determining how to cast the vote, but 
would simplify the reporting obligation.\54\
---------------------------------------------------------------------------

    \51\ See 2010 Proposing Release, supra footnote 25, at Section 
II.B.2.
    \52\ CII Letter.
    \53\ Glass Lewis Letter I (only the ``voting entity'' should 
report); MFA Letter (require reporting only when the manager has 
instructed an intermediary to vote its shares); Letter of Seward & 
Kissel LLP (Nov. 18, 2010) (``Seward Letter'') (require reporting by 
manager that ``actually voted'' the proxy); Stone Letter (party who 
votes should bear the burden of disclosure and the Commission should 
not require reporting on the basis of shared voting authority).
    \54\ ISS Letter (suggesting that the manager who receives the 
ballot should be the primary filer with respect to the votes covered 
by that ballot).
---------------------------------------------------------------------------

    We request comment on the proposed approach of requiring managers 
to report say-on-pay votes when they exercise voting power over the 
security, and in particular, on the following issues:
    9. Should the reporting requirement be based on exercising the 
power to vote with respect to say-on-pay votes as proposed, or should 
we use some other basis? For example, should we base the reporting 
requirement on the possession of investment discretion, the identity of 
who in fact votes, or the identity of who receives the ballot? As 
another example, should a vote that was dictated entirely by a client's 
mandate be treated as an exercise of voting power by the manager, even 
if the manager did not influence the vote? What are the advantages and 
disadvantages of the different potential approaches?

[[Page 57484]]

    10. Should we modify the proposed definitions of voting power or 
exercise of voting power? For example, instead of considering a manager 
to exercise voting power when it uses voting power to influence a 
voting decision, should we use a different standard, such as using 
voting power to ``significantly'' influence a voting decision or to 
``primarily'' make a voting decision? If so, what factors would be 
relevant for determining if a manager's role in a voting decision meets 
the revised standard?
    11. Should we, as proposed, consider a manager to exercise voting 
power when it has the ability to determine not to vote or to recall 
loaned securities? Would this provision present challenges to managers? 
If so, what are those challenges, and are there changes to the 
reporting requirement that would address such challenges?
    12. Should we provide additional guidance concerning the 
circumstances under which a manager exercises voting power? If so, 
please specify the type of guidance that managers would find helpful.
    13. Does our proposed exercise of voting power standard cover 
circumstances that should be covered or should not be covered? If so, 
what are the circumstances that should or should not be covered?
3. Additional Scoping Matters for Manager Reporting of Say-on-Pay Votes
    We are proposing to require that a manager report say-on-pay votes 
with respect to any security over which it meets the voting power test 
described above.\55\ As was the case in the 2010 Proposing Release, we 
are not proposing to modify the scope of securities to align with those 
reported on Form 13F or to provide exceptions where the manager does 
not vote.
---------------------------------------------------------------------------

    \55\ Proposed rule 14Ad-1(a).
---------------------------------------------------------------------------

    Some commenters supported the requirement that managers report any 
security.\56\ Other commenters requested that the Commission limit the 
reporting obligation to securities that had previously been reported 
publicly on Form 13F or adopt a de minimis threshold below which 
reporting of say-on-pay votes would not be required.\57\ A commenter 
requesting a de minimis threshold argued that not providing an 
equivalent exemption from Form N-PX reporting as is available from Form 
13F reporting would reduce the value of the 13F exemption and raise 
costs for managers.\58\
---------------------------------------------------------------------------

    \56\ CII Letter; Levin Letter.
    \57\ See, e.g., ABA Letter (recommending non-disclosure of say-
on-pay votes for securities not previously reported because they 
were below the de minimis threshold for Form 13F); Seward Letter 
(suggesting limiting the securities to which the reporting 
requirements apply to those securities previously reported publicly, 
or, in the alternative, adopting a threshold position size below 
which a reporting person need not report proxy votes); Barnard 
Letter (excluding securities where the manager holds less than 
10,000 shares); Reiland Letter (suggesting to limit to holdings on 
which persons are required to file statements on Schedule 13D or 
Schedule 13G under the Exchange Act).
    \58\ See Letter of Intel Corporation (Nov. 19, 2010) (``Intel 
Letter''). On Form 13F, a manager is permitted to omit holdings of 
fewer than 10,000 shares (or less than $200,000 principal amount in 
case of convertible debt securities) and less than $200,000 
aggregate fair market value. See Special Instruction 10 to Form 13F.
---------------------------------------------------------------------------

    While we acknowledge commenters' suggestion that a de minimis 
threshold could reduce record keeping and reporting burdens on managers 
for smaller position sizes that currently do not require reporting on 
Form 13F, a de minimis threshold could reduce the value of the say-on-
pay disclosure because a fund or manager's full voting record would not 
be available when the threshold applied. We therefore are not proposing 
to provide a de minimis threshold for institutional managers reporting 
their say-on-pay votes on Form N-PX.
    Because Form 13F reports only disclose holdings as of the close of 
a calendar quarter, these reports are not required to include 
securities held during the quarter but subsequently disposed of prior 
to the end of the quarter. Form 13F reports also do not reflect when a 
manager increased or decreased its position during a quarter but 
returned to the ``baseline'' level reported on its previous Form 13F 
report by the end of the quarter. As a result, although some commenters 
requested that the Commission limit say-on-pay reporting to securities 
that had previously been reported publicly on Form 13F, this approach 
could exclude a significant number of say-on-pay votes, which we 
believe would be inconsistent with the purpose of section 14A. The 
proposed rule therefore would require a manager to report say-on-pay 
votes without regard to whether the manager had previously reported or 
been required to report the security as a holding on Form 13F.
    In addition to comments suggesting that Form N-PX reporting 
obligations should more closely align with Form 13F, some commenters 
suggested other exceptions from Form N-PX reporting for managers who do 
not vote. For example, two commenters recommended that we not require a 
manager to report on Form N-PX if, under certain or all circumstances, 
the manager does not vote.\59\ These commenters stated that some 
investment strategies (such as algorithmic strategies with short 
holding periods) are unrelated to the economic interests served by 
voting proxies. One of these commenters stated that, with respect to 
certain strategies, voting proxies could be characterized as ``empty 
voting.'' \60\ One of these commenters suggested that, in some cases, 
securities are held for insufficient periods (such as less than one 
day) to perform the requisite analysis for proxy voting, and where the 
manager disclosed a policy not to vote proxies to its clients, the 
manager's Form N-PX report would contain little information and would 
not further the policy objectives of the proposed rule.\61\ The other 
commenter expressed concern about the burdens of developing and 
implementing technology to track record date holdings in cases where 
the manager does not vote.\62\
---------------------------------------------------------------------------

    \59\ See Seward Letter (requesting an exception from the 
reporting requirement where the manager maintains a policy not to 
vote proxies and discloses that policy to clients); ABA Letter 
(requesting a blanket exception for holdings that were not voted).
    \60\ See ABA Letter; see also Exchange Act Release No. 62495 
(July 14, 2010) [75 FR 42982, 43017-20 (July 22, 2010)] (``Proxy 
Mechanics Concept Release'') (discussing the concept of ``empty 
voting''). This release cites some comment letters on the Proxy 
Mechanics Concept Release. These comment letters are available at 
https://www.sec.gov/comments/s7-14-10/s71410.shtml.
    \61\ Seward Letter.
    \62\ ABA Letter.
---------------------------------------------------------------------------

    We believe that an exception from Form N-PX reporting requirements 
when a manager does not cast a vote on say-on-pay matters may limit the 
ability of investors to understand fully how a manager votes its 
shares. In addition, we believe the burden of reporting when the 
manager does not vote its shares would be lower under our current 
proposal, as compared to the burden of the equivalent aspect in the 
2010 proposal, because the current proposal would not require the 
manager to track record date holdings to disclose the number of shares 
the manager was authorized to vote.\63\
---------------------------------------------------------------------------

    \63\ See supra Section II.C.3 (discussing how the quantitative 
information contained in this proposal differs from the 2010 
proposal, including no longer proposing to require the number of 
shares the manager was authorized to vote).
---------------------------------------------------------------------------

    A few commenters requested exceptions from Form N-PX reporting 
requirements in situations where a manager discloses certain 
information about how it votes to its clients, such as formulaic voting 
criteria developed by the manager which have been disclosed to clients 
or where the manager distributes its voting record to a client who had 
provided the manager its own

[[Page 57485]]

proxy policies or guidelines to follow.\64\ We do not believe that an 
exception would be warranted in these circumstances because, in 
addition to benefiting the direct clients of managers, public 
disclosure of say-on-pay votes could benefit other investors, such as 
plan participants of employee benefit plans that hire managers.
---------------------------------------------------------------------------

    \64\ ABA Letter (formulaic voting criteria); Mayer Brown Letter 
(distribution to clients).
---------------------------------------------------------------------------

    Finally, to the extent a manager did not exercise voting power over 
any securities that held say-on-pay votes during a given reporting 
period, we are proposing to require the manager to file a Form N-PX 
report affirmatively stating this fact. The Commission also proposed 
this requirement in 2010.\65\ One commenter opposed this requirement, 
stating that it would not contribute to the objective of increased 
transparency regarding any possible influence over shareholder votes 
and corporate governance.\66\ However, we believe this disclosure would 
help investors and the Commission differentiate managers with no 
reportable say-on-pay votes from those that failed to file a Form N-PX 
report to disclose say-on-pay votes.
---------------------------------------------------------------------------

    \65\ Item 1 of proposed Form N-PX.
    \66\ Seward Letter.
---------------------------------------------------------------------------

    We request comment on the circumstances in which the proposal would 
require a manager to file a Form N-PX report, and, in particular, on 
the following issues:
    14. Should we permit managers to omit votes otherwise reportable 
where the manager's ownership is below a specific threshold? What are 
the potential advantages or disadvantages if we permit a manager that 
holds, on the record date, fewer than 10,000 shares and less than 
$200,000 aggregate fair market value to omit say-on-pay votes on such 
securities? Would such an exception impede investors from understanding 
how shares were voted? Why or why not?
    15. Should we permit managers to omit votes on a particular type of 
security? Do managers have substantial holdings of securities that are 
not ``section 13(f) securities'' as defined by 17 CFR 240.13f-1(c), but 
are registered pursuant to section 12 of the Exchange Act and thus 
would have say-on-pay votes? Would there be potential advantages or 
disadvantages if we required managers to report only their say-on-pay 
votes on section 13(f) securities? Would such an approach be consistent 
with the public interest, and how would it impact investor protection?
    16. Should we permit managers to omit votes on securities that were 
not held as of the end of a calendar quarter (and thus would not be 
reported on Form 13F)? Should we permit or require any disclosure on 
Form N-PX or elsewhere to explain differences between information 
reported on Form N-PX and information reported on Form 13F or related 
circumstances (e.g., where a manager has significantly more or less 
voting power on the record date of a say-on-pay vote than its Form 13F 
report would otherwise suggest)? If so, under what circumstances would 
this disclosure be helpful? What would the disclosure entail, and 
should it be permissive or required? \67\
---------------------------------------------------------------------------

    \67\ Under the proposal, a manager would be permitted to 
disclose additional information on the cover page of its Form N-PX 
report, so long as it does not, either by its nature, quantity, or 
manner of presentation, impede the understanding or presentation of 
the required information. See General Instruction C.3 of proposed 
Form N-PX.
---------------------------------------------------------------------------

    17. Should we expand or limit in any other way the securities with 
respect to which managers would be required to report say-on-pay votes?
    18. Should we modify the proposed approach for managers that do not 
vote their shares? For example, should we permit these managers to not 
file Form N-PX reports? Should we exempt non-voting managers from 
certain disclosure requirements on Form N-PX concerning the various 
securities they did not vote on say-on-pay matters during the reporting 
period? What conditions or limitations, if any, should apply? For 
instance, to rely on a modified approach, should a manager be required 
to disclose to its clients that it does not vote? Would a modified 
approach be particularly applicable to certain categories of managers, 
such as those whose trading strategies involve relatively short-term 
ownership?
    19. As proposed, should we require a manager without any say-on-pay 
votes to disclose to file a report on Form N-PX stating that fact? 
Would such filings effectively distinguish managers that missed a 
required filing from managers without say-on-pay votes to report?

C. Proxy Voting Information Reported on Form N-PX

    We are proposing to enhance funds' current Form N-PX disclosures so 
investors can more easily understand and analyze proxy voting 
information. These proposed changes include, for example, more clearly 
tying the description of the voting matter to the issuer's form of 
proxy and categorizing voting matters by type. In addition, we are 
proposing to extend many of these proposed enhancements to the Form N-
PX reports that managers would file under this proposal.
1. Identification of Proxy Voting Matters
    We are proposing to require reports on Form N-PX to identify proxy 
voting matters using the same language as disclosed in the issuer's 
form of proxy. In 2010, the Commission proposed to require standardized 
descriptions for say-on-pay votes and brief identifications of other 
votes.\68\ At that time, the Commission requested comment on 
alternative methods of standardizing descriptions of these voting 
matters. As part of the Proxy Mechanics Concept Release, the Commission 
also solicited comment regarding methods for uniform identification of 
proxy voting matters in Form N-PX reports.\69\ In particular, the 
Commission asked about ways to standardize identifications if issuers 
do not themselves create and assign unique interactive data ``tags'' 
for each matter on their proxy statements.\70\ Several commenters on 
the Commission's 2010 proposal supported requiring standardized 
descriptions for say-on-pay votes, and one commenter on the Proxy 
Mechanics Concept Release expressed support for standardizing 
descriptions more broadly.\71\ Two commenters expressed concern with 
standardized descriptions for matters other than say-on-pay votes. 
These commenters cited the practical challenges posed in uniformly 
identifying different matters, given both the variety of voting matters 
before shareholders and the absence of standardized data tags in issuer 
proxy materials.\72\
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    \68\ See 2010 Proposing Release, supra footnote 25, at paragraph 
accompanying n.89.
    \69\ Proxy Mechanics Concept Release, supra footnote 60, at 
Section III.C.3.
    \70\ Id., at requests for comment subsequent to n.237 (``Whether 
or not we permit or require interactive data tagging, should Form N-
PX require standardized reporting formats so that comparisons 
between funds are easier?'').
    \71\ See CalPERS Letter; Fidelity Letter; Letter of Michael 
Ostrovsky (Sept. 5, 2013) (File No. S7-14-10) (``Ostrovsky Letter on 
Concept Release'') (supporting a standardized classification system 
for voting matters).
    \72\ See Fidelity Letter (citing difficulty ``given the wide 
variety of votes placed before shareholders'' and stating that ``as 
a general matter, the variable nature of proxy-related disclosures 
do not lend themselves to uniform standardization''); Letter of 
Fidelity Investments (Oct. 20, 2010) (File No. S7-14-10) (``Fidelity 
Letter on Concept Release'') (questioning feasibility of providing 
for a uniform identification of each matter voted in reports on Form 
N-PX); Letter of Investment Company Institute (Oct. 20, 2010) (File 
No. S7-14-10) (``ICI Letter on Concept Release'') (citing a 
``significant practical issue'' of ``how to provide for uniform 
identification of each matter voted across different funds'').

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[[Page 57486]]

    We are proposing to require reporting persons to use the same 
language from the issuer's form of proxy to identify proxy voting 
matters on Form N-PX.\73\ In addition, each voting matter (including 
say-on-pay votes and other voting matters) would be required to be 
reported in the same order as presented on the issuer's form of 
proxy.\74\ We believe these proposed requirements would facilitate 
identification of identical matters included on different Form N-PX 
filings by different reporting persons even though there is no 
interactive data tagging in issuer proxy materials.\75\ We are 
proposing to apply the identification requirement to all voting matters 
in order to facilitate the ability of investors to better understand 
fund and manager proxy disclosure and compare voting records. We 
believe that reflecting the descriptions and ordering used on an 
issuer's form of proxy, which is publicly available and must identify 
clearly and impartially each separate matter intended to be acted upon, 
would address the previously identified practical issues associated 
with standardized descriptions.\76\
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    \73\ Special Instruction D.3 to proposed Form N-PX.
    \74\ Id. For matters involving the election of more than one 
director, reporting persons would be required to identify each 
director separately in the same order as on the form of proxy, even 
if the election of directors is presented as a single matter on the 
form of proxy. Id.
    \75\ See 2010 Proposing Release, supra footnote 25, at requests 
for comment subsequent to n.90 (requesting comment on alternatives 
that could result in uniform tags being assigned by all reporting 
persons).
    \76\ See Securities Exchange Act rule 14a-4(a)(3) (requiring 
that the form of proxy identify clearly and impartially each 
separate matter intended to be acted upon). See also Division of 
Corporation Finance, Compliance and Disclosure Interpretations, 
Section 301 (Mar. 22, 2016), available at https://www.sec.gov/divisions/corpfin/guidance/exchange-act-rule-14a-4a3-301.htm.
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    We request comment on the proposed requirement to identify proxy 
voting matters, including the following:
    20. Should we require, as we are proposing, that Form N-PX use the 
descriptions and ordering used on an issuer's form of proxy? Are there 
practical considerations we should consider with respect to tying Form 
N-PX disclosure to forms of proxies?
    21. Does using the descriptions and ordering used on an issuer's 
form of proxy, which is publicly available, overcome the previously 
identified practical issues associated with standardized descriptions? 
Why or why not? Should we revert to the standardized language approach 
for say-on-pay votes, as was proposed in the 2010 proposal? If so, why?
    22. Would the proposed requirement to use the description and 
ordering from an issuer's form of proxy facilitate the comparison of 
Form N-PX data, or otherwise enhance the usefulness of information 
reported on Form N-PX for users? What obstacles, if any, might prevent 
reporting persons from being able to comply with the proposed 
requirement?
2. Identification of Proxy Voting Categories
    We are proposing that Form N-PX reporting persons select from 
standardized categories to identify the subject matter of each of the 
reported proxy voting items. This requirement would apply to managers 
and funds. The proposal would require a reporting person to categorize 
each proxy voting matter from a specified list of categories and 
subcategories. The proposed categories and subcategories are designed 
to cover matters on which funds frequently vote, based on our staff's 
experience and review of the matters on which funds voted in 2020, 
including say-on-pay votes:
     Board of directors (subcategories: Director election, term 
limits, committees, size of board, or other board of directors matters 
(along with a brief description));
     Section 14A say-on-pay votes (subcategories: 14A executive 
compensation, 14A executive compensation vote frequency, or 14A 
extraordinary transaction executive compensation); \77\
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    \77\ The proposed Form N-PX categorizations include a separate 
category for say-on-pay votes to make it easier for investors to 
identify these votes, which require special disclosure under the 
Dodd-Frank Act. The Commission similarly proposed to require 
managers to use standardized descriptions to identify these votes in 
the 2010 proposal.
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     Audit-related (subcategories: Auditor ratification, 
auditor rotation, or other audit-related matters (along with a brief 
description));
     Investment company matters (subcategories: Change to 
investment management agreement, new investment management agreement, 
assignment of investment management agreement, business development 
company approval of restricted securities, closed-end investment 
company issuance of shares below net asset value, business development 
company asset coverage ratio change, or other investment company 
matters (along with a brief description));
     Shareholder rights and defenses (subcategories: Adoption 
or modification of a shareholder rights plan, control share acquisition 
provisions, fair price provisions, board classification, cumulative 
voting, or other shareholder rights and defenses matters (along with a 
brief description));
     Extraordinary transactions (subcategories: Merger, asset 
sale, liquidation, buyout, joint venture, going private, spinoff, 
delisting, or other extraordinary transaction matters (along with a 
brief description));
     Security issuance (subcategories: Equity, debt, 
convertible, warrants, units, rights, or other security issuance 
matters (along with a brief description));
     Capital structure (subcategories: Stock split, reverse 
stock split, dividend, buyback, tracking stock, adjustment to par 
value, authorization of additional stock, or other capital structure 
matters (along with a brief description));
     Compensation (subcategories: Board compensation, executive 
compensation (other than Section 14A say-on-pay), board or executive 
anti-hedging, board or executive anti-pledging, compensation clawback, 
10b5-1 plans, or other compensation matters (along with a brief 
description));
     Corporate governance (subcategories: Articles of 
incorporation or bylaws, board committees, codes of ethics, or other 
corporate governance matters (along with a brief description));
     Meeting governance (subcategories: Approval to adjourn, 
acceptance of minutes, or other meeting governance matters (along with 
a brief description));
     Environment or climate (subcategories: Greenhouse gas 
(GHG) emissions, transition planning or reporting, biodiversity or 
ecosystem risk, chemical footprint, renewable energy or energy 
efficiency, water issues, waste or pollution, deforestation or land 
use, say-on-climate, environmental justice, or other environment or 
climate matters (along with a brief description));
     Human rights or human capital/workforce (subcategories: 
Workforce-related mandatory arbitration, supply chain exposure to human 
rights risks, outsourcing or offshoring, workplace sexual harassment, 
or other human rights or human capital/workforce matters (along with a 
brief description));
     Diversity, equity, and inclusion (subcategories: Board 
diversity, pay gap, or other diversity, equity, and inclusion matters 
(along with a brief description));
     Political activities (subcategories: Lobbying, political 
contributions, or other political activity matters (along with a brief 
description));
     Other social (subcategories: Data privacy, responsible tax 
policies, charitable contributions, consumer protection, or other 
social matters (along with a brief description)); or

[[Page 57487]]

     Other (along with a brief description).
    Some categories would contain specific subcategories which a 
reporting person must select when filing a report on Form N-PX. For 
example, a reporting person would need to distinguish section 14A 
executive compensation votes from section 14A executive compensation 
frequency votes. When categorizing a particular voting matter, a 
reporting person would be required to select multiple categories or 
subcategories for the matter if applicable. If a vote did not fall 
within a specified subcategory, the reporting person would select the 
``other'' subcategory and provide a brief description. The brief 
description need only identify the subject matter of the vote, 
consistent with the level of detail in the specified subcategories.
    We believe that requiring reporting persons to categorize their 
proxy votes would help investors understand how funds and managers are 
voting by helping them readily identify votes on matters that are 
important to them. It also would allow investors to compare how 
different managers or funds voted on specific types of matters.
    We request comment on the proposed requirement to categorize proxy 
votes reported on Form N-PX, and, in particular, on the following 
issues:
    23. Should we require reporting persons to categorize their votes, 
as proposed? What are the advantages and disadvantages of this 
approach?
    24. Do the proposed categories or subcategories adequately capture 
the range of proxy voting matters? Are there other categories or 
subcategories of votes that we should require reporting persons to 
identify? Will these categorizations enhance the usefulness of the 
information reported on Form N-PX for investors and facilitate the 
comparison of reporting persons' proxy voting records? Are there 
categories or subcategories we should eliminate?
    25. Should we require reporting persons to use high-level 
categories to identify different types of votes, or should we require 
reporting persons to use subcategories, as proposed? Are there 
particular areas where subcategories are more or less difficult for 
reporting persons to use for purposes of identifying different types of 
votes? Are there particular areas where subcategories are more or less 
useful for investors?
    26. Are there particular types of votes where the categorization 
would be unclear or where reporting persons may reasonably categorize 
the same vote differently? To what extent would the ability to select 
more than one category for a given vote address these types of issues? 
Would the use of subcategories help address or contribute to 
potentially differing approaches to categorizing a particular vote 
among reporting persons?
    27. Are the proposed categories and subcategories sufficiently 
clear? Are there any categories or subcategories where additional 
guidance or definition would be helpful for understanding the 
parameters of a category or subcategory?
3. Quantitative Disclosures
    We are proposing changes to Form N-PX that would require disclosure 
of information about the number of shares that were voted (or, if not 
known, the number of shares that were instructed to be cast). We are 
also proposing a requirement to disclose the number of shares the 
reporting person loaned and did not recall. These quantitative 
disclosure requirements would apply to a manager's say-on-pay votes and 
to all of a fund's votes.
    In 2010, the Commission proposed to require that both funds and 
managers report: (1) The number of shares that the reporting person was 
entitled to vote (for funds) or had or shared voting power over (for 
managers); (2) the number of shares voted; and (3) how the reporting 
person voted the shares and, if the votes were cast in multiple manners 
(e.g., for and against), the number of shares voted in each manner.\78\
---------------------------------------------------------------------------

    \78\ See 2010 Proposing Release, supra footnote 25, at Section 
II.E.3.
---------------------------------------------------------------------------

    Comments regarding these quantitative disclosure requirements were 
mixed. Some commenters supported the proposed quantitative disclosures 
or stated that they were acceptable.\79\ Some commenters stated that 
providing quantitative disclosures would be burdensome.\80\ One 
commenter opposed requiring funds to quantify votes in particular and 
stated that quantitative disclosures might cause confusion for 
investors or result in competitors gaining insight into fund 
strategies.\81\
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    \79\ See Levin Letter (stating that quantitative disclosure will 
allow investors to monitor, understand, and hold their proxies 
accountable for their votes); CalPERS Letter (finding disclosure of 
the number of shares voted acceptable).
    \80\ See ICI Letter; Fidelity Letter; Mayer Brown Letter. One 
commenter, however, while opposing quantitative disclosures for 
other reasons, noted that from a purely technological perspective, 
disclosing share positions voted would be straightforward. See ISS 
Letter.
    \81\ See ICI Letter (noting that complying with the quantitative 
disclosure requirements as proposed would be burdensome and 
difficult, and questioning the value to shareholders).
---------------------------------------------------------------------------

    Some commenters, while opposing any requirement that reporting 
persons report quantitative information, agreed that the use of the 
existing Form N-PX disclosure (e.g., for, against, or abstain) without 
quantification is not meaningful for ``split votes,'' i.e., if 
different votes are cast on the same matter by a reporting person.\82\ 
These commenters suggested, should the Commission determine to adopt 
quantitative reporting requirements, that it limit such reporting to 
instances of actual split votes, and allow reporting persons to report 
the number of shares instructed to be cast.\83\ Another commenter 
suggested that the Commission consider alternative indications of 
``magnitude'' in lieu of requiring disclosure of the number of votes 
cast.\84\
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    \82\ See Fidelity Letter (stating that ``a mere notation of 
`split' may not be rich disclosure''); ICI Letter (stating that 
``simply reporting `split' does not provide much meaningful 
information about the way the reporting entity voted, and additional 
information may be useful to put the split vote in context'').
    \83\ See ICI Letter; Fidelity Letter; MFA Letter.
    \84\ See Mayer Brown Letter.
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    As discussed in greater detail below, as compared to the 2010 
proposal, there are three primary differences in the proposed 
quantitative disclosures requirements: (1) Clarifying that the 
reporting person's records could be used to determine the number of 
shares voted, even where those records do not reflect a confirmed 
number of actual votes cast and received by the issuer; (2) requiring 
disclosure of the number of shares the reporting person has loaned and 
not recalled; and (3) not proposing the previously proposed provisions 
requiring disclosure of the number of shares the reporting person was 
entitled to vote (for funds) or had or shared voting power over (for 
managers).
a. Disclosure of Number of Shares Voted
    We are proposing, substantially as proposed in the 2010 proposal, a 
requirement that both funds and managers disclose: (1) The number of 
shares voted (or instructed to be voted); and (2) how those shares were 
voted (e.g., for or against proposal, or abstain).\85\ If the votes 
were cast in multiple manners (e.g., both for and against), we propose 
requiring disclosure of the number of shares voted (or instructed to be 
voted) in each manner.\86\ We are proposing to require

[[Page 57488]]

disclosure of the number of shares voted or instructed to be voted 
because, where a manager votes in multiple ways on the same matter, 
disclosure of that fact alone is largely meaningless without providing 
a measure of the magnitude of the different votes.\87\ In addition, and 
in contrast to the 2010 proposal, we are also proposing to require 
disclosure of the number of shares the reporting person loaned and did 
not recall.\88\ We believe that the context given by disclosing the 
number of shares voted would allow investors to better understand how 
securities lending activities affect the voting practices of the 
reporting person. Without disclosing the amount voted, the amount of 
shares on loan for a given vote would not provide meaningful insight 
into how a fund or manager voted.
---------------------------------------------------------------------------

    \85\ Items 1(h) and 1(j) of proposed Form N-PX.
    \86\ Item 1(j) of proposed Form N-PX. As proposed in the 2010 
release, in the case of a shareholder vote on the frequency of 
executive compensation votes, a reporting person would be required 
to disclose the number of shares, if any, voted in favor of each of 
1-year frequency, 2-year frequency, or 3-year frequency, and the 
number of shares, if any, that abstained. We are clarifying that the 
number zero (``0'') would be entered if no shares were voted, so 
that responses to this item would be uniformly numeric in nature. 
Item 1(h) of proposed Form N-PX.
    \87\ While we understand that funds do not split votes 
regularly, we believe investors would benefit from parity in 
disclosure between funds and managers in cases where funds do split 
votes.
    \88\ Item 1(i) of proposed Form N-PX. See also infra Section 
II.C.3.b for more information with respect to this proposed 
requirement.
---------------------------------------------------------------------------

    As suggested by some commenters, we are proposing to modify the 
2010 proposal with respect to the disclosure of the number of shares 
voted because reporting persons may not be able to determine with 
certainty how many of the votes they instructed to be cast were 
actually voted in a particular matter.\89\ This change would permit a 
reporting person to use the number of shares voted as reflected in its 
records at the time of filing a report on Form N-PX. If a reporting 
person has not received confirmation of the actual number of votes 
cast, we are proposing that Form N-PX instead may reflect the number of 
shares instructed to be cast on the date of the vote.\90\ The proposal 
would not require a reporting person to seek confirmation of the actual 
number of votes cast if this information is not otherwise readily 
available.\91\ However, should the reporting person learn prior to 
filing its Form N-PX that a different number of shares were voted, the 
reporting person would be required to report the actual number of votes 
cast.\92\ If confirmation of the actual number of votes cast occurs 
after the reporting person files the Form N-PX report, we are not 
proposing to require an amendment to the filing. We believe that this 
approach would reduce the compliance burden of providing information 
regarding the number of shares voted. At the same time, this disclosure 
would still achieve the goal of providing meaningful information to 
investors about how a reporting person voted its shares.
---------------------------------------------------------------------------

    \89\ See ICI Letter; Fidelity Letter; MFA Letter. See also 
Memorandum from the Division of Investment Management regarding 
November 29, 2010 telephone call with BlackRock, Inc., 
representatives (November 30, 2010), available at http://www.sec.gov/comments/s7-30-10/s73010-33.pdf (in which BlackRock 
representatives indicated that the burden associated with providing 
quantitative disclosures may be significantly reduced to the extent 
that the proposed quantitative disclosure requirement was modified 
to only require disclosure of the number of votes instructed to be 
cast). In addition, we recognize that this may be an issue when a 
manager's client enters an arrangement with a securities lending 
agent to loan the client's securities without any involvement by the 
manager.
    \90\ Special Instruction D.5 to proposed Form N-PX. See Fidelity 
Letter (suggesting quantitative disclosure be limited to votes 
instructed to be cast); ICI Letter (same); MFA Letter (same); Stone 
Letter (same). See also Proxy Mechanics Concept Release, supra 
footnote 60, at Section II.B.1 (discussion of issues surrounding 
confirmation of proxy votes).
    \91\ Special Instruction D.5 to proposed Form N-PX.
    \92\ Id.
---------------------------------------------------------------------------

    Although suggested by a commenter, we are not proposing disclosure 
of the number of shares voted only in split voting situations.\93\ We 
believe that requiring different disclosures for votes, depending on 
whether a reporting person split its vote on a particular matter, could 
result in potentially confusing inconsistencies within each report on 
Form N-PX. Providing information about the number of shares voted, in 
addition to shares on loan and not recalled, also would present a more 
complete picture of a reporting person's voting, including by allowing 
an investor to understand the extent to which a reporting person 
determines not to vote.
---------------------------------------------------------------------------

    \93\ See ICI Letter.
---------------------------------------------------------------------------

    We also disagree with commenters that disclosure of the number of 
votes cast could result in competitors gaining insight into reporting 
persons' holdings.\94\ Given the alignment of filing deadlines among 
forms, this disclosure likely will be publicly available via Form 13F 
(for managers) and Form N-PORT (for funds) before the reporting person 
is required to file on Form N-PX.\95\ Even for securities reported on 
Form N-PX that are not reported on Form 13F or Form N-PORT, proxy votes 
reported on Form N-PX generally occur up to several months (including 
as many as 14 months) before the August 31 Form N-PX reporting date. As 
a result, we do not believe the disclosure would materially affect 
competition.\96\ Reporting persons would also be permitted to request 
confidential treatment of filed information, as discussed further 
below.
---------------------------------------------------------------------------

    \94\ See ISS Letter; ICI Letter (noting that quantitative 
disclosure information might be useful to competitors looking for 
information about fund holdings).
    \95\ To the extent securities reported on Form N-PX are included 
on Form 13F, reports from managers on Form 13F for the quarter 
ending June 30 would be required to be filed no later than August 
14. This means that public disclosure of such holdings on Form 13F 
generally would pre-date the August 31 deadline for filing Form N-
PX. Similarly, funds must publicly disclose their holdings on a 
quarterly basis on Form N-PORT. See 17 CFR 270.30b1-9 (requiring 
filing no later than 60 days after the end of the relevant fiscal 
quarter).
    \96\ See also infra Section IV.
---------------------------------------------------------------------------

    We are also not proposing the approach advocated by one commenter 
who suggested that the Commission consider alternative indications of 
``magnitude'' in lieu of requiring disclosure of the number of votes 
cast. This commenter suggested, for example, that a manager could 
report how a majority (or plurality) of the shares the manager was 
entitled to vote was actually voted or managers could report the 
percentage of total votes cast for each position.\97\ We are not 
proposing these approaches because we believe they do not sufficiently 
demonstrate how a manager exercised its voting power (including any 
shares on loan and not recalled). We believe this context is important 
to present a more complete picture of how the manager votes, and these 
alternatives do not provide additional information relative to our 
proposal. Further, these methods would not alleviate any burden in 
retaining and reporting quantitative data regarding the number of votes 
cast.
---------------------------------------------------------------------------

    \97\ Mayer Brown Letter.
---------------------------------------------------------------------------

    We request comment on the proposed disclosure of the number of 
shares voted, and, in particular, on the following issues:
    28. Should we, as proposed, require funds and managers to report 
the number of shares voted (or instructed to be cast)? Does disclosing 
the number of shares voted allow investors to understand better how 
securities lending activities impact the voting practices of the 
reporting person? Why or why not?
    29. As proposed, should we require a reporting person to report the 
actual number of votes cast if it learns prior to filing its Form N-PX 
that a different number of shares were voted than the reporting person 
instructed to be cast? Should we require this reporting only if the 
reporting person receives information about the actual number of shares 
voted within a specified period before its Form N-PX filing is due? If 
so, what should the specified period be (e.g., at least 5, 10, or 30 
days before the Form N-PX filing is due)?
    30. Are there other ways to promote investor understanding of 
reporting

[[Page 57489]]

persons' voting practices (e.g., the occurrence of split voting) that 
we should require instead of, or in addition to, disclosure of the 
number of shares voted (or instructed to be cast)? For example, would 
investor understanding be promoted if we required reporting of another 
metric, such as the percentage of total shares held that were voted (or 
instructed to be cast), to be disclosed? Why or why not?
    31. We are proposing that, if a reporting person has not received 
confirmation of the actual number of votes cast, the reporting person 
instead may reflect the number of shares instructed to be cast on the 
date of the vote. Does this alleviate concerns about the burden on 
reporting persons with respect to quantitative disclosures? Is the 
information disclosed still of utility to data users? Why or why not?
    32. Should the requirement to disclose the number of shares voted 
only apply to certain types of votes or to a subset of reporting 
persons? For example, should this disclosure be required only in the 
case of say-on-pay votes or split votes?
    33. Does the proposed requirement to disclose the number of shares 
voted complement the proposed requirement to disclose the number of 
shares the reporting person loaned and did not recall? Would investors 
need both figures to understand how securities lending activities 
affect a reporting person's proxy voting? Are there other figures or 
types of information one would need to understand the interaction 
between these two activities?
    34. Are there additional quantitative disclosures we should 
consider that would provide utility to investors?
b. Disclosure of Number of Shares the Reporting Person Loaned and Did 
Not Recall
    In addition to the number of shares a reporting person voted, we 
are proposing to require disclosure of the number of shares the 
reporting person loaned and did not recall.\98\ We understand from 
commenters that this information about securities lending is important 
to understand a reporting person's voting record because the reporting 
person cannot affirmatively cast a vote for or against a matter if the 
security is on loan over the record date. Several commenters on the 
2010 Proposing Release and Proxy Mechanics Concept Release stated that 
it was important to know how many shares were not voted because they 
were on loan.\99\ The proposed requirement is designed to provide 
transparency into how a reporting person's securities lending affects 
its proxy voting.
---------------------------------------------------------------------------

    \98\ Item 1(i) of proposed Form N-PX.
    \99\ Levin Letter; Letter of InterOrganization Network (Oct. 13, 
2010) (File No. S7-14-10); Shareowner Education Letter on Concept 
Release; Letter of Society of Corporate Secretaries & Governance 
Professionals (Nov. 22, 2010) (File No. S7-14-10) (``SCSGP Letter on 
Concept Release'').
---------------------------------------------------------------------------

    We also believe the proposed requirement to disclose the number of 
shares the reporting person loaned and did not recall would help 
address commenters' concerns with a requirement in the 2010 proposal to 
disclose the total number of shares a fund was entitled to vote or a 
manager had or shared voting power over. Some commenters opposed the 
requirement in the 2010 proposal because of the cost and effort that 
would be required to aggregate and reconcile the total number of shares 
a fund is entitled to vote or a manager has or shared voting power 
over.\100\ These commenters noted complexities in the current proxy 
system, including the intermediation between issuers and shareholders, 
and the multitude of entities involved (such as transfer agents, proxy 
vendors, and tabulators).\101\ Some commenters also raised concern that 
there could be potentially confusing or misleading discrepancies 
between the reported number of shares voted and the reported number of 
shares which the reporting person was entitled to vote or over which it 
had or shared voting power.\102\ For example, commenters discussed 
scenarios in which discrepancies between these figures could arise 
despite the reporting person's intent to vote all available shares 
(e.g., discrepancies resulting from differing proxy frameworks in 
certain jurisdictions or limitations on a manager's ability to vote 
shares that its client has loaned as part of an agreement solely 
between the client and its custodian).\103\
---------------------------------------------------------------------------

    \100\ See, e.g., ABA Letter; ICI Letter; Fidelity Letter; Stone 
Letter. See also Letter of Institutional Shareholder Services, Inc. 
(Oct. 20, 2010) (File No. S7-14-10) (``ISS Letter on Concept 
Release''); Letter of Sullivan & Cromwell LLP (Oct. 20, 2010) (File 
No. S7-14-10) (``Sullivan & Cromwell Letter on Concept Release''); 
Fidelity Letter on Concept Release; Letter of BlackRock (Oct. 29, 
2010) (File No. S7-14-10) (``BlackRock Letter on Concept Release''); 
Letter of CFA Institute (Nov. 22, 2010) (File No. S7-14-10); ICI 
Letter on Concept Release.
    \101\ See ICI Letter; Sullivan & Cromwell Letter on Concept 
Release.
    \102\ See Fidelity Letter; ICI Letter; Mayer Brown Letter.
    \103\ See Fidelity Letter; Mayer Brown Letter.
---------------------------------------------------------------------------

    We are proposing a requirement that focuses solely on shares a 
reporting person loaned and did not recall. Under federal law, an 
investment adviser is a fiduciary.\104\ With respect to securities 
lending, advisers have a fiduciary duty to consider the tradeoffs 
between continuing to keep securities on loan, or recalling loaned 
securities in order to vote.\105\ The disclosure we are proposing to 
add to Form N-PX would provide transparency regarding whether a 
reporting person has opted to recall a security and vote the 
accompanying proxy or to keep the security out on loan. Absent this 
disclosure, investors would not have information about a manager's 
decision not to recall a loaned security, which is similar to the 
decision not to vote on a matter, which currently is reported on Form 
N-PX.\106\ Our proposal also takes into account commenters' concerns on 
the prior proposal, and we believe the quantitative information we are 
proposing to require is easier for reporting persons to obtain than the 
information the 2010 proposal would have required. For instance, the 
proposal does not implicate the complexities in the current proxy 
system with determining the number of shares the reporting person was 
entitled to vote or over which it had or shared voting power that 
commenters described.
---------------------------------------------------------------------------

    \104\ 2019 Fiduciary Interpretation, supra footnote 12, at text 
accompanying n.2. See also SEC v. Capital Gains Research Bureau, 
Inc., 375 U.S. 180, 194 (1963); Investment Adviser Codes of Ethics, 
Investment Advisers Act Release No. 2256 (July 2, 2004); Compliance 
Programs of Investment Companies and Investment Advisers, Investment 
Advisers Act Release No. 2204 (Dec. 17, 2003); Electronic Filing by 
Investment Advisers; Proposed Amendments to Form ADV, Investment 
Advisers Act Release No. 1862 (Apr. 5, 2000).
    \105\ See Proxy Voting Interpretation, supra footnote 13, at 
response to question 1 and at n.34 (indicating that while the 
application of the investment adviser's fiduciary duty in the 
context of proxy voting will vary with the scope of the voting 
authority assumed by the investment adviser, the relationship in all 
cases remains that of a fiduciary to the client, and an investment 
adviser must make any determination regarding whether to retain a 
security and vote the accompanying proxy or lend out the security in 
the client's best interest).
    \106\ See Item 1(g) of current Form N-PX.
---------------------------------------------------------------------------

    The disclosure we are proposing would be required only where the 
reporting person has loaned the securities. This would include 
scenarios where the reporting person loans the securities directly or 
indirectly through a lending agent.\107\ However, it would not include 
scenarios where the manager is not involved in lending shares in a 
client's account because, for

[[Page 57490]]

example, the manager is not a party to the client's securities lending 
agreement and has not itself (rather than the client) loaned the 
securities. As recognized above, a manager would not exercise voting 
power over loaned securities when its client hires a securities lending 
agent to loan securities in the client's account and the manager has no 
involvement in the securities lending arrangement or in decisions to 
recall loaned securities.\108\ Thus, the manager would not have any 
say-on-pay reporting obligations with respect to those loaned 
securities.
---------------------------------------------------------------------------

    \107\ See Special Instruction D.7 of proposed Form N-PX. To the 
extent a reporting person allocates an amount of securities to the 
lending agent for lending purposes and treats that amount of 
securities as being on loan when determining how many shares it can 
vote in a matter, the reporting person should report all of the 
allocated shares as being on loan and not recalled (excluding any 
shares the reporting person recalled for the vote).
    \108\ See supra paragraph accompanying footnote 48.
---------------------------------------------------------------------------

    We request comment on the proposed requirement to disclose the 
number of shares loaned and not recalled, and, in particular, on the 
following issues:
    35. Should we require disclosure of the number of shares a 
reporting person loaned and did not recall, as proposed? Is this 
information valuable to investors? Does the value of the information 
differ between institutional and retail investors? Are there any 
changes we could make to enhance the utility of the information for 
investors?
    36. Are there limitations we should be aware of regarding the 
ability of reporting persons to disclose the number of shares loaned 
and not recalled? If so, are there ways would could address those 
limitations?
    37. We understand that proxy statements typically are not delivered 
until after the record date.\109\ Does this create challenges for 
reporting persons to determine whether they want to recall loaned 
securities before the record date? \110\ If so, how might these 
challenges affect disclosure of the number of shares loaned and not 
recalled, or other aspects of this proposal? Are there any changes we 
should make to the proposed rule to recognize these challenges?
---------------------------------------------------------------------------

    \109\ See Proxy Mechanics Concept Release, supra footnote 60, at 
Section III.C.2.
    \110\ Some commenters on the Proxy Mechanics Concept Release 
suggested that the lack of a meeting agenda prior to a record date 
generally does not affect their ability to anticipate many kinds of 
voting matters and to make arrangements to recall loaned securities 
in advance of a record date, if they determine to do so. See, e.g., 
ICI Letter on Concept Release; Letter of American Bar Association 
(Dec. 17, 2010) (File No. S7-14-10).
---------------------------------------------------------------------------

    38. Would the proposed requirement to disclose the number of shares 
a reporting person loaned and did not recall affect decisions a fund or 
manager currently makes on when to recall a loaned security for 
purposes of voting and when to keep a security on loan? If so, how 
might the proposal affect the revenues funds or managers (and, by 
extension, their investors or clients) receive from securities lending? 
Would disclosure of this effect be helpful to a fund's investors or a 
manager's clients? If so, what form should this disclosure take?
    39. Beyond information about how securities lending activities 
affect proxy voting, are there other types of information that would 
help investors understand a reporting person's approach to voting? If 
so, are there ways we could capture that information in Form N-PX 
reports or elsewhere? Similar to the 2010 proposal, should we require 
that the reporting person disclose the total number of shares a fund 
was entitled to vote or a manager exercised voting power over?
    40. Commenters raised concerns that the quantitative disclosure 
requirements in the 2010 proposal may lead to investor confusion.\111\ 
Does our proposed approach limit the potential for confusing 
discrepancies by focusing more directly on the number of shares voted 
and the number of shares on loan? If not, what areas of potential 
confusion remain under our current proposal, and are there changes we 
could make to reduce the potential for confusion?
---------------------------------------------------------------------------

    \111\ See supra footnote 103 and accompanying text.
---------------------------------------------------------------------------

4. Additional Proposed Amendments to Form N-PX
    In addition to proposing new categories of disclosure on Form N-PX, 
we are proposing certain other amendments to enhance the usability of 
Form N-PX reports and to modernize or clarify existing form 
requirements. For instance, we are proposing to require a standardized 
order to the Form N-PX disclosure requirements.\112\ We are also 
proposing an amendment to require a fund that offers multiple series of 
shares to provide Form N-PX disclosure separately by series (for 
example, provide Series A's full proxy voting record, followed by 
Series B's full proxy voting record).\113\ We believe these proposed 
changes will make Form N-PX disclosure easier to review and compare 
among reporting persons. Several commenters supported standardized 
order requirements, stating the importance of displaying data in a 
consistent manner to assist in analyzing multiple votes.\114\ One 
commenter, in contrast, stated that we should not adopt a standardized 
order requirement and that it was not aware of shareholders having any 
difficulty in deciphering or locating Form N-PX information.\115\ 
However, we are re-proposing the requirement because we continue to 
believe it would make the disclosure easier to review and compare among 
reporting persons, and believe it will aid our overall objective to 
increase transparency.
---------------------------------------------------------------------------

    \112\ See Special Instruction D.1 to proposed Form N-PX.
    \113\ See Special Instruction D.9 to proposed Form N-PX.
    \114\ See Levin Letter (supporting standardized order and 
stating that ``[r]equiring the data to be displayed in a consistent 
manner will assist analysis of multiple votes''); CalPERS Letter 
(finding standardized order to be acceptable); Letter of the State 
Board of Administration of Florida (Oct. 20, 2010) (File No. S7-14-
10) (``Florida Board Letter on Concept Release'') (supporting 
standardization of reporting for Form N-PX); Shareowner Education 
Letter on Concept Release (same); Letter of the United States Proxy 
Exchange (Oct. 20, 2010) (File No. S7-14-10) (``Proxy Exchange 
Letter on Concept Release'') (same).
    \115\ See Fidelity Letter.
---------------------------------------------------------------------------

    In the 2010 Proposing Release, the Commission proposed to retain 
the current form's requirement to report both the relevant security's 
CUSIP number and its ticker symbol. One commenter recommended that a 
ticker symbol be required only if a CUSIP number was unavailable since 
certain securities listed on more than one exchange have multiple 
ticker symbols.\116\ In response to this comment, we are proposing to 
require reporting of only one security identifier. Reporting persons 
would be required to report the security's CUSIP number unless it is 
not available through reasonably practicable means (e.g., in the case 
of certain foreign issuers).\117\ If the CUSIP number is not reported, 
then Form N-PX would require the security's ISIN, unless it also is not 
available through reasonably practicable means.\118\ Consistent with 
current Form N-PX, a filer may omit disclosure of both the CUSIP and 
ISIN identifier if neither is reasonably available through practicable 
means.\119\
---------------------------------------------------------------------------

    \116\ ABA Letter (noting the difficulties in determining which 
exchange is the principal exchange for the securities for purposes 
of the disclosure).
    \117\ See Item 1(b) of proposed Form N-PX; Special Instruction 
D.2 to proposed Form N-PX.
    \118\ See Item 1(c) of proposed Form N-PX; Special Instruction 
D.2 of proposed Form N-PX. If the security's CUSIP number is 
reported, then the ISIN would not be required to be reported.
    \119\ See Instruction 2 to Item 1 of current Form N-PX; Special 
Instruction D.2 of proposed Form N-PX.
---------------------------------------------------------------------------

    In addition, we are proposing two general amendments related to the 
cover page of Form N-PX.\120\ Consistent with the 2010 proposal, 
amended Form N-PX would contain a new section on the cover page to be 
used where the filing is an amendment to a previously filed Form N-PX 
report (e.g., to correct errors

[[Page 57491]]

in a previous filing or as part of the confidential treatment 
process).\121\ Amendments to a Form N-PX report would be required to 
either restate the original Form N-PX report in its entirety or include 
only the additional information that supplements the information 
already reported in a Form N-PX report for the same period.\122\ We 
also propose to amend the form to allow for additional information so 
long as it does not, either by its nature, quantity, or manner of 
presentation, impede the understanding or presentation of the required 
information.\123\ This optional disclosure would be placed at the end 
of the cover page or, if it relates to a particular vote, a reporting 
person could provide additional information about the matter or how it 
voted after disclosing the required information about that vote.\124\ 
Form 13F provides similar flexibility, where filers use it, among other 
things, to explain the reasons for an amendment to an earlier 
filing.\125\ We believe this flexibility would also be useful in Form 
N-PX and would facilitate a reporting person's ability to provide 
additional information about a particular vote, or about its voting 
practices in general.\126\
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    \120\ We are also proposing a few other amendments to the cover 
page of Form N-PX to accommodate manager reporting on Form N-PX. See 
infra Section II.D.2 (discussing these proposed cover page 
amendments).
    \121\ See, e.g., Confidential Treatment Instruction 7 to 
proposed Form N-PX (regarding the filing of amendments upon the 
final adverse disposition of a confidential treatment request or the 
expiration of confidential treatment); see also Section II.G infra.
    \122\ See Special Instruction B.1 to proposed Form N-PX.
    \123\ Special Instruction B.4 to proposed Form N-PX.
    \124\ See Special Instructions B.4 and D.10 and Item 1(m) of 
proposed Form N-PX.
    \125\ See Special Instruction 5 to Form 13F.
    \126\ Cf. ABA Letter (observing that Form N-PX does not readily 
permit explanatory disclosure).
---------------------------------------------------------------------------

    Further, we propose to amend the current disclosure in Form N-PX 
requiring a fund to identify whether a matter was proposed by the 
issuer or by a security holder.\127\ To provide additional information 
about matters proposed by security holders, we propose to require funds 
to identify whether such matters are proposals or counterproposals. In 
addition, we propose to clarify that the disclosure requirement would 
apply to funds only, and not to managers. We are not proposing that 
managers make this disclosure because say-on-pay votes relate 
exclusively to matters proposed by issuers and not by security 
holders.\128\
---------------------------------------------------------------------------

    \127\ See Item 1(f) of current Form N-PX; Item 1(g) of proposed 
Form N-PX.
    \128\ See 2010 Proposing Release, supra footnote 25, at text 
accompanying n.77.
---------------------------------------------------------------------------

    We are also proposing a technical amendment to Form N-PX that would 
require reporting persons to disclose whether each reported vote was 
``for or against management's recommendation.'' Current Form N-PX 
requires funds to disclose whether a vote was ``for or against 
management.'' \129\ The proposed amendment is intended to clarify that 
Form N-PX should disclose how the vote was cast in relation to 
management's recommendation on a particular proxy voting matter, as 
opposed to how the vote may have affected management. In recognition 
that there are some circumstances in which management may not provide a 
voting recommendation on a given matter, we are also proposing an 
instruction that would direct reporting persons to disclose ``none'' 
for the applicable matter in response to this disclosure 
requirement.\130\
---------------------------------------------------------------------------

    \129\ See Item 1(i) of Form N-PX.
    \130\ See Special Instruction D.8 of proposed Form N-PX.
---------------------------------------------------------------------------

    The Commission similarly proposed to amend the current Form N-PX 
item to refer to whether a vote was ``for or against management's 
recommendation'' in the 2010 proposal.\131\ Commenters generally 
supported the proposed change.\132\ One commenter stated that we should 
replace this item instead with a narrative description of what 
management recommended for the vote, and allow readers to determine on 
their own if the reporting person voted with or against 
management.\133\ However, our intent in this proposal is to provide 
useful and easily comparable information to shareholders. As a result, 
we are proposing to update the required disclosure to clarify that the 
report is required to disclose how the vote was cast in relation to 
management's recommendation.\134\
---------------------------------------------------------------------------

    \131\ See 2010 Proposing Release, supra footnote 25, at text 
accompanying n.90.
    \132\ See CalPERS Letter; Levin Letter.
    \133\ See Stone Letter.
    \134\ Item 1(k) of proposed Form N-PX.
---------------------------------------------------------------------------

    Unlike the 2010 proposal, which would have removed the definitions 
section in the instructions to Form N-PX, we are proposing to amend 
Form N-PX to include a section containing definitions for purposes of 
identifying terms used in Form N-PX.\135\ The terms for which 
definitions are included are ``fund,'' ``institutional manager,'' 
``reporting person,'' and ``series.'' The current version of Form N-PX 
also has a definitions section, but it refers filers to the definitions 
in the Investment Company Act and the rules and regulations 
thereunder.\136\ The terms used in the definitions section are the same 
as those used in this release. We believe the proposed definitions 
would clarify the terms used on Form N-PX and, in doing so, make the 
application of the form's requirements to different categories of 
reporting persons clear. The proposed definitions are also intended to 
make the proposed form more concise and readable (e.g., by referring to 
funds, rather than registered management investment companies, 
throughout the form).
---------------------------------------------------------------------------

    \135\ See General Instruction E to proposed Form N-PX.
    \136\ General Instruction E to current Form N-PX.
---------------------------------------------------------------------------

    We request comment on the additional proposed amendments to Form N-
PX, and, in particular, on the following issues:
    41. Should we, as proposed, require the information in Form N-PX 
reports to be disclosed in a standardized order? Would this facilitate 
comparisons or be otherwise useful to users of this information? What 
costs, if any, would be associated with standardization? Should the 
requirement to standardize apply to managers, funds, or both? If we 
standardize the order of the information in Form N-PX reports, should 
we use the order set forth in our proposal, or would some other order 
of information be more appropriate?
    42. In proposing to require a standardized order to the information 
in Form N-PX, we are also proposing clarifying language with respect to 
the placement in a report for a fund containing multiple series. Would 
this requirement make it easier for investors to review reports more 
efficiently? Is there a different method of disclosing the votes of 
multiple series that would assist our goal of providing useful and 
comparative information?
    43. Are there other ways we could make the disclosure in Form N-PX 
easier to review and compare among reporting persons? If so, what are 
they?
    44. We are proposing to require reporting of only one security 
identifier (either the CUSIP or the ISIN) on Form N-PX. Should we 
require reporting persons to disclose both identifiers? If so, why? 
Should we also require the ticker symbol in order to identify a 
security? Why or why not? Is there a more appropriate identifier of 
securities?
    45. Should the cover page permit, as proposed, the inclusion of 
optional information in addition to the information required by Form N-
PX? Are the conditions proposed with respect to the optional 
information sufficient? Why or why not? In what instances might the 
inclusion of additional information on the cover page impede the 
comprehension of the required disclosure? For example, should we limit 
this additional information by length? Or by

[[Page 57492]]

presentation? Are there other limits we should consider?
    46. Should we allow reporting persons to provide additional 
information relating to a particular vote after disclosing the required 
information about that vote, as proposed? What types of information 
might reporting persons wish to provide about particular votes? Does 
the proposal provide sufficient flexibility for reporting persons to 
provide such information, while also limiting the potential for 
optional disclosure that would impede the understanding or presentation 
of the required information?
    47. To what extent do filers amend Form N-PX filings? What are the 
typical reasons for an amendment? Should all amended Form N-PX filings 
be required to restate all information in the prior filing? Should we 
require any additional clarifying language on amendment filings?
    48. As proposed, should we require funds to distinguish between 
proposals and counterproposals when identifying matters proposed by 
security holders? Is it sufficiently clear to a fund when a matter 
proposed by a security holder should be classified as a proposal or 
counterproposal?
    49. Should we, as proposed, clarify that managers are not required 
to disclose whether a matter was proposed by the issuer or by a 
security holder? Are there other requirements in Form N-PX that should 
only apply to funds? Are there requirements that should only apply to 
managers?
    50. Does the change of required disclosure on Form N-PX to ``for or 
against management's recommendation'' clarify the intended purpose of 
the disclosure? Why or why not? Is additional clarification necessary? 
Should we instead require a narrative disclosure, as suggested by a 
commenter?
    51. We are proposing to amend Form N-PX to add specific definitions 
to the instructions. Are the proposed definitions effective? Should we 
modify or remove any of the proposed definitions? Are there other 
definitions we should add to Form N-PX? Should we instead retain the 
current definitions section or remove this section, as proposed in the 
2010 proposal?
    52. Should we modify the proposed content requirements in any way 
for either managers or funds? Is there any information that we are 
proposing to require that should not be required? Is there additional 
information that should be required?
    53. Should we provide any additional guidance on the contents of 
the proposed Form N-PX requirements?

D. Joint Reporting and Related Form N-PX Amendments To Accommodate 
Manager Reporting

1. Joint Reporting Provisions
    Section 14A(d) of the Exchange Act requires a manager to report any 
say-on-pay vote unless such vote is otherwise required to be reported 
publicly by rule or regulation of the Commission. In order to implement 
this provision and prevent duplicative reporting, we are proposing 
three sets of amendments to Form N-PX to permit joint reporting, as 
well as associated disclosure requirements to identify all of a given 
manager's votes. The Commission proposed similar joint-reporting 
provisions in the 2010 proposal, and commenters supported this 
reporting framework.\137\ Based on our experience with Form 13F 
reports, we believe that allowing consolidated reporting in this manner 
would yield reported data that would be at least as useful as 
separately reported data while reducing burden for reporting persons 
who may prefer to report jointly. Furthermore, we expect that the 
instructions we are proposing that require reports on Form N-PX to be 
structured and machine-readable would allow tools to be developed so 
that investors can sort and filter the data to view votes by the 
relevant manager.
---------------------------------------------------------------------------

    \137\ See, e.g., ABA Letter; Letter of The Colorado Public 
Employees' Retirement Association (Nov. 18, 2010) (``COPERA 
Letter''); CII Letter; IAA Letter.
---------------------------------------------------------------------------

    The first amendment would permit a single manager to report say-on-
pay votes in cases where multiple managers exercise voting power.\138\ 
This method for preventing duplicative reporting is similar to that 
employed by Form 13F, which permits a single manager to include 
information regarding securities with respect to which multiple 
managers exercise investment discretion.\139\
---------------------------------------------------------------------------

    \138\ General Instruction C.1 to proposed Form N-PX.
    \139\ See 15 U.S.C. 78m(f)(6)(B) (directing the Commission to 
adopt such rules as it deems necessary or appropriate to prevent 
duplicative reporting by two or more managers exercising investment 
discretion with respect to the same amount); General Instruction 2 
to Form 13F.
---------------------------------------------------------------------------

    In response to a similar provision in the 2010 proposal, one 
commenter suggested that we require a manager who receives a ballot be 
the primary filer that all other managers may reference in their 
filings.\140\ We are not proposing this approach because we believe 
that the joint-reporting provisions should provide flexibility to 
address different types of voting arrangements. Moreover, under our 
current proposal, the manager who receives the ballot would not be 
required to report a say-on-pay vote on Form N-PX under all 
circumstances (e.g., if it does not exercise voting power). Another 
commenter requested guidance on whether an adviser or a sub-adviser 
should be the primary filer when both exercise voting power. We do not 
believe it is necessary to specify who should report under these 
circumstances, because the joint reporting provisions are designed to 
provide flexibility to reporting persons to divide that responsibility 
among themselves or to each report independently.\141\ This may in 
certain circumstances result in two managers reporting the same vote, 
for instance if two managers provide voting advice regarding the same 
securities and have not coordinated with each other regarding who will 
make a report on Form N-PX. Because both managers would exercise voting 
power (i.e., would influence the voting decision) under these 
circumstances, we do not believe it would be inappropriate or confusing 
for those managers to report the same vote separately. Like reports on 
Form N-PX that rely on the joint reporting provisions, reports that 
separately disclose the same votes would provide insight to clients and 
other investors into how a manager voted.
---------------------------------------------------------------------------

    \140\ See ISS Letter.
    \141\ See Brown Letter.
---------------------------------------------------------------------------

    The second proposed amendment would permit a fund to report its 
say-on-pay votes on behalf of a manager exercising voting power over 
some or all of the fund's securities.\142\ This provision avoids a fund 
and its adviser each having to file duplicative reports regarding the 
same votes. Under our proposed approach, if a manager's say-on-pay 
votes are reported by one or more funds over whose securities the 
manager exercises voting power or by one or more other managers, the 
non-reporting manager would be required to file a Form N-PX report that 
identifies each manager and fund reporting on its behalf.\143\
---------------------------------------------------------------------------

    \142\ General Instruction C.3 to proposed Form N-PX.
    \143\ General Instruction C.4 to proposed Form N-PX. See infra 
Section II.D.2 (discussing this proposed requirement).
---------------------------------------------------------------------------

    The third proposed amendment would permit affiliates to file joint 
reports on Form N-PX notwithstanding that they do not exercise voting 
power over the same securities. The Commission did not propose a 
similar provision in 2010, but a few commenters suggested that we 
broaden the circumstances where affiliates may file joint reports.\144\ 
These commenters

[[Page 57493]]

suggested that, to further promote operational efficiencies and ease 
potential administrative burdens, the Commission should permit 
affiliated managers to file jointly even where they do not jointly 
exercise voting power, and allow managers to report at the holding 
company level if they so choose.\145\ After considering these comments, 
we are proposing to permit two or more persons who are affiliated 
persons to file a single report on Form N-PX for all affiliated persons 
in the group.\146\ This joint reporting provision is designed to 
provide operational efficiencies without negatively affecting the 
quality or accessibility of the information reported on Form N-PX.
---------------------------------------------------------------------------

    \144\ See Letter of Fidelity Investments (Nov. 18, 2010) 
(``Fidelity Letter'') (suggesting flexibility for affiliated 
managers to jointly file Form N-PX even where they do not share 
voting power); IAA Letter (suggesting flexibility for corporate 
groups to report at the holding company or subsidiary level 
regardless of whether they share voting authority).
    \145\ Id.
    \146\ See General Instruction C.2 to proposed Form N-PX; section 
2(a)(3) of the Investment Company Act (defining ``affiliated 
person'').
---------------------------------------------------------------------------

    In all three cases, where another reporting person reports say-on-
pay votes on a manager's behalf, the report on Form N-PX that includes 
the manager's votes would be required to identify the manager (and any 
other managers) on whose behalf the filing is made and separately 
identify the securities over which the non-reporting manager exercised 
voting power.\147\ The manager's report on Form N-PX also would have to 
identify the other managers or funds reporting on its behalf.\148\ This 
approach is designed to allow managers' clients and investors to easily 
search for all votes where the manager exercised voting power, whether 
or not those votes are reported on the manager's own Form N-PX.
---------------------------------------------------------------------------

    \147\ For example, in the case of a Form N-PX report that 
includes votes of multiple affiliated managers, the filing must 
identify each affiliate the report covers and separately identify 
the securities for which each affiliate exercised voting power.
    \148\ General Instructions C.5 and C.6 to proposed Form N-PX; 
Special Instructions C.2 and D.6 to proposed Form N-PX. See infra 
Sections II.D.3 and II.D.4 (discussing these proposed requirements 
in more detail).
---------------------------------------------------------------------------

    Use of the proposed joint reporting provisions would be optional. 
For example, where multiple managers exercise voting power over the 
same securities, the managers could choose to report the relevant say-
on-pay votes individually instead of relying on the joint reporting 
provisions. If a manager does not rely on the joint reporting 
provisions, it would not be subject to the disclosure requirements tied 
to joint reporting that facilitate identification of all of a manager's 
say-on-pay votes.\149\ In this case, the manager's report on Form N-PX 
would provide its complete proxy voting record for say-on-pay votes 
during the reporting period, without reference to any other reports on 
Form N-PX, and would not include any votes where the manager did not 
exercise voting power.
---------------------------------------------------------------------------

    \149\ In this case, the manager would report on its own behalf 
and would not have to analyze if any other manager also is required 
to report the vote.
---------------------------------------------------------------------------

    We request comment on the proposal to address duplicative reporting 
and, in particular, on the following issues:
    54. Should we, as proposed, permit a single manager to report say-
on-pay votes in cases where multiple managers exercise voting power? 
Should we, as proposed, permit a manager to satisfy its reporting 
obligations by reference to the Form N-PX report of a fund that 
includes the manager's say-on-pay votes? Is there any reason not to 
permit joint reporting? For example, would joint reporting confuse 
investors or make Form N-PX harder to use? Would the potential for 
confusion or for reduced usability decline if, as proposed, Form N-PX 
reports were reported in a structured data language? \150\ Are there 
other ways to address potentially duplicative reporting that are 
consistent with section 14A(d) of the Exchange Act that we should 
consider?
---------------------------------------------------------------------------

    \150\ Proposed rule 14Ad-1(a); Item 1 of proposed Form N-PX.
---------------------------------------------------------------------------

    55. Should the rule and form amendments provide, as we are 
proposing, that two or more managers that are affiliated persons may 
file a joint report on a single Form N-PX notwithstanding that the 
managers do not exercise voting power over the same securities? Does 
this standard permit a level of consolidated reporting by corporate 
groups that is sufficient to address common arrangements? Are there 
other frameworks for consolidated reporting that would be more 
appropriate? Rather than use the Investment Company Act definition of 
``affiliated person,'' is there a different standard we should use? For 
example, similar to Form 13F, should we deem a manager to exercise 
voting power over any securities over which any person under its 
control exercises voting power?
    56. Would the ability of a manager to report say-on-pay votes that 
another manager or a fund also reports lead to investor confusion or 
inappropriate double-counting? Should we prohibit a manager from 
reporting say-on-pay votes that another manager or a fund also reports? 
Should any such prohibition be qualified based on a manager's 
knowledge, belief, or some other standard? Should a manager be required 
to take any steps to determine whether another manager or fund is 
reporting say-on-pay votes for the same securities? Would it confuse 
investors if, as provided in our proposal, joint reporting of say-on-
pay votes is optional?
    57. Are the joint reporting provisions necessary in light of 
differences between our current proposal's standard for exercising 
voting power and the 2010 proposal's standard of directly or indirectly 
having or sharing the power to vote or to direct the voting of a 
security? If so, are there any changes we should make to the joint 
reporting provisions to better align with our proposed standard of 
exercising voting power over a security?
2. The Cover Page
    The Commission proposed changes to the cover page of Form N-PX in 
the 2010 proposal to address the addition of managers as a class of 
reporting persons and to help operationalize the joint reporting 
provisions. Commenters did not address these cover page changes, and we 
are proposing the same changes. Consistent with current Form N-PX cover 
page requirements, the proposed cover page of Form N-PX would require 
the name of the reporting person, the address of its principal 
executive offices, the name and address of the agent for service, the 
telephone number of the reporting person, identification of the 
reporting period, and the reporting person's file number.\151\ We also 
propose that a manager provide its CRD number and other SEC file 
number, if any, which we believe would facilitate identification of 
other regulatory filings of the manager and interrelationships between 
managers who rely on the proposed joint reporting provisions.\152\ We 
are proposing to require that the cover page include information to 
identify more readily whether the reporting person is a fund or a 
manager. If the reporting person is a manager, this information would 
also help investors identify reports filed by other managers and funds 
that contain say-on-pay votes of the reporting person under the joint 
reporting provisions. Specifically, the reporting person would be 
required to

[[Page 57494]]

check a box in order to identify the report as one of the following 
four types:
---------------------------------------------------------------------------

    \151\ In the case of a fund, the file number would be an 
Investment Company Act number beginning with ``811-.'' In the case 
of a manager, the file number would be a Form 13F number beginning 
with ``028-.''
    \152\ A CRD number is a number assigned by the Financial 
Industry Regulatory Authority's Central Registration Depository 
system or by the Investment Adviser Registration Depository system. 
The SEC file number would be any file number (e.g., 801-, 8-, 866-, 
802-) assigned by the Commission to the manager other than the 
manager's 13F file number, which all managers would be required to 
provide on the cover page. See Special Instruction B.3 of proposed 
Form N-PX.
---------------------------------------------------------------------------

     Registered management investment company report;
     Manager ``voting'' report when the report contains all 
say-on-pay votes of the manager;
     Manager ``notice'' when the report contains no say-on-pay 
votes of the manager and all say-on-pay votes are reported by other 
managers or funds under the joint reporting provisions; and
     Manager ``combination'' report when the report contains 
some say-on-pay votes of the manager and some say-on-pay votes of the 
manager are reported by other managers or funds under the joint 
reporting provisions.
    In addition, the cover page of a ``notice'' or ``combination'' 
report would include a list of the file numbers and names, as well as 
CRD numbers (if any), of the other managers and funds whose Form N-PX 
reports include say-on-pay votes of the reporting manager.\153\ This 
cross-referencing, which is modeled after Form 13F requirements, will 
help investors locate the reports of say-on-pay votes by other such 
managers.\154\
---------------------------------------------------------------------------

    \153\ Special Instruction B.2 to proposed Form N-PX.
    \154\ See Special Instruction 6 to Form 13F.
---------------------------------------------------------------------------

    We request comment on the proposed cover page of Form N-PX and, in 
particular, on the following issues:
    58. Should we adopt the cover page of Form N-PX as proposed, or 
should we modify it in any way, e.g., by adding or removing 
information? For example, should we require managers to include their 
CRD numbers and SEC file numbers, if any, as proposed? Should we also 
require managers to include their legal entity identifiers (``LEIs''), 
if any? \155\ Would the proposed cover page adequately identify the 
reporting person and the reporting period? Would the proposed cover 
page sufficiently enable investors to identify a reporting person's 
Form N-PX report for a given period and any amendments to that report? 
Would the proposed cover page enable users to identify the type of 
reporting person?
---------------------------------------------------------------------------

    \155\ An LEI is a unique identifier generally associated with a 
single corporate entity and is intended to provide a uniform 
international standard for identifying counterparties to a 
transaction.
---------------------------------------------------------------------------

    59. In the case of a ``notice'' or ``combination'' report filed by 
a manager, would the proposed cover page adequately enable investors to 
identify reports filed by other persons that contain say-on-pay votes 
for which the manager exercised voting power? Should these reports be 
required to include a list of the file numbers and names, as well as 
CRD numbers (if any), of the other managers and funds whose Form N-PX 
reports include say-on-pay votes of the reporting manager, as proposed? 
Is there other information that would help investors find a given 
manager's votes?
    60. Should ``notice'' filings contain any additional required 
disclosure? As currently contemplated, does the proposed notice filing 
requirement provide useful information to investors?
    61. Is there additional information that would be helpful to 
include on the cover page of Form N-PX?
3. The Summary Page
    We are proposing to add a new summary page to Form N-PX to enable 
investors to readily identify any additional managers (besides the 
reporting person) with say-on-pay votes included on the Form N-PX 
report.\156\ The summary page would be required in any fund's Form N-PX 
report, as well as any manager's Form N-PX other than a ``notice'' 
filing.\157\ Commenters did not address the proposed summary page 
requirements, and we are proposing the summary page requirements 
largely without any changes from the 2010 proposal.
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    \156\ For example, this disclosure might contain managers 
included under the joint reporting requirements. See Special 
Instruction B.2.b-d of proposed Form N-PX.
    \157\ Special Instructions B.2.a-d of proposed Form N-PX. The 
summary page would not be required in a ``notice'' report by 
managers because, since the notice report would not contain any say-
on-pay votes at all, it would not report any say-on-pay votes of 
other managers.
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    The summary page of Form N-PX would require reporting persons to 
identify the names and total number of additional managers with say-on-
pay votes included in the report in list format.\158\ The proposed 
instructions to Form N-PX specify the contents of this information, 
including the title, column headings, and format.\159\
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    \158\ Special Instruction C.1 to proposed Form N-PX.
    \159\ Special Instruction C.2 to proposed Form N-PX.
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    If a Form N-PX report includes the say-on-pay votes of additional 
managers, the summary page list would be required to include all such 
managers together with their respective Form 13F file numbers and, if 
any, CRD numbers and other SEC file numbers.\160\ In addition, and 
similar to Form 13F, the proposal would require the reporting person to 
assign a number (which need not be consecutive) for each such manager, 
and present the list in sequential order.\161\ These numbers would help 
identify the particular manager(s) who exercised the power to vote the 
securities. While we are proposing the sequential numbering requirement 
to make the list easier to use, the proposal would permit non-
consecutive numbering to allow managers to retain the same number 
across filings of different reporting persons and different time 
periods.
---------------------------------------------------------------------------

    \160\ Special Instruction C.2.b to proposed Form N-PX.
    \161\ Id.; see also Special Instruction 8.b to Form 13F.
---------------------------------------------------------------------------

    If a Form N-PX filing does not disclose the proxy votes of a 
manager other than the reporting person, the reporting person would 
enter the word ``NONE'' under the title and would not include the 
column headings and list entries.\162\
---------------------------------------------------------------------------

    \162\ Special Instruction C.2.a to proposed Form N-PX.
---------------------------------------------------------------------------

    To the extent a fund's report on Form N-PX includes the votes of 
multiple series, the summary page would require the name and the series 
identifier (if any) of each series.\163\ We believe this would assist 
investors in discerning the funds covered by the Form N-PX report. 
While the Commission did not propose this requirement in 2010, the 
Commission has since adopted Form N-CEN and Form N-PORT, which contain 
similar series identification requirements for funds.\164\
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    \163\ Special Instruction C.3 to proposed Form N-PX.
    \164\ Item B.6.a.ii of Form N-CEN; Item A.2 of Form N-PORT.
---------------------------------------------------------------------------

    We request comment on the proposed summary page of Form N-PX and, 
in particular, on the following issues:
    62. Should we adopt the summary page of Form N-PX, as proposed, or 
should we modify it in any way? For example, should we require the 
inclusion of additional information with respect to the additional 
managers in the list? What information would be helpful for investors 
to review in summary format? Would such information be practicable for 
the reporting person to acquire and report? Should we remove any of the 
proposed information requirements, such as the requirements for CRD 
numbers and other SEC file numbers for managers, if any?
    63. Would the proposed sequential and/or non-consecutive listing of 
other managers in the summary page help investors identify specific 
managers? Is the other identifying information we are proposing to 
require (including a manager's 13F file number and, if any, CRD number 
and other SEC file numbers) sufficient for purposes of identifying 
managers whose votes are included in a given report?

[[Page 57495]]

    64. Would the proposed summary page enable investors to readily 
identify any managers whose say-on-pay votes are included in a Form N-
PX report? Would additional formatting constraints be helpful?
    65. Should there be additional summary page requirement differences 
between funds and managers?
    66. Should we, as proposed, require fund Form N-PX reports that 
include the votes of multiple series to identify on the summary page 
the names and EDGAR identifier of each series that the report covers? 
Is there other information we should require of funds that would enable 
investors to more easily identify which funds the report covers? For 
example, should we also require disclosure of the series' LEI?
    67. Should we provide any exceptions to the summary page reporting 
requirement? If so, how should any such exception be defined?
    68. We request information on how clients of managers or other 
investors would utilize the information contained on the summary page. 
Would it provide useful data?
4. Other Proposed Amendments to Form N-PX To Accommodate Manager 
Reporting
    We are proposing other modifications to the format and content of 
the information currently required by Form N-PX to accommodate the 
proposed requirement for managers to report on Form N-PX. Specifically, 
we are proposing to require a manager to report the number of shares 
the manager is reporting on behalf of another manager pursuant to the 
joint reporting provisions separately from the number of shares the 
manager is reporting only on its own behalf.\165\ A manager would also 
be required to separately report shares when the groups of managers on 
whose behalf the shares are reported are different. For example, if the 
reporting manager is reporting on behalf of Manager A with respect to 
10,000 shares and on behalf of Managers A and B with respect to 50,000 
shares, then the groups of 10,000 and 50,000 shares must be separately 
reported. Similarly, a fund would be required to separately report 
shares that are reported on behalf of different managers or groups of 
managers.\166\ We believe this requirement would further our goal of 
providing meaningful information to investors by allowing investors to 
clearly see how a particular manager exercised voting power.
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    \165\ See Special Instruction D.6 to proposed Form N-PX. See 
also supra Section II.D.1 (discussing the proposed joint reporting 
provisions).
    \166\ See id. We are also clarifying, as a commenter suggested, 
that reporting persons would not be required to report shares 
separately when they are not relying on the joint reporting 
provisions, even if another manager exercised voting power over some 
of the shares reported. See IAA Letter.
---------------------------------------------------------------------------

    One commenter suggested limiting disclosure regarding manager 
shared voting power to the summary page of Form N-PX.\167\ We are not 
proposing this approach because we believe it would make it difficult 
for investors to identify which entities are responsible for the 
particular say-on-pay votes reported, which would undermine the purpose 
of reporting say-on-pay votes. The summary page is intended to identify 
any additional managers (besides the reporting person) with say-on-pay 
votes included on the Form N-PX report. We believe disclosure with 
respect to shared voting power should be included in the body of Form 
N-PX containing proxy voting information, in order to assist 
identifying which of the votes reported on Form N-PX were those over 
which the manager exercised voting power.
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    \167\ See ISS Letter.
---------------------------------------------------------------------------

    We request comment on the other proposed amendments to Form N-PX to 
accommodate new reporting requirements for managers, including the 
following:
    69. Should we, as proposed, require a reporting person relying on 
the joint reporting provisions to identify, for each applicable vote 
reported, each manager who exercised voting power as to the securities 
voted? Why or why not? Alternatively, would it be sufficient to require 
a reporting person to disclose on the summary page the managers for 
whom it is reporting, without identifying, for each vote reported, the 
managers that exercised voting power?
    70. Are there other changes we should make to Form N-PX to 
accommodate manager say-on-pay vote reporting requirements?

E. Form N-PX Reporting Data Language

    We are proposing to require reporting persons to file reports on 
Form N-PX in a structured data language.\168\ In particular, and as 
discussed in more detail below, we are proposing to require filing of 
Form N-PX reports in a custom eXtensible Markup Language (``XML'')-
based structured data language created specifically for reports on Form 
N-PX (``custom XML'').\169\ We believe use of a custom XML language 
would make it easier for reporting persons to prepare and submit the 
information required by Form N-PX accurately, and would make the 
submitted information more useful.
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    \168\ See General Instruction D.2. of proposed Form N-PX 
(specifying that reporting persons must file reports on Form N-PX 
electronically on EDGAR, except as provided by the form's 
confidential treatment instructions, and consult the EDGAR Filer 
Manual for EDGAR filing instructions). See also 17 CFR 232.301 
(requiring filers to prepare electronic filings in the manner 
prescribed by the EDGAR Filer Manual). We are also proposing to 
amend rule 101(a)(1)(iii) of Regulation S-T to provide that reports 
filed pursuant to section 14A(d) of the Exchange Act must be 
submitted in electronic format. Reports filed pursuant to section 30 
of the Investment Company Act are already subject to electronic 
filing. See rule 101(a)(1)(iv) of Regulation S-T.
    \169\ This would be consistent with the approach used for other 
XML-based structured data languages created by the Commission for 
certain EDGAR Forms, including the data languages used for reports 
on each of Form N-CEN, Form N-PORT, and Form 13F.
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    Reports on Form N-PX are currently required to be filed in HTML or 
ASCII.\170\ We understand that, in order to prepare reports in HTML and 
ASCII, reporting persons generally need to reformat required 
information from the way the information is stored for normal business 
uses. In this process, reporting persons typically strip out 
incompatible metadata (i.e., syntax that is not part of the HTML or 
ASCII specification) that their business systems use to ascribe meaning 
to the stored data items and to represent the relationships among 
different data items. The resulting code, when rendered in an end-
user's web browser, is comprehensible to a human reader, but it is not 
suitable for automated validation or aggregation.
---------------------------------------------------------------------------

    \170\ See Regulation S-T, 17 CFR 232.101(a)(1)(iv); 17 CFR 
232.301; EDGAR Filer Manual (Volume II) version 58 (June 2021), at 
5-1 (requiring EDGAR filers generally to use ASCII or HTML for their 
document submissions, subject to certain exceptions).
---------------------------------------------------------------------------

    The Commission requested comment in both the 2010 Proposing Release 
and the Proxy Mechanics Concept Release on whether to require reporting 
of the information required by Form N-PX in a structured data 
language.\171\ Among other things, we requested comment on the 
feasibility of identifying proxy voting matters in a uniform way and on 
the costs of providing data in a

[[Page 57496]]

structured data language.\172\ Commenters on these releases were mixed. 
Commenters that expressed support suggested that structured data would: 
Improve investor analysis or allow for more informed decision-making, 
improve third-party analyses of voting information or reduce the costs 
associated with preparing them, and generally benefit investors or 
improve the usefulness and accessibility of reported data.\173\ The 
Commission's Investor Advisory Committee also recommended that reports 
on Form N-PX be filed in a structured data language, stating that 
investors would be better able to assess the voting records of mutual 
funds.\174\ We believe that the modifications we are proposing 
regarding the identification of proxy voting matters would result in 
reported data that is sufficiently standardized to make structured data 
useful for interested parties.\175\
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    \171\ 2010 Proposing Release, supra footnote 25, at text 
subsequent to footnote 91 (``Are there methods other than 
standardizing the order of information that would render the 
information reported on Form N-PX more useful? Should we require 
reporting persons to provide the information reported on Form N-PX 
in interactive data format?''); Proxy Mechanics Concept Release, 
supra footnote 60 at text accompanying n. 225. The 2010 Proposing 
Release and the Proxy Mechanics Concept Release referred to an 
``interactive data format.'' Some comments on these releases 
similarly referred to an ``interactive data format.'' For purposes 
of this release, we consider the terms ``interactive data format'' 
and ``structured data language'' to be synonymous and use the terms 
``structured data language'' or ``structured data'' throughout for 
consistency.
    \172\ 2010 Proposing Release, supra footnote 25, at requests for 
comment subsequent to n. 91; Proxy Mechanics Concept Release, supra 
footnote 60, at requests for comment at n. 225.
    \173\ Letter of Broadridge Financial Solutions (Oct. 19, 2010) 
(File No. S7-14-10) (``Broadridge Letter on Concept Release''); 
Florida Board Letter on Concept Release,; ISS Letter on Concept 
Release; Letter of Dominic Jones (Nov. 2, 2010) (``Jones Letter''); 
Ostrovsky Letter on Concept Release; Proxy Exchange Letter on 
Concept Release; Letter of Shareowners Education Network (Oct. 20, 
2010) (File No. S7-14-10) (``Shareholder Education Letter on Concept 
Release''); Towns Letter on Concept Release; Letter of 
VoterMedia.org (Sept. 29, 2010) (File No. S7-14-10) (``VoterMedia 
Letter on Concept Release'').
    \174\ See supra footnote 22.
    \175\ See supra Section II.C.1 (Identification of Proxy Voting 
Matters). Some commenters agreed with statements in the 2010 
Proposing Release and the Proxy Mechanics Concept Release suggesting 
that having uniform identification of proxy voting matters would 
make structured data more useful. See Fidelity Letter on Concept 
Release; ICI Letter on Concept Release; see also Ostrovsky Letter on 
Concept Release (indicating that uniform identification is 
essential, but feasible).
---------------------------------------------------------------------------

    Two commenters on the Proxy Mechanics Concept Release urged the 
Commission to evaluate its then-new structured data requirements before 
adopting similar requirements elsewhere.\176\ In the time since the 
Commission issued the 2010 Proposing Release and the Proxy Mechanics 
Concept Release, we have gained additional experience with different 
reporting data languages, including with reports in an XML-based 
structured data language. For example, we have used customized XML data 
languages for reports filed on Form N-CEN, Form N-PORT, and Form 
13F.\177\ We have found the XML-based structured data languages used 
for those reports allow investors to aggregate and analyze reported 
data in a much less labor-intensive manner than data filed in ASCII or 
HTML. Based on our consideration of comments and our understanding of 
how fund and managers currently disclose required information in a 
structured data language, we believe that requiring a custom XML 
language for Form N-PX would minimize reporting costs while yielding 
reported data that would be more useful to investors. Reporting persons 
would be able to, at their option, either submit XML reports directly 
or use a web-based reporting application developed by the Commission to 
generate the reports, as managers are able to do today when submitting 
holdings reports on Form 13F.
---------------------------------------------------------------------------

    \176\ Fidelity Letter on Concept Release; ICI Letter on Concept 
Release.
    \177\ See e.g., Investment Company Reporting Modernization, 
Investment Company Act Release No. 32314 (Oct. 13, 2016) [81 FR 
81870 (Nov. 18, 2016)] (adopting Form N-CEN and Form N-PORT); 
Adoption of Updated EDGAR Filer Manual, Securities Act Release 9403 
(May 14, 2013) [78 FR 29616 (May 21, 2013)] (requiring managers to 
report their holdings in an XML-based structured data language on 
Form 13F).
---------------------------------------------------------------------------

    Some commenters observed that interested data users can procure 
structured voting data from third-party service providers.\178\ Another 
commenter, however, expressed concerns with the cost, 
comprehensiveness, and timeliness of the data cited by those 
commenters.\179\ While similar data may be available commercially, we 
believe that this information should be made freely available to 
investors and that current users of data made available by third-
parties could nonetheless benefit from structured Form N-PX reports if 
the costs associated with third-party data analysis fell.
---------------------------------------------------------------------------

    \178\ Fidelity Letter on Concept Release; ICI Letter on Concept 
Release.
    \179\ See Ostrovsky Letter on Concept Release.
---------------------------------------------------------------------------

    One commenter stated that it did not believe shareholders were 
interested in proxy voting information using a structured data 
language.\180\ Other commenters and the Investor Advisory Committee, 
however, have indicated that investors would benefit from proxy voting 
data reported in a structured data language. Among other things, 
commenters have noted that structured data would improve investor 
analysis or allow for more informed decision-making.\181\ We believe 
that reporting in custom XML language will allow investors to aggregate 
and analyze the reported data in a much less labor-intensive manner.
---------------------------------------------------------------------------

    \180\ ICI Letter on Concept Release.
    \181\ See supra footnote 173 and accompanying text.
---------------------------------------------------------------------------

    One commenter stated that a structured data reporting requirement 
would increase reporting costs, noting the costs of reporting data in 
both the current ASCII or HTML markup language, as well as any 
structured data language.\182\ Another commenter suggested it would not 
be necessary to continue to require ASCII or HTML reporting, in 
addition to reporting in a structured data language, because data in a 
structured data language could be translated to human-readable form in 
an automated manner and at low cost.\183\ In order to minimize 
reporting burdens, we are proposing to replace the ASCII or HTML 
reporting requirement with the custom XML reporting requirement. We 
recognize that current Form N-PX filers could bear some additional 
reporting costs related to adjusting their systems to a different data 
language. However, in the intervening time period since the 2010 
proposal, many reporting persons have acquired substantial experience 
with reporting on web-based applications (or directly submitting 
information in a structured data language). We believe that aligning 
Form N-PX's reporting data language with the type of data language of 
other required reports may reduce costs and introduce additional 
efficiencies for reporting persons already accustomed to reporting 
using structured data and may reduce overall reporting costs in the 
longer term.\184\
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    \182\ ICI Letter on Concept Release.
    \183\ Ostrovsky Letter on Concept Release.
    \184\ See infra Section IV.
---------------------------------------------------------------------------

    Finally, a commenter indicated that there would be costs associated 
with rendering the reported data in a form that could be comprehensible 
to a human reader.\185\ We agree that there would be some costs 
associated with rendering XML data in a human-readable format, and we 
believe that it is appropriate for the Commission to bear these costs. 
We are proposing that the Commission would develop electronic ``style 
sheets'' that, when applied to the reported XML data, would represent 
that data in human-readable form. We developed similar style sheets for 
holdings data reported by managers in XML on Form 13F, and they have 
yielded useful, consistently formatted documents.
---------------------------------------------------------------------------

    \185\ ICI Letter on Concept Release (noting that the Proxy 
Mechanics Concept Release did not make clear who would bear those 
costs); but see Ostrovsky Letter on Concept Release (characterizing 
these costs as ``trivial'').
---------------------------------------------------------------------------

    We request comment on the reporting data language we are proposing 
to require for reports filed on Form N-PX, and, in particular, on the 
following issues:

[[Page 57497]]

    71. Should we require, as we are proposing, Form N-PX reports to be 
filed in a custom XML language? Is a custom XML language the 
appropriate type of data language for Form N-PX reports? Why or why 
not? If another structured data language would be more appropriate, 
which one, and why?
    72. Would this proposed requirement yield reported data that is 
more useful to investors, compared with not requiring Form N-PX to be 
filed in a custom XML language, or requiring Form N-PX to be filed in a 
structured data language other than a custom XML language?
    73. Are the standardized identification requirements we are 
proposing compatible with the proposed reporting data language?
    74. Should any subset of funds or managers be exempt from the 
proposed structured data reporting requirement? If so, what subset and 
why?

F. Time of Reporting

    Currently, funds must report their proxy voting records annually on 
Form N-PX no later than August 31 of each year, for the most recent 12-
month period ended June 30.\186\ We are proposing to retain the same 
reporting timeframe for funds and to apply this reporting timeframe to 
managers' reporting of say-on-pay votes.\187\ Commenters on the 2010 
proposal generally supported retaining the current reporting timeframe, 
though certain commenters advocated for longer or shorter 
timeframes.\188\
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    \186\ See rule 30b1-4 under the Investment Company Act. We refer 
to this twelve-month period ending on June 30 of each year as the 
``reporting timeframe'' or the ``timeframe.''
    \187\ Proposed rule 14Ad-1(a); General Instruction A to proposed 
Form N-PX. The timing of a manager's Form N-PX filing obligations 
would differ when the manager enters and exits from the obligation 
to file Form 13F reports. See infra Section II.J.
    \188\ See, e.g., ABA Letter; CalPERS Letter; CII Letter; COPERA 
Letter; Glass Lewis Letter I; but see Jones Letter (requesting that 
managers and funds be required to report their votes on Form N-PX 
within four business days of each shareholder meeting); Letter of 
Adrienne Brown of Nationwide Investment Management Group (Nov. 18, 
2010) (``Brown Letter'') (suggesting a later filing deadline, such 
as September or October); Fidelity Letter (suggesting the filing 
deadline be moved from August 31 to October 31).
---------------------------------------------------------------------------

    We preliminarily believe that the proposed reporting timeframe for 
managers--and retaining the current reporting timeframe for funds--
appropriately balances the benefits of prompt reporting and the burdens 
associated with that reporting. We are not proposing to require, as 
suggested by one commenter, that managers and funds report their votes 
shortly after the relevant shareholder meeting.\189\ We preliminarily 
believe that the benefits of public reporting of proxy votes by funds 
and managers would not significantly increase with faster reporting and 
that publicly reporting each vote individually would make it difficult 
for investors reading a manager's Form N-PX reports to evaluate overall 
patterns in the manager's voting behavior.
---------------------------------------------------------------------------

    \189\ See Jones Letter.
---------------------------------------------------------------------------

    As it relates to managers' reporting of say-on-pay votes, the 
relevant proposals are typically unique to the issuer in question and 
votes may be heavily dependent on the particular facts and 
circumstances applicable to that issuer. Moreover, because such votes 
are reported on a retrospective basis, investors will not necessarily 
be able to use the information reported by managers on Form N-PX to 
engage in a dialogue with their manager about its voting policies or to 
switch to a manager who will vote differently with respect to any 
specific say-on-pay vote.\190\ In the context of fund reporting of 
proxy votes, however, we are mindful of the fact that similar proposals 
often appear on the ballots of many issuers in a given proxy season, 
especially those issuers within the same industry. In these instances, 
timelier public reporting of funds' proxy votes has the potential to 
facilitate fund shareholders' ability to monitor their funds' 
involvement in the governance activities of portfolio companies, 
including within a single proxy season.\191\ We request comment below 
on whether the benefits of timelier reporting of proxy votes--including 
those of both managers and funds--might outweigh any potential 
drawbacks.
---------------------------------------------------------------------------

    \190\ Requiring managers to disclose their intended votes on a 
prospective basis would allow investors to make such a change, but 
such an approach would be inconsistent with the statute and we are 
not proposing it here.
    \191\ Shareholders of a given fund may be able to monitor the 
fund's proxy voting record to evaluate whether the fund's votes are 
consistent with its disclosure. This information would promote 
shareholders' ability to engage with fund management on timely 
issues in the midst of proxy season, including as it relates to 
future votes on the same subject matter at another issuer.
---------------------------------------------------------------------------

    We also are not proposing, as some commenters on the 2010 proposal 
suggested, to extend the deadline for filing reports from August 31 to 
a later date because of additional proposed disclosure 
requirements.\192\ We believe that further delay after the close of the 
reporting period is unnecessary, particularly in light of other changes 
from the 2010 proposal that we believe should result in reporting 
persons having sufficient time to gather the data necessary to make the 
filing, such as the reduction in the quantitative information required 
to be disclosed.\193\
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    \192\ See Brown Letter; Fidelity Letter.
    \193\ See supra Section II.C.3 (discussing modifications to the 
proxy voting information required on Form N-PX).
---------------------------------------------------------------------------

    We request comment on the proposed reporting timeframe for filing 
Form N-PX reports and, in particular, on the following:
    75. Should we, as proposed, require funds to file their proxy 
voting records on the same reporting timeline as currently required? 
Would investors benefit from more timely reporting of funds' proxy 
votes? Please explain. Do funds need more time than currently permitted 
to file Form N-PX reports that include the new disclosure this proposal 
would require? If so, why, and how much time?
    76. Should we, as proposed, require managers to report their say-
on-pay votes annually on Form N-PX not later than August 31, for the 
most recent 12-month period ended June 30? Should we instead require 
reporting as of some other period end date (e.g., May 31 or December 
31), or with a shorter or longer lag period after the end reporting 
period (e.g., a 45-day lag period to align with Form 13F)?
    77. Should we require reporting for managers and funds to occur 
more frequently than annually, such as monthly, quarterly, or close in 
time to each vote? Should we require more frequent voting to be 
reported on firm websites and annual reporting on Form N-PX? For 
example, should we require funds and managers to report their votes on 
a monthly or quarterly basis on their websites, and annually on Form N-
PX? Would requiring more frequent reporting to occur on managers' and 
funds' websites rather than on Form N-PX mitigate any of the potential 
issues with more frequent reporting, such as the cost of reporting or 
the ability of investors to read and identify patterns in fund or 
manager voting records?
    78. Would investors benefit from more frequent voting disclosure? 
For example, would more frequent disclosure enhance fund shareholders' 
ability to monitor their funds' involvement in the governance 
activities of portfolio companies? Conversely, would investors 
generally be most interested in analyzing a reporting person's voting 
record more holistically rather than focusing on individual votes on 
more frequent intervals or shortly after a vote is held? What are the 
advantages and disadvantages of more frequent reporting of proxy votes?
    79. Certain types of funds, such as index funds and the majority of

[[Page 57498]]

exchange-traded funds, provide a degree of transparency as to their 
holdings more frequently than required by Form N-PORT. Transparency as 
to these funds' holdings arises as a result of either: (1) Full 
portfolio disclosure (in the case of transparent ETFs), or (2) the 
tracking of an index whose constituents and weightings are transparent 
(in the case of index funds). Because of this transparency, more 
frequent disclosure of these funds' proxy voting records might not 
contribute to the potential risks otherwise associated with such a 
requirement. Should the Commission require more frequent or timely 
disclosure of proxy voting information for these or other types of 
funds whose characteristics mitigate the risks of such a requirement?
    80. Should funds and managers file Form N-PX reports on the same 
schedule, as proposed? Are there reasons they should be subject to 
different reporting schedules?

G. Requests for Confidential Treatment

    The information filed on Form N-PX would be publicly available 
through the Commission's EDGAR system, as is information filed on Form 
13F.\194\ Certain managers filing reports on Form 13F request 
confidential treatment of certain or all the positions reported on 
their Form 13F, and those managers may request that confidential 
information reported on their Form 13F also be treated as confidential 
on their Form N-PX.\195\ Pursuant to 17 CFR 240.24b-2 under the 
Exchange Act (``rule 24b-2''), which governs requests for confidential 
treatment of information required to be filed under the Act, a manager 
can request confidential treatment of information reported on proposed 
Form N-PX.\196\
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    \194\ See rule 80(c)(3) promulgated under the Freedom of 
Information Act [17 CFR 200.80(c)(3)] (stating that filings made 
through the EDGAR system are publicly available on the Commission's 
website).
    \195\ Requests for confidential treatment can be based either on 
a claim that the information would identify securities held by the 
account of a natural person or an estate or trust, other than a 
business trust or investment company, in which case the Commission 
is required to keep the information confidential indefinitely, or on 
a claim that the information is confidential commercial or financial 
information (consistent with the requirements of Freedom of 
Information Act (``FOIA'') Exemption 4), in which case the grant is 
discretionary and generally only for a period of time. See generally 
sections 13(f)(4) and (5) of the Exchange Act [15 U.S.C. 78m(f)(4)] 
[15 U.S.C. 78m(f)(5)]; Form 13F Instructions for Confidential 
Treatment Requests; Rulemaking for EDGAR System, Investment Company 
Act Release No. 23640 (Jan. 12, 1999) [64 FR 2843].
    \196\ See 17 CFR 240.24b-2; Confidential Treatment Instruction 1 
to proposed Form N-PX. The confidential treatment instructions we 
are proposing for Form N-PX are based on the Form 13F confidential 
treatment instructions, which apply in similar circumstances. See 
Form 13F Instructions for Confidential Treatment Requests.
---------------------------------------------------------------------------

    Managers seeking confidential treatment for information on their 
Form 13F are required to file multiple lists of securities. One, filed 
publicly, lists only those securities for which it is not seeking 
confidential treatment, as well as a statement indicating that 
confidential information has been omitted and filed with the 
Commission. Managers must also file a separate list including those 
securities positions for which the manager seeks confidential 
treatment. Confidential treatment granted by the Commission may be 
subject to an expiration date, as is often the case when confidential 
treatment is granted to protect commercial information, such as a 
position that is still being built. Therefore, when the confidential 
treatment period ends, or if the confidential treatment request is 
denied, the manager must file an additional report on Form 13F publicly 
disclosing those securities for which confidential treatment expired, 
or was denied.
    We are proposing instructions in Form N-PX that are designed to 
provide a similar opportunity to prevent confidential information that 
is protected from disclosure on Form 13F from being disclosed on Form 
N-PX.\197\ These instructions provide that a person requesting 
confidential treatment of information filed on Form N-PX should follow 
the same procedures set forth in Form 13F for filing confidential 
treatment requests. They also prescribe the required content of a 
confidential treatment request and the required filing of information 
that is no longer entitled to confidential treatment.\198\ For 
instance, the confidential treatment request would be required to 
provide enough factual support for the request, including a 
demonstration that the information is both customarily and actually 
kept private by the reporting person, and that release of this 
information could cause harm to the reporting person. Although this 
differs somewhat from the current language in Form 13F regarding 
confidential treatment requests, we are proposing this standard in Form 
N-PX to conform to a June 2019 U.S. Supreme Court decision that 
overturned the standard for determining whether information is 
``confidential'' under Exemption 4 of the FOIA on which the current 
Form 13F instruction is based.\199\
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    \197\ Section 13(f)(4) of the Exchange Act provides that the 
Commission, as it determines to be necessary or appropriate in the 
public interest or for the protection of investors, may delay or 
prevent public disclosure of information filed on Form 13F in 
accordance with the Freedom of Information Act. Section 13(f)(4) 
also provides that any information filed on Form 13F that identifies 
the securities held by the account of a natural person or an estate 
or trust (other than a business trust or investment company) shall 
not be disclosed to the public. As a result, we are unable to 
conclude, in advance, that confidential treatment of information 
filed on Form N-PX could, under no circumstances, be appropriate as 
suggested by one commenter. See Barnard Letter.
    \198\ Confidential Treatment Instructions to proposed Form N-PX. 
Upon the final adverse disposition of a request for confidential 
treatment, or upon the expiration of the confidential treatment, a 
reporting person would be required to electronically submit within 
six business days an amendment to its Form N-PX reporting the 
previously confidential proxy voting information. See Confidential 
Treatment Instruction 7 to proposed Form N-PX. Such amendment 
specifically would make publicly available through the Commission's 
EDGAR system the proxy voting information that previously was 
confidential. In the event that the required amendment is not filed, 
the Commission could make the proxy voting information available to 
the public through other means.
    \199\ 5 U.S.C. 552(b)(4). See Food Marketing Institute v. Argus 
Leader Media, 139 S.Ct. 2356 (2019) (``Food Marketing v. Argus 
Leader'') (stating that ``[a]t least where commercial or financial 
information is both customarily and actually treated as private by 
its owner and provided to the government under an assurance of 
privacy, the information is `confidential' within the meaning of 
Exemption 4''); see also Reporting Threshold for Institutional 
Investment Managers, Exchange Act Release No. 89290 (July 10, 2020) 
[85 FR 46016 (July 31, 2020)] (proposing a similar conforming 
amendment to the confidential treatment instructions in Form 13F).
---------------------------------------------------------------------------

    In light of the public disclosure intent of section 14A(d) and the 
confidential treatment requirements of rule 24b-2 under the Exchange 
Act, we believe that confidential treatment generally would not be 
merited solely in order to prevent proxy voting information from being 
made public. One commenter on the 2010 Proposing Release suggested that 
we should expand the standards for requesting and obtaining 
confidential treatment to cover situations in which a manager has a 
confidentiality agreement with a client regarding disclosure of 
portfolio information.\200\ We do not believe that such a private 
agreement should override the requirement to report proxy voting 
information publicly. We believe that confidential treatment could be 
justified only in narrowly tailored circumstances. For example, 
confidential treatment may be justified when a manager has filed a 
confidential treatment request for information reported on Form 13F 
that is pending or has been granted and where confidential treatment of 
information filed on Form N-PX would be necessary in order to protect 
information that is the subject of such Form 13F confidential treatment 
request, and the information is also

[[Page 57499]]

customarily treated as private, non-public information by the 
manager.\201\
---------------------------------------------------------------------------

    \200\ Mayer Brown Letter.
    \201\ In the case of information that is not reported on Form 
13F but would have been the subject of a Form 13F confidential 
treatment request if it were required to be reported (for example, a 
de minimis position that is not required to be reported on Form 13F 
but would have been eligible for confidential treatment if it were 
required to be reported on the form), we would follow similar 
procedures and apply similar standards to those followed for reports 
on Form 13F in processing requests for confidential treatment of 
information filed on Form N-PX.
---------------------------------------------------------------------------

    Existing Form N-PX does not include any confidential treatment 
instructions and, apart from Form N-PX, funds already disclose their 
portfolio holdings.\202\ As a result, we are not aware of any situation 
in which confidential treatment would be justified under rule 24b-2 for 
information filed by funds on Form N-PX.
---------------------------------------------------------------------------

    \202\ Portfolio holdings information is required to be disclosed 
by funds on a quarterly basis with a 60-day lag, through semiannual 
shareholder reports pursuant to rule 30e-1 under the Investment 
Company Act [17 CFR 270.30e-1] and Form N-PORT [17 CFR 274.150]. An 
exception exists for ``miscellaneous securities'' comprising less 
than 5% of a fund's portfolio and held for less than one year, but 
the number of votes relating to the securities in that category is 
generally expected to be small because of its short-term nature.
---------------------------------------------------------------------------

    We request comment on the proposed provisions regarding 
confidential treatment requests, including the following:
    81. Should we modify the proposed confidential treatment provisions 
in any way? Would it be appropriate to tie the confidential treatment 
provisions for Form N-PX to the confidential treatment provisions for 
Form 13F, for example by automatically granting confidential treatment 
for positions reported on Form N-PX when confidential treatment has 
been granted for those positions on Form 13F?
    82. As proposed, should we require reporting persons to file 
confidential treatment requests for Form N-PX in the same manner as 
Form 13F requires? Are there reasons for the filing processes for 
confidential treatment requests to differ between the two forms? If so, 
what approach should we permit or require reporting persons to use to 
file confidential treatment requests for Form N-PX?
    83. Do the proposed instructions for confidential treatment 
requests appropriately reflect the current requirements of FOIA, 
including the effect of the U.S. Supreme Court's June 24, 2019, 
decision in Food Marketing Institute v. Argus Leader Media on the type 
of information that is required to substantiate confidential treatment 
in accordance with rule 24b-2 under the Exchange Act?
    84. Are there circumstances in which say-on-pay votes should be 
publicly disclosed but our proposal could permit confidential 
treatment? Alternatively, are there circumstances in which our proposal 
would require public disclosure of a say-on-pay vote but where 
confidential treatment should be granted? Please explain.
    85. Should we allow funds to request confidential treatment under 
some circumstances? For example, should we allow a fund to request 
confidential treatment of votes on securities that were reported in the 
``miscellaneous securities'' category of its most recent disclosure of 
its portfolio holdings? If so, why should the result under the proposed 
rule differ from the result under current Form N-PX?

H. Proposed Website Availability of Fund Proxy Voting Records

    When the Commission adopted Form N-PX in 2003, it also required a 
fund to disclose that its proxy voting record is available to 
shareholders, either on (or through) the fund's website or upon 
request.\203\ We understand that, currently, most funds make their 
proxy voting records available to shareholders upon request but do not 
provide this information on their websites. We are proposing amendments 
to Forms N-1A, N-2, and N-3 to require a fund to disclose that its 
proxy voting record is publicly available on (or through) its website 
and available upon request, free of charge in both cases.\204\ We 
believe this proposed change would make a fund's proxy voting record 
more accessible to investors. Investors' access to the internet has 
increased substantially since 2003, and many investors go to fund or 
intermediary websites to get information about a fund.\205\ Because the 
proposal would require funds to file Form N-PX reports in a custom XML 
language, we are proposing to specify that the proxy voting record the 
fund posts on its website and provides upon request must be in a human-
readable format. A fund could comply with this requirement by using the 
human-readable version of its Form N-PX report that would appear on 
EDGAR (e.g., by providing a direct link on its website to the HTML-
rendered Form N-PX report on EDGAR).
---------------------------------------------------------------------------

    \203\ See Form N-PX Adopting Release, supra footnote 7; Items 
17(f) and 27(d)(5) of Form N-1A; Items 18.16, 24.6.d, and 24.8 of 
Form N-2; Item 23(f) and Instructions 4(d) and 6 to Item 31(a) of 
Form N-3.
    \204\ See proposed amendments to Items 17(f) and 27(d)(5) of 
Form N-1A; proposed amendments to Items 18.16, 24.6.d, and 24.8 of 
Form N-2; proposed amendments to Item 23(f) and Instructions 4(d) 
and 6 to Item 31(a) of Form N-3. The Commission has proposed other 
amendments that would replace current Item 27(d)(5) of Form N-1A 
with disclosure about the availability of different types of 
information for investors, including proxy voting information. See 
Tailored Shareholder Reports, Treatment of Annual Prospectus Updates 
for Existing Investors, and Improved Fee and Risk Disclosure for 
Mutual Funds and Exchange-Traded Funds; Fee Information in 
Investment Company Advertisements, Investment Company Act Release 
No. 33963 (Aug. 5, 2020) [85 FR 70716 (Nov. 5, 2020)] (``Tailored 
Shareholder Reports Proposing Release''). If those amendments were 
to be adopted, we would not amend current Item 27(d)(5) of Form N-1A 
as part of this rulemaking because it would no longer exist in its 
current form.
    \205\ See, e.g., ICI Research Perspective, ``Ownership of Mutual 
Funds, Shareholder Sentiment, and Use of the internet, 2020'' (Nov. 
2020) (noting that 96 percent of households owning mutual funds had 
internet access in 2020, up from 68 percent in 2000), available at 
https://www.ici.org/system/files/attachments/per26-08.pdf; Tailored 
Shareholder Reports Proposing Release, supra footnote 204, at n.69 
and accompanying text.
---------------------------------------------------------------------------

    We also propose to make conforming changes to Form N-1A and Form N-
3 provisions that discuss how a fund may make its proxy voting record 
available on request to require a fund to provide the email address, if 
any, that an investor may use to request the proxy voting record. Form 
N-2 currently includes a similar provision, while Form N-1A and Form N-
3 only refer to a fund providing a toll-free telephone number.
    We request comment on our proposed amendments to Forms N-1A, N-2, 
and N-3 to require funds to disclose that their proxy voting records 
are available on websites and upon request, including the following:
    86. Should we require funds to disclose that their proxy voting 
records is publicly available on (or through) their websites, free of 
charge and in a human-readable format, as proposed? Why or why not?
    87. Should we only require a fund to disclose that its proxy voting 
record is publicly available on (or through) its website, and not also 
require disclosure that the record is available upon request? Do 
investors need the option to request a copy of a fund's proxy voting 
record, or is website availability sufficient? If we retain the 
availability upon request provisions, should we require a fund to 
provide the email address, if any, that investors can use to request 
the proxy voting record, as proposed? If not, why not? Are there any 
other changes we should make that relate to an investor's ability to 
request delivery of a fund's proxy voting record, including that relate 
to the timeframe in which a fund delivers the voting record?
    88. Are there other ways we could improve the accessibility of 
funds' proxy voting records for investors? Please explain.

[[Page 57500]]

I. Compliance Dates

    As described above, we are proposing that managers would be 
required to report their say-on-pay votes annually on Form N-PX not 
later than August 31 of each year, for the most recent 12-month period 
ended June 30.\206\ We are proposing compliance dates that would vary 
depending on when the amendments become effective relative to the 
form's reporting deadline.
---------------------------------------------------------------------------

    \206\ Proposed rule 14Ad-1(a); General Instruction A to proposed 
Form N-PX. For further discussion of the time of reporting 
provisions, see the discussion in Section II.F.
---------------------------------------------------------------------------

    In the 2010 Proposing Release, we proposed that the first reports 
under then-proposed rule 14Ad-1 and amended Form N-PX would be required 
to be filed by August 31, 2011 (the same calendar year as the earliest 
anticipated adoption date). A number of commenters requested a delay in 
filing due to the compliance burden during initial implementation, with 
some commenters suggesting a compliance date as late as August 31, 2012 
(i.e. one calendar year after the proposed compliance date),\207\ or 
covering votes beginning no earlier than six months after such proposed 
rule's effective date.\208\
---------------------------------------------------------------------------

    \207\ See, e.g., ICI Letter; ISS Letter; Glass Lewis Letter I.
    \208\ See Letter of Glass Lewis & Co. (June 3, 2011).
---------------------------------------------------------------------------

    We agree with commenters that a longer compliance period is 
appropriate to provide reporting persons with a sufficient transition 
period to implement the changes that would be needed to record and 
report the information required by amended Form N-PX. We similarly 
provided a period between the effective date and the beginning of 
required compliance when we adopted proxy vote reporting requirements 
for funds.\209\ We are therefore proposing that, if the amendments are 
effective six months before June 30, the first reports on amended Form 
N-PX would be required to be filed by the August 31 that follows the 
rule's effective date. For a fund, the first report would disclose 
votes occurring at least six months after the effective date in 
conformance with the amended form, while applicable votes occurring 
before this period could be reported in conformance with current form 
requirements. A manager's requirement to report votes would begin six 
months after the effective date, since managers are not currently 
subject to Form N-PX reporting requirements. For example, if the 
amendments become effective on September 1, 2022, reporting persons 
would be required to report votes occurring between March 1, 2023 and 
June 30, 2023 in compliance with the amended form and include those 
votes in a report filed by August 31, 2023.
---------------------------------------------------------------------------

    \209\ See Form N-PX Adopting Release, supra footnote 7, at 
Section III.
---------------------------------------------------------------------------

    If the amendments are not effective six months before June 30, 
funds and managers would be required to file their first reports on 
amended Form N-PX by August 31 of the first complete reporting 
timeframe following the effective date of the proposed rule. As with 
the prior compliance date alternative, the first reports would be 
required to disclose votes occurring six months after the effective 
date of the amendments and thereafter in conformance with the amended 
form. That is, if the proposed rule takes effect on February 1, 2022, 
the first reports on amended Form N-PX would be due on August 31, 2023. 
For a fund, the first report would cover the reporting period of July 
1, 2022 through June 30, 2023, with votes occurring between August 1, 
2022 and June 30, 2023 reported in conformance with the amended form. 
For a manager, the first report would cover votes occurring between 
August 1, 2022 and June 30, 2023.
    We believe that, under either alternative, the initial reporting 
period would allow reporting persons and their third-party service 
providers additional time to develop or modify the necessary systems in 
order to record and report information on amended Form N-PX.
    We are proposing to require funds to comply with the amendments to 
Form N-PX at the same time as managers. This also allows funds 
additional time to implement applicable new Form N-PX requirements in 
the current proposal, including structured data reporting requirements, 
new quantification requirements, and new requirements to identify proxy 
voting matters and proxy voting categories. The proposed compliance 
date also is intended to provide a uniform mechanism of reporting votes 
at meetings that occur during the first reporting timeframe after the 
effective date of the proposed rule, because funds would be permitted 
to report say-on-pay votes for managers. As is currently the case, 
funds would be required to comply with current Form N-PX requirements 
until the end of the compliance period.
    We request comment on the proposed compliance dates, and in 
particular, on the following issues:
    89. Would the proposed compliance dates provide adequate time for 
managers that would be required to file Form N-PX for the first time 
and for funds that would be required to comply with the proposed 
amendments to Form N-PX? What, if any, implementation issues would 
managers and funds encounter in complying with the proposed rule and 
form amendments, and how should we address those issues (e.g., permit 
delayed filing for the first full reporting period after the rule is 
enacted)?
    90. Should we provide different compliance dates for managers or 
funds to comply with certain provisions of the proposal? For example, 
should the compliance date for structured data reporting differ from 
the compliance date for other amendments to Form N-PX?

J. Transition Rules for Managers

    We are proposing, as we did in the 2010 proposal, transition rules 
that govern the timing of a manager's Form N-PX filing obligations 
whenever the manager enters and exits from the obligation to file Form 
13F reports.\210\ In particular, the proposal would not require a 
manager to file a Form N-PX report for the 12-month period ending June 
30 of the calendar year in which the manager's initial filing on Form 
13F is due.\211\ Instead, the manager would be required to file a 
report on Form N-PX for the period ending June 30 for the calendar year 
following the manager's initial filing on Form 13F. For example, assume 
that a manager does not meet the $100 million threshold test on the 
last trading day of any month in 2023 but does meet the $100 million 
threshold test on the last trading day of at least one month in 2024. 
As a result, under the rules that currently apply to Form 13F, the 
manager would be required to file a Form 13F report no later than 
February 15, 2025, for the period ending December 31, 2024.\212\ 
Additionally, under proposed rule 14Ad-1(b), the manager would be 
required to file a Form N-PX report no later than August 31, 2026, for 
the 12-month period from July 1, 2025, through June 30, 2026.\213\ The 
following chart

[[Page 57501]]

illustrates the timing of the entrance of a manager to its obligation, 
under the proposed rule, to file Form N-PX.
---------------------------------------------------------------------------

    \210\ For commenters supporting the transition rule, see ABA 
Letter; Fidelity Letter.
    \211\ Proposed Rule 14Ad-1(b); General Instruction F to proposed 
Form N-PX. For this purpose, an ``initial filing'' on Form 13F means 
any quarterly filing on Form 13F if no filing on Form 13F was 
required for the immediately preceding calendared quarter. Id.
    \212\ Currently, under rule 13f-1, the obligation to file Form 
13F arises when a manager exercises investment discretion over 
accounts holding at least $100 million in section 13(f) securities 
as of the ``last trading day of any month of any calendar year.'' 
However, the manager's obligation to file Form 13F commences with 
the report for December 31 of that year, which is required to be 
filed within 45 days after December 31. Rule 13f-1(a)(1); General 
Instruction 1 to Form 13F. See rule 0-3 under the Exchange Act [17 
CFR 240.0-3].
    \213\ Proposed Rule 14Ad-1(b); General Instruction F to proposed 
Form N-PX.

                                            Initial Form N-PX Filing
----------------------------------------------------------------------------------------------------------------
     Date filer exceeds reporting       First Form 13F filing    First proxy reporting
              threshold                          due                     period            First Form N-PX due
----------------------------------------------------------------------------------------------------------------
Mar. 31, 2023........................  Feb. 15, 2024..........  July 1, 2024-June 30,    Aug. 31, 2025.
                                                                 2025.
Dec. 31, 2023........................  Feb. 15, 2024..........  July 1, 2024-June 30,    Aug. 31, 2025.
                                                                 2025.
Jan. 31, 2024........................  Feb. 15, 2025..........  July 1, 2025-June 30,    Aug. 31, 2026.
                                                                 2026.
----------------------------------------------------------------------------------------------------------------

    In addition we are proposing, as we did in the 2010 Proposing 
Release, to not require a manager to file a report on Form N-PX with 
respect to any shareholder vote at a meeting that occurs after 
September 30 of the calendar year in which the manager's final filing 
on Form 13F is due.\214\ Instead, the manager would be required to file 
a report on Form N-PX for the period July 1 through September 30 of the 
calendar year in which the manager's final filing on Form 13F is due. 
This short-period Form N-PX filing would be due no later than March 1 
of the immediately following calendar year.\215\ A manager's obligation 
to file Form 13F reports always terminates with the September 30 
report, and the transition rule we are proposing conforms the ending 
date for reporting say-on-pay votes with the ending date for Form 13F 
reporting.\216\ The proposed February 28 due date would provide a two-
month period for filing after December 31, when the manager's Form 13F 
filing status would be conclusively determined for the coming 
year.\217\
---------------------------------------------------------------------------

    \214\ Proposed Rule 14Ad-1(c); General Instruction F to proposed 
Form N-PX. For this purpose, a ``final filing'' on Form 13F means 
any quarterly filing on Form 13F if no filing on Form 13F is 
required for the immediately subsequent calendar quarter. Id.
    \215\ Proposed Rule 14Ad-1(c); General Instruction F to proposed 
Form N-PX.
    \216\ See rule 13f-1(a) (manager that meets $100 million 
threshold on last trading day of any month of any calendar year is 
required to file Form 13F for December 31 of that year and the first 
three calendar quarters of the subsequent calendar year).
    \217\ A manager is required to file a report on Form 13F in the 
coming year if it meets the $100 million threshold on the last 
trading day of any month of the current calendar year. As a result, 
in cases where the manager does not meet the threshold in January 
through November, its status will not be determined until December 
31.
---------------------------------------------------------------------------

    For example, assume that a manager ceases to meet the $100 million 
threshold in 2023. In other words, the manager meets the threshold on 
at least one of the last trading days of the months in 2022, but does 
not meet the threshold on any of the last trading days of the months in 
2023. The manager's final report on Form 13F would be filed for the 
quarter ended September 30, 2023. The manager's final report on Form N-
PX would include all say-on-pay votes cast during the period from July 
1, 2023, through September 30, 2023, and would be required to be filed 
no later than March 1, 2024. The following chart illustrates the timing 
of the exit of a manager from its obligation to file Form N-PX.

                                             Final Form N-PX Filing
----------------------------------------------------------------------------------------------------------------
                                        Final Form  13F filing   Final Proxy  reporting
 Date filer ceases to meet threshold             due                     period            Final Form  N-PX due
----------------------------------------------------------------------------------------------------------------
Mar. 30, 2023........................  Nov. 14, 2024..........  July 1, 2024-Sept. 30,   Mar. 1, 2025.
                                                                 2024.
Dec. 30, 2023........................  Nov. 14, 2024..........  July 1, 2024-Sept. 30,   Mar. 1, 2025.
                                                                 2024.
Feb. 1, 2024.........................  Nov. 14, 2025..........  July 1, 2025-Sept. 30,   Mar. 1, 2026.
                                                                 2025.
----------------------------------------------------------------------------------------------------------------

    We request comment on the proposed transition rules for managers 
required to file Form N-PX reports and, in particular, on the 
following:
    91. The proposal would not require a manager to file a Form N-PX 
report for the 12-month period ending June 30 of the calendar year in 
which the manager's initial filing on Form 13F is due. Is this 
transition rule appropriate for managers entering the Form 13F and Form 
N-PX filing requirements, or is some other rule more appropriate? For 
example, should we require a manager to report say-on-pay votes for the 
period commencing January 1 (rather than July 1) of the calendar year 
in which the manager's initial filing on Form 13F is due? Instead 
should we require a manager to report say-on-pay votes for the period 
commencing on the first day of the month immediately following the date 
on which it meets the $100 million threshold?
    92. Should we, as proposed, not require a manager to file a Form N-
PX report with respect to any shareholder vote at a meeting that occurs 
after September 30 of the calendar year in which the manager's final 
filing on Form 13F is due? Should we instead require a manager to 
report say-on-pay votes cast at meetings that occur during some period 
after September 30 of the calendar year in which the manager's final 
filing on Form 13F is due? If so, what should that period be?

K. Technical and Conforming Amendments

    We are proposing, as we did in the 2010 Proposing Release, two 
technical and conforming amendments. First, we are proposing to amend 
the heading of Subpart D of Part 249 of the Code of Federal Regulations 
to include new section 14A of the Exchange Act and to indicate that 
Exchange Act reports are filed by both issuers and other persons (e.g., 
managers). We are also proposing amendments to reflect the fact that 
Form N-PX would be an Exchange Act form, as well as an Investment 
Company Act form.\218\
---------------------------------------------------------------------------

    \218\ Rule 30b1-4; 17 CFR 249.326 and 274.129.
---------------------------------------------------------------------------

III. General Request for Comments

    The Commission requests comment on the rule and form amendments 
proposed in this release, whether any changes to our rules or forms are 
necessary or appropriate to implement the objectives of our proposed 
rule and form amendments, and other matters

[[Page 57502]]

that might affect the proposals contained in this release.

IV. Economic Analysis

A. Introduction

    The Commission is proposing to amend Form N-PX to enhance the 
information funds currently report annually about their proxy votes on 
both executive compensation and other matters to make these reports 
more informative and easier to analyze. The proposed amendments to Form 
N-PX would standardize the order in which reporting persons disclose 
information, categorize votes, structure and tag the data reported, and 
make the description of proxy voting issues consistent across multiple 
filings. The proposed amendments would also provide additional 
information about the extent to which a fund votes or loans its shares. 
The Commission is also proposing rule and form amendments that would 
complete the implementation of section 951 of the Dodd-Frank Act by 
requiring a manager to report how it voted proxies relating to 
executive compensation matters. Specifically, the proposed rule and 
form amendments would require managers to report their say-on-pay votes 
annually on Form N-PX.
    The Commission is sensitive to the economic effects, including the 
costs and benefits, imposed by the proposed rule and form amendments. 
At the outset, the Commission notes that, where practicable, we have 
attempted to quantify the costs, benefits, and effects on efficiency, 
competition, and capital formation expected to result from the proposed 
rule and form amendments. In some cases, however, data needed to 
quantify these economic effects are not currently available to the 
Commission or otherwise publicly available. For example, there would be 
costs and benefits associated with managers disclosing information 
about their votes on executive compensation. Those costs and benefits 
may depend on existing levels of voluntary disclosure by managers and 
the extent to which they exercise voting power on behalf of funds 
because such votes are already reported on Form N-PX, and the proposal 
would not require managers to report them separately. Furthermore, 
costs associated with the proposal may depend on existing systems and 
levels of technology expertise within the funds and managers, which 
could differ substantially across reporting persons.\219\
---------------------------------------------------------------------------

    \219\ We do not anticipate any significant costs associated with 
the technical and conforming amendments discussed in supra Section 
II.K.
---------------------------------------------------------------------------

B. Economic Baseline and Affected Parties

    The economic baseline against which we measure the economic effects 
of this rule, including its potential effects on efficiency, 
competition, and capital formation, is the state of the world as it 
currently exists.
1. Funds' Reporting of Proxy Voting Records
    Due to funds' significant voting power and the effects of funds' 
proxy voting practices on the actions of corporate issuers and the 
value of these issuers' securities, investors have an interest in how 
funds vote.\220\ Since 2003, funds have used Form N-PX to report their 
proxy voting records annually for each matter relating to a portfolio 
security considered at any shareholder meeting held during the 
reporting period and with respect to which the fund was entitled to 
vote. In 2020, we estimate that there were approximately 2,087 funds 
with total assets of $29.86 trillion that were required to file reports 
on Form N-PX.\221\
---------------------------------------------------------------------------

    \220\ See, e.g., Stuart Gillan and Laura Starks, ``The Evolution 
of Shareholder Activism in the United States.'' Journal of Applied 
Corporate Finance, Volume 19 (2007).
    \221\ These estimates are based on staff review of Form N-CEN 
filings of management investment companies registered with the 
Commission as of December 2020.
---------------------------------------------------------------------------

    On the current Form N-PX, among other things, a fund discloses 
whether it cast its votes on each proposal, how it voted (e.g., for or 
against the proposal, or abstained), and whether any votes cast were 
for or against management recommendations. Although the form specifies 
the information that each fund must provide, it does not specify the 
format of the disclosure or how funds must present or organize the 
information. Reports on Form N-PX also are not currently filed in a 
machine-readable, or ``structured,'' data language. Investors can 
access a fund's Form N-PX filings online through the EDGAR website. 
Funds also must disclose that their proxy voting records are available 
to investors either upon request or on (or through) their websites, 
with most funds disclosing that this information is available upon 
request.
    Current Form N-PX reports advanced transparency into fund voting. 
However, these reports can be difficult for investors to read and 
analyze. For example, under the current rules, Form N[hyphen]PX is 
routinely filed as a large HTML or plain[hyphen]text (ASCII) file. Many 
funds use automated systems to produce their Form N[hyphen]PX records, 
which is often a simple output from a database maintained by the filer 
that covers meetings, proposals, and votes over a given period. A fund 
may own hundreds of securities, sorted by firm, each of which may have 
ten or more proposals each year. As a result, Form N-PX reports 
disclosing proxy voting records for all securities and proposals can be 
overwhelmingly long.\222\ Investors also may have difficulty finding a 
particular fund's voting history within a single Form N-PX filing. Many 
fund complexes include information about several different funds in a 
single Form N-PX report, given the structure of many funds as series of 
a trust.
---------------------------------------------------------------------------

    \222\ See supra footnote 17.
---------------------------------------------------------------------------

    Funds also often use their own descriptions and abbreviations when 
describing a particular voting matter, which differ from the 
descriptions on an issuer's form of proxy. This can make it difficult 
for investors to identify a particular voting matter or category of 
similar voting matters, and to compare funds' voting records.
    In addition to difficulties to collect and analyze the data 
provided on Form N-PX, certain gaps in the required current disclosure 
may provide an incomplete picture of a fund's proxy voting practices. 
For example, current Form N-PX does not require funds to provide 
information about the potential effects of a fund's securities lending 
activities on its proxy voting. A fund's securities lending activities 
can generate additional income for the fund and its shareholders. 
However, when a fund lends its portfolio securities, it transfers 
incidents of ownership, including proxy voting rights, for the duration 
of the loan. As a result, the fund loses its ability to vote the 
proxies of such securities, unless the securities are recalled, the 
loan is terminated and the securities are returned to the fund before 
the record date for the vote. Current Form N-PX does not provide 
information about this effect.
2. Managers' Reporting of Say-on-Pay Votes
    Section 951 of the Dodd-Frank Act added new section 14A to the 
Exchange Act requiring issuers to provide shareholders with a vote on 
say-on-pay matters, and requires managers to report how they voted on 
those matters. Section 14A generally requires public companies to hold 
non-binding say-on-pay shareholder advisory votes to: (1) Approve the 
compensation of its named executive officers; (2) determine the 
frequency of such votes; and (3) approve ``golden parachute'' 
compensation in connection with a merger or acquisition.

[[Page 57503]]

Section 14A(d) requires that every manager report at least annually how 
it voted on say-on-pay votes, unless such vote is otherwise required to 
be reported publicly. However, there are currently no rules or forms in 
place governing how managers are to comply with their reporting 
obligation under section 14A(d).\223\ Some managers, such as public 
pension funds, do disclose their proxy voting records on their 
websites, although we understand that their disclosures generally do 
not contain quantitative information and presentation practices of 
website reporting vary across managers. Adopting say-on-pay vote 
reporting requirements for managers would complete implementation of 
section 951 of the Dodd-Frank Act.
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    \223\ Although managers are not currently required to file 
reports on Form N-PX, there is a subset of managers that advise 
funds, and each of these funds is required to report its own proxy 
voting record, including say-on-pay votes, annually on Form N-PX.
---------------------------------------------------------------------------

    As of March 31, 2021, 7,550 managers with investment discretion 
over approximately $39.79 trillion in section 13(f) securities.\224\
---------------------------------------------------------------------------

    \224\ These estimates are based on staff review of Form 13F 
filings covering the first quarter of 2021. See also supra footnote 
24 and infra footnote 265.
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C. Costs and Benefits

1. Amendments to Funds' Reporting of Proxy Votes
a. Benefits
    The fund-related proposed amendments to Form N-PX would benefit 
fund investors, other market participants, and other proxy voting data 
users,\225\ by enhancing the information funds currently report about 
their proxy votes and making that information easier to collect and 
analyze. The proposed amendments include the following principal 
elements: (1) Requiring the disclosure of information about the number 
of shares that were voted (or instructed to be voted) and the number of 
shares that a fund loaned and did not recall before the record date for 
the vote; (2) requiring that funds describe a voting matter using the 
description in the issuer's form of proxy; (3) requiring funds to 
categorize voting matters by type; (4) requiring funds to report 
information in a standardized order and provide disclosure separately 
by series of shares; (5) requiring the reporting of information on Form 
N-PX in a custom XML language created specifically for Form N-PX; and 
(6) requiring funds to disclose that their proxy voting records are 
publicly available on (or through) their websites and available upon 
request, free of charge in both cases.
---------------------------------------------------------------------------

    \225\ Other proxy voting data users include, for example, 
regulators such as the Commission, proxy voting advisers, equity 
analysts, corporate issuers, and third-party data providers.
---------------------------------------------------------------------------

    The amendments are designed to facilitate the benefits the 
Commission sought to provide with Form N-PX as articulated in the 
adopting release, namely: (1) To provide better information to 
investors who wish to determine to which fund managers they should 
allocate their capital, and whether their existing fund managers are 
adequately maximizing the value of their shares; (2) to deter fund 
voting decisions that are motivated by considerations of the interests 
of a fund's adviser rather than the interests of the fund's investors; 
and (3) to provide stronger incentives for fund managers to vote their 
proxies carefully.\226\ One academic study suggests that, currently, 
investors may be less inclined to use information provided in Form N-PX 
because the costs of gathering and understanding more granular details 
about the fund's proxy voting exceed the benefits.\227\
---------------------------------------------------------------------------

    \226\ Form N-PX Adopting Release, supra footnote 7. The 
discussion of the interests of funds' investors is not intended to 
describe the interests of any particular investor or investors, but 
instead refers to the fund's investors, considered as a whole.
    \227\ See Jonathon Zytnick, ``Do Mutual Funds Represent 
Individual Investors?'' NYU Law and Economics Research Paper No. 21-
04 (March 7, 2021) at page 4, (finding ``evidence consistent with 
limited attention, in which the costs [to shareholders] of acquiring 
more granular detail about funds, as compared to readily available 
information, exceed the benefits''), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3803690.
---------------------------------------------------------------------------

    We expect that the proposed amendments to the Form N-PX format and 
content would help investors and other data users more easily collect 
and analyze proxy voting information, resulting in lower costs of 
gathering and understanding this information. Specifically, the 
proposed amendments would require funds to use a consistent and 
standardized description, categorize voting matters, report in a custom 
XML data language, and make the form available on the fund's website 
and provide it to investors upon request, free of charge in both cases. 
We also expect these amendments could facilitate comparisons of voting 
patterns across a wide range of funds or within an individual fund over 
time. To the extent that investors choose among funds based on their 
proxy voting policies and records, in addition to other factors such as 
expenses, performance, and investment policies, we expect that 
investors would be able to select funds that suit their preferences 
more efficiently.
    We expect additional benefits to investors and other proxy voting 
data users from accessing the new information on the amended Form N-PX 
regarding the number of shares voted and the number of shares loaned. 
We believe that this additional information could benefit investors and 
other data users by helping them understand the scope of a fund's 
participation in proxy voting activities, the fund's voting 
preferences, and the fund's ability to affect the outcome of 
shareholder votes and influence the governance of corporate issuers. As 
an example, the additional transparency the proposal would provide may 
help assess concerns regarding the extent to which loaned shares could 
be used to sway proxy votes towards outcomes that enhance borrowers' 
private benefits instead of outcomes considered beneficial for funds' 
shareholders.\228\
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    \228\ It may be possible that investors who borrow securities 
primarily to obtain votes could sway proxy votes towards outcomes 
that enhance their private benefits instead of outcomes considered 
beneficial for funds' shareholders. Hu and Black (2008) provide 
examples of situations when the use of borrowed shares may have 
swayed the outcome of a shareholder vote. See Henry Hu and Bernard 
Black, ``Equity and Debt Decoupling and Empty Voting: II Importance 
and Extensions.'' University of Pennsylvania Law Review, Volume 156 
(2008). To date, we are not aware of evidence on whether such voting 
with borrowed shares occurs on a regular basis or whether it has a 
significant effect on proxy voting outcomes.
---------------------------------------------------------------------------

    In light of the increased transparency the amendments would provide 
on fund voting, the proposal may also provide an incentive for fund 
managers to devote additional time and resources to their participation 
in voting proxies, which could lead to an improvement in the 
performance of corporate issuers and enhance shareholder wealth.\229\ 
Academic research provides some evidence that actively voting funds 
help sway shareholder votes toward value-maximizing outcomes when 
voting on the matters such as CEO turnover, executive compensation, 
anti-takeover provisions, and mergers.\230\ We note that

[[Page 57504]]

these potential corporate governance improvements resulting from more 
active participation in proxy voting by funds could have a positive 
externality effect as the benefits would be accessible to all equity 
holders, and not limited to fund investors.
---------------------------------------------------------------------------

    \229\ See Peter Iliev and Michelle Lowry, ``Are Mutual Funds 
Active Voters?'' Review of Financial Studies, Volume 28 Issue 2 
(2015); Vincente Cunat, Mireia Gine, and Maria Guadalupe, ``The Vote 
is Cast: The Effect of Corporate Governance On Shareholder Value.'' 
Journal of Finance, Volume 67 Issue 5 (2012). (finding that passing 
a governance provision is associated with an increase in shareholder 
value, and more so when proposals are sponsored by institutional 
investors).
    \230\ See, e.g., Angela Morgan, Annette Poulsen, Jack Wolf, and 
Tina Yang, ``Mutual Funds as Monitors: Evidence from Mutual Fund 
Voting.'' Journal of Corporate Finance, Volume 17 (2011). (finding 
that, ``in general, mutual funds vote more affirmatively for 
potentially wealth-increasing proposals and funds' voting approval 
rates for these beneficial resolutions are significantly higher than 
those of other investors''). See also Jean Helwege, Vincent 
Intintoli, and Andrew Zhang, ``Voting with Their Feet or Activism? 
Institutional Investors' Impact on CEO Turnover.'' Journal of 
Corporate Finance, Volume 18 Issue 1 (2012) for a review of the 
literature.
---------------------------------------------------------------------------

    In addition, the proposed amendments to the format and content of 
Form N-PX may also help deter fund votes motivated by conflicts of 
interest that compromise the fund's voting on proposals considered 
beneficial for the fund's investors.\231\ For example, some academic 
research finds that mutual funds' proxy voting may be affected by their 
business ties with the portfolio firms where the fund's adviser also 
manages the firm's pension plan, as well as through personal 
connections between fund managers and corporate executives.\232\ More 
generally, fund managers' proxy voting decisions may be driven by their 
economic interest in attracting more business for the fund.\233\ A 
fund's proxy voting also may be affected by the fund manager's personal 
preferences that do not align with the best interests of the fund's 
investors.\234\
---------------------------------------------------------------------------

    \231\ See, e.g., Gerald Davis and Han Kim, ``Business Ties and 
Proxy Voting by Mutual Funds.'' Journal of Financial Economics, 
Volume 85 Issue 2 (2007) (``To the extent that good corporate 
governance leads to higher valuations, fund managers have incentives 
to use their voting power to demand good corporate governance and 
accept (reject) proposals that may benefit (harm) investors. 
However, such fiduciary responsibilities may be compromised if 
mutual fund parents manage employee benefit plans (such as 401(k) 
plans) for their portfolio firms at the behest of management.''). 
According to the article, on average, earnings from 401(k)-related 
business equal 14% of the revenues that mutual fund families earn 
from their equity funds, and such income can represent as much as 
25% of fund family revenues.
    \232\ See, e.g., Ashraf, Jayaraman, and Ryan (2012) find that 
``fund families support management when they have pension ties to 
the firm'' and Cvijanovic, Dasgupta, and Zachariadis (2016) find 
that ``business ties significantly influence pro-management voting 
at the level of individual pairs of fund families and firms.'' 
Butler and Gurun (2012) observe that ``mutual funds whose managers 
are in the same educational network as the firm's CEO are more 
likely to vote against shareholder-initiated proposals to limit 
executive compensation than out-of-network funds are.'' See Rasha 
Ashraf, Narayanan Jayaraman, and Harley Ryan, ``Do Pension-Related 
Business Ties Influence Mutual Fund Proxy Voting? Evidence from 
Shareholder Proposals on Executive Compensation.'' Journal of 
Financial Quantitative Analysis, Volume 47 Issue 03 (2012); Dragana 
Cvijanovic, Amil Dasgupta, and Konstantinos Zachariadis, ``Ties That 
Bind: How Business Connections Affect Mutual Fund Activism'', 
Journal of Finance, Volume 71 Issue 6 (2016); Gerald Davis and Han 
Kim, ``Business Ties and Proxy Voting by Mutual Funds.'' Journal of 
Financial Economics, Volume 85 Issue 2 (2007); and Alexander Butler 
and Umit Gurun, ``Educational Networks, Mutual Fund Voting Patterns, 
and CEO Compensation.'' Review of Financial Studies, Volume 25 Issue 
8 (2012).
    \233\ See, e.g., Lucian Bebchuk, Alma Cohen, and Scott Hirst, 
``The Agency Problems of Institutional Investors.'' Journal of 
Economic Perspectives, Volume 31 Number 3 (2017) (discussing that 
fund managers' proxy voting decisions may be driven by their 
economic interest in attracting more business for the fund rather 
than engaging in generating governance gains at portfolio 
companies.) The Commission has brought at least one enforcement 
action against a registered investment adviser for having proxy 
voting policies that did not address material potential conflicts 
when the adviser selected voting guidelines explicitly favored by 
certain clients to vote all its clients' securities, in order to 
improve the adviser's ranking in a third-party proxy voting survey. 
See, In the Matter of INTECH Investment Management LLC, Investment 
Advisers Act Release No. 2872 (May 7, 2009) (settled order).
    \234\ See, e.g., Paul Mahoney and Julia Mahoney, ``The New 
Separation of Ownership and Control: Institutional Investors and 
ESG.'' Columbia Business Law Review, Volume 2 Number 2 (2021).
---------------------------------------------------------------------------

    To the extent that the increased transparency about fund's proxy 
votes, resulting from the proposed amendments, would provide an 
incentive for fund managers to focus more on shareholder value 
maximization, this could lead to an improvement in the performance of 
corporate issuers and enhance shareholder value. We note that assets 
held in funds account for approximately 30% of the market 
capitalization of all publicly traded U.S. corporations as of year-end 
2020, and therefore funds have the ability to exercise a considerable 
amount of influence in proxy votes which could affect the value of 
these corporations.\235\
---------------------------------------------------------------------------

    \235\ ICI 2020 Fact Book, supra footnote 5, Figure 2.7.
---------------------------------------------------------------------------

b. Costs
    The proposed amendments to Form N-PX would lead to some additional 
costs for funds. Any portion of these costs that is not borne by a 
fund's adviser or other sponsor would ultimately be borne by the fund's 
shareholders. Direct costs for funds would consist of both internal 
costs (for compliance attorneys and other non-legal staff of a fund, 
such as computer programmers, to prepare and review the required 
disclosure) and external costs (such as any costs associated with 
third-party service providers to collect and report the information 
disclosed in Form N-PX).\236\
---------------------------------------------------------------------------

    \236\ Based on the results of the PRA analysis provided in Table 
2, it is estimated that the annual direct costs attributable to 
information collection requirements in the proposed amendments for 
funds that hold equity securities would be approximately $6,577 per 
fund, which consists of $6,077 in internal costs and $500 in 
external costs. For funds not holding equity securities, the direct 
costs are not expected to change. For funds of funds, the direct 
costs would comprise internal and external costs and are estimated 
at $414 per fund. These annual direct costs include both ongoing, 
and initial costs, with the latter being amortized over three years.
---------------------------------------------------------------------------

    We anticipate that any additional direct costs associated with the 
proposed amendments aimed at reducing the costs of accessing and 
gathering proxy voting information for investors and other users of the 
data--the requirements to use a custom XML language and to publish 
proxy voting records on the fund's website--would be relatively low 
given that funds already accommodate similar requirements in their 
other reporting and can utilize their existing capabilities for 
preparing and publishing an updated Form N-PX.
    Indirect costs for funds would include the costs associated with 
additional actions that funds may decide to undertake in light of the 
increased transparency of their voting records and practices. To the 
extent that the proposed amendments provide an incentive for fund 
managers to devote additional time and resources to voting proxies, 
this may result in additional expenses for funds, some of which may be 
passed on to funds' investors. Also, as a result of the increased 
scrutiny by investors, a fund may be incentivized to vote against an 
issuer firm's management with whom the fund has business ties. This 
could jeopardize the fund's relationship with the client firm and 
result in lost revenue if the firm decides to relocate their employee 
benefit accounts elsewhere.
    The proposed requirement for funds to disclose the number of shares 
a fund voted and the number of shares the fund loaned and did not 
recall for voting could reduce the fund's proceeds from securities 
lending, which would reduce returns to the fund's investors.\237\ 
Specifically, in light of the increased transparency the amendments 
would provide on funds' securities lending activities, some funds may 
decide to recall their loaned securities to be able to vote the proxies 
of these securities. A change in the fund's lending activity could also 
affect the fund's adviser and its affiliates. For example, some funds 
use securities lending agents that are affiliated with the fund's 
adviser and that are compensated in their role as agent with a share of 
the proceeds generated by the lending program.
---------------------------------------------------------------------------

    \237\ Based on Form N-CEN filings received through May 2021, 67% 
of funds were authorized to engage and 40% participated in lending 
their securities. Funds that lent their securities reported 
aggregate net income from securities lending in the last year of 
$2.663 billion, representing an average of 0.036% of average total 
net assets in the last year.
---------------------------------------------------------------------------

    However, we expect the scope of the possible impact of the proposed 
amendments on funds' securities

[[Page 57505]]

lending practices and income would be limited for the following 
reasons:
     First, according to a survey of institutional investors 
referenced in one academic study, 37.9% of the respondents stated that 
a formal policy on securities lending is part of their proxy voting 
policy, with some institutional investors requiring a total recall of 
shares ahead of proxy voting, while others weigh the lost income from 
securities lending against the benefits of voting on a specific 
proposal.\238\ For funds with such existing securities lending 
policies, we expect no changes to their lending practices as a result 
of the proposed amendments.
---------------------------------------------------------------------------

    \238\ See, e.g., Aggarwal et al. (2015) at page 2314, supra 
footnote 20.
---------------------------------------------------------------------------

     Second, even if some funds decide to recall loaned 
securities ahead of proxy voting, we anticipate that these funds would 
lend their shares again immediately after the vote record date, thus 
resuming the income stream obtained through security lending. This is 
consistent with findings in academic research showing that the supply 
of shares available to lend starts to decrease about 20 days before the 
vote record date and it increases to its pre-event levels immediately 
after the vote record date.\239\ Therefore, we expect that the lost 
income to the funds from recalling their loaned shares to participate 
in proxy voting would be limited to the income from securities lending 
that could have been generated over the recall period.
---------------------------------------------------------------------------

    \239\ See id at page 2316.
---------------------------------------------------------------------------

     Third, we expect that funds would factor income from 
securities lending, among other considerations, into their lending 
decision and recall loaned securities when they expect the value of 
their voting rights would exceed lost income from securities lending. 
This is consistent with findings in academic research showing that the 
recall of shares ahead of the voting record date is sensitive to the 
borrowing fee and that recall is lower if the fee paid by borrowers is 
higher.\240\ Therefore, if, under the proposed amendments, some funds 
decided to recall their loaned shares to be able to participate in 
proxy voting, we anticipate that the fund managers will have determined 
that the benefits to these funds associated with their decision would 
outweigh the potential loss of lending income.
---------------------------------------------------------------------------

    \240\ See id at page 2328.
---------------------------------------------------------------------------

    Since stock loans can be used for many different purposes, 
including short selling and arbitrage and hedge trading strategies, 
changes in funds' securities lending practices could have an impact on 
these activities, which may impose additional costs on market 
participants. However, as discussed earlier, we would expect the 
securities lending supply to be largely unaffected by the proposed 
amendments and, therefore, we would expect other market activities that 
rely on securities lending to be largely unaffected too. If, as a 
result of increased transparency under the proposed amendments, some 
funds decide to recall their loaned shares, we expect the impact of 
this change on other related market activities such as short selling 
and arbitrage trading to be limited for the following reasons:
     As discussed earlier, we would expect the recall to be 
short-term and funds to return to their normal securities lending 
practices immediately after the vote record date. Therefore, we 
anticipate that other market activities that rely on securities lending 
would also return to normal levels after the vote record date.
     Additionally, we expect that the market for securities 
lending has sufficient depth to withstand these short-term recalls by 
some funds ahead the voting record date without experiencing 
significant changes. One academic study shows that the equity lending 
market has a slack in supply with approximately a quarter of a 
corporate issuer's market capitalization typically available for 
lending and less than one-fifth of these shares being on loan.\241\ 
Therefore, we expect that if some funds decided to recall their 
securities to participate in proxy voting, other lenders would step in 
to supply shares for loan on similar terms. This is consistent with 
findings in academic research showing that changes in borrowing fees 
during the recall period tend to be economically small or 
insignificant.\242\
---------------------------------------------------------------------------

    \241\ See id at page 2315.
    \242\ See id at page 2327. See also Susan Christoffersen, 
Cristopher Geczy, David Musto, and Adam Reed, ``Vote Trading and 
Information Aggregation.'' Journal of Finance, Volume 62 Issue 6 
(2007) at page 2912.
---------------------------------------------------------------------------

     The impact on borrowing fees could be more pronounced for 
hard-to-borrow stocks such as stocks with low lendable supply and/or 
high borrowing demand, also known as ``special.'' \243\ If funds 
recalled a significant number of shares of such stocks ahead of the 
vote record date, it may potentially have an impact on the stock 
price.\244\ However, ``special'' stocks are typically associated with 
higher borrowing fees \245\ and, therefore, funds may be more reluctant 
to recall these shares from loans if the income from lending them 
exceeds the benefits of participating in proxy voting. For example, one 
academic study shows that lendable supply of ``special'' stocks changes 
by less than that of the non-special stocks prior to the vote record 
date.\246\ Therefore, we expect that the proposed amendments are 
unlikely to have an impact on securities lending and other related 
market activities for these stocks.
---------------------------------------------------------------------------

    \243\ The Aggarwal et al. (2015) study estimated that such 
special stocks represented about 9% of their considered equity 
lending sample, which covers more than 85% of the securities lending 
market. The study finds that ``special'' stocks have a higher 
average annualized borrowing fee of 429 basis points, compared with 
a fee of 9.3 basis points for the non-special stocks.
    \244\ See, e.g. Jesse Blocher, Adam Reed, and Edward Van Wesep, 
``Connecting Two Markets: An Equilibrium Framework for Shorts, 
Longs, and Stock Loans.'' Journal of Financial Economics, Volume 108 
Issue 2 (2013) (finding that when share loan supply is ``reduced 
around dividend record dates, prices of hard-to-borrow stocks 
increase 1.1% while prices of easy-to-borrow stocks are 
unaffected''). While the study looks at the effect around the 
dividend record date, it is possible that similar results could hold 
around vote record dates.
    \245\ Supra footnote 243.
    \246\ See Aggarwal et al. (2015) at page 2323.
---------------------------------------------------------------------------

2. Amendments To Require Manager Reporting of Say-on-Pay Votes
a. Benefits
    Under the proposal, managers would publicly disclose annually on 
Form N-PX information about their proxy votes relating to say-on-pay 
matters. The information would include a description of say-on-pay 
matters that is consistent with the description on an issuer's form of 
proxy, their standardized classification, the number of shares voted 
and number of shares loaned and not recalled, and how the shares were 
voted by the manager.
    We believe the proposed rule may benefit the securities markets by 
providing access to information about how managers vote on issuers' 
say-on-pay recommendations. As of March 31, 2021, managers that file 
reports on Form 13F exercised investment discretion over approximately 
$39.79 trillion in section 13(f) equity securities. In many cases, fund 
managers also exercise voting power for proxies relating to these 
equity securities. This voting power gives fund managers significant 
ability to affect the outcomes of shareholder votes and influence the 
governance of corporations.
    Recent academic literature shows that the requirement of holding 
say-on-pay votes could have an impact on executive compensation and 
other corporate governance practices for corporate issuers.\247\ The 
proposed rule would

[[Page 57506]]

enable investors to observe how managers exercised their proxy votes 
regarding such matters. To the extent the information contained in say-
on-pay votes is understood and valued by investors,\248\ investors can 
benefit from using this additional information in selecting managers, 
and in determining whether managers are adequately maximizing the value 
of their assets.
---------------------------------------------------------------------------

    \247\ See Peter Iliev and Svetla Vitanova, ``The Effect of the 
Say-on-Pay Vote in the United States.'' Management Science, Volume 
65 (2019); James Cotter, Alan Palmiter and Randall Thomas, ``The 
First Year of Say-on-Pay under Dodd-Frank: An Empirical Analysis and 
Look Forward.'' George Washington Law Review, Volume 81 Issue 3 
(2013).
    \248\ See, e.g., David Larcker, Ronald Schneider, Brian Tayan, 
and Aaron Boyd, ``2015 Investor Survey Deconstructing Proxy 
Statements--What Matters to Investors.'' Stanford University, RR 
Donnelley, and Equilar Report (February 2015) (finding that 58 
percent of shareholders believes that say-on-pay is effective in 
influencing or modifying pay practices).
---------------------------------------------------------------------------

    This information may also help deter votes motivated by conflicts 
of interest and promote accountability of executives who often are in a 
position to shape their own pay arrangements. To the extent that 
executives are sensitive to approval from their institutional 
shareholder base, the adoption of the proposed rule should help align 
the incentives of executives and investors, which would result in 
better corporate governance practices at corporate issuers.
    Public companies currently subject to the Dodd-Frank Act's say-on-
pay vote requirements may also benefit from the transparency provided 
by this rule. Knowing how managers have voted on executive compensation 
matters in the past, and knowing how they voted on say-on-pay matters 
at similar firms or other firms in the same industry, could be useful 
for the companies as they consider their own executive compensation 
practices and policies.
b. Costs
    The proposed rule would lead to some additional direct and indirect 
costs for managers associated with disclosing required information 
about their say-on-pay votes annually on Form N-PX. If a manager 
exercises voting power for a client's securities, the costs to report 
the vote may be passed on to the client. Some of these costs are a 
direct result of section 14A(d)'s statutory mandate for managers to 
report annually how they have voted.\249\
---------------------------------------------------------------------------

    \249\ In the 2010 Proposing Release, no commenter provided 
specific empirical data quantifying costs that may be incurred by a 
reporting person in complying with those proposed amendments.
---------------------------------------------------------------------------

    Direct costs to each manager would include both internal costs (for 
compliance attorneys and other non-legal staff, such as computer 
programmers, to prepare and review the required disclosure) and 
external costs (such as any costs associated with third-party service 
providers to collect and report the information disclosed in Form N-
PX).\250\ We anticipate that costs for managers associated with 
obtaining the information required to be reported by the proposed rule 
would be limited because we believe that many managers are already 
tracking some of these data.
---------------------------------------------------------------------------

    \250\ Based on the results of the PRA analysis provided in Table 
2, it is estimated that the annual direct costs attributable to 
information collection requirements in the proposed amendments for 
managers would be approximately $5,925 per manager, consisting of 
$4,925 in internal costs and $1,000 in external costs. These annual 
direct costs include ongoing as well as initial costs, with the 
latter being amortized over three years.
---------------------------------------------------------------------------

    Indirect costs to managers associated with the proposed amendments 
would be similar to the indirect costs to funds discussed in the prior 
section. More specifically, to the extent that the proposed amendments 
may provide an incentive for managers to devote additional time and 
resources to proxy voting, this may result in additional expenses for 
managers, some of which may be passed on to their clients. Also, an 
increase in scrutiny by investors as a result of increased transparency 
under the proposed amendments may incentivize managers to vote against 
the management of an issuer with which the manager may have a business 
relationship, which could weaken the manager's relationship with the 
issuer firm and result in lost revenue.
    Further, the proposed disclosure requirements for managers could 
create incentives for them to recall their loaned securities to cast 
proxy votes on say-on-pay matters for these securities. This could 
reduce these managers' and their clients' revenues and may have a 
short-term impact on the securities lending and underlying stock 
markets.\251\ However, similar to the impact on funds discussed in the 
prior section, we expect that the scope of the possible impact of the 
proposed amendments on managers' securities lending practices and 
revenues would be limited.
---------------------------------------------------------------------------

    \251\ See supra footnotes 238-240 and accompanying text for the 
discussion related to the effect on securities lending for funds. 
See supra footnotes 241-246 and accompanying text for a discussion 
of the potential effects on underlying markets, which would also 
apply to changes in managers' securities lending activities.
---------------------------------------------------------------------------

    We believe that the costs arising from the proposal to use Form N-
PX to implement section 14A's say-on-pay vote reporting requirements 
for managers would be mitigated by the experience that managers that 
are advisers to funds already have with filing Form N-PX reports on 
behalf of funds. In addition, the proposed move to a custom XML data 
language for Form N-PX is not expected to impose significant costs on 
managers subject to say-on-pay voting requirements, as managers have 
experience filing other EDGAR forms that use similar custom XML data 
languages, such as Form 13F.
    The costs associated with the proposed rule may vary depending on 
existing levels of voluntary disclosure, organizational structure, and 
investment objectives of each manager. For example, the cost of 
compliance with the proposed rule is likely to be lower for managers 
that exercise voting power on behalf of funds because such votes are 
already reported on Form N-PX, and the proposal would not require 
managers to separately report say-on-pay votes cast on behalf of funds 
in compliance with the joint reporting provisions. Also, the costs are 
likely to be lower for managers who already voluntarily track and 
disclose some of the data the proposed rule would require.

D. Effects on Efficiency, Competition, and Capital Formation

    In this section we consider whether the proposed rule and form 
amendments would promote efficiency, competition, and capital 
formation.
1. Amendments to Funds' Reporting of Proxy Votes
    The proposed amendments to Form N-PX would provide investors with 
greater access to information regarding the proxy voting decisions of 
the funds they invest in. This could help investors make better 
informed investment decisions when they want to take into account 
funds' voting records, which could promote more efficient allocation of 
capital by investors to funds.
    The amendments would also make it easier for investors and other 
proxy voting data users to compare and evaluate proxy voting records 
across a wide variety of funds. This may improve competition among 
funds, as funds may seek to differentiate themselves based on their 
voting records. This could further promote a more efficient allocation 
of capital by investors among competing funds.
    Further, as proxy voting information becomes easier to gather and 
analyze, data-collecting service providers could face an increased 
competitive pressure to improve and develop new tools and methodologies 
and/or reduce their service fees.
    Finally, we do not anticipate any significant effects of the 
proposed amendments on capital formation.

[[Page 57507]]

2. Amendments To Require Manager Reporting of Say-on-Pay Votes
    Because the proposed rule applies equally to all managers that are 
required to file reports under section 13(f) of the Exchange Act, we do 
not anticipate that any competitive disadvantages would be created. To 
the contrary, we anticipate that the proposed rule may encourage 
competition by raising awareness about manager voting on say-on-pay 
matters and may facilitate differentiation among managers.
    The proposed amendments to require manager reporting of say-on-pay 
votes could promote more efficient allocation of capital to managers. 
The proposed amendments could enable investors to obtain managers' 
proxy voting information which could help investors allocate assets to 
managers who cast proxy votes that are more consistent with investors' 
preference for voting on executive compensation matters.
    Finally, we do not anticipate any significant effects of the 
amendments on capital formation.

E. Reasonable Alternatives

1. Scope of Managers' Say-on-Pay Reporting Obligations
    We considered as an alternative whether to more closely align 
managers' reporting requirements on Form N-PX with their reporting 
requirements on Form 13F by adding a de minimis exception. Filers on 
Form 13F are permitted to exclude positions when the positions have a 
dollar value of less than $200,000 and consist of fewer than 10,000 
shares. Several commenters on the 2010 proposal suggested that we 
include a de minimis exception, with one suggesting that not doing so 
would reduce the value of the exception to Form 13F reporting and a 
different commenter suggesting that this could permit their positions 
to be front-run.\252\
---------------------------------------------------------------------------

    \252\ Intel Letter (suggesting that this would reduce the value 
of the Form 13F exception); Seward Letter (front-running). See also 
ABA Letter (general support for de minimis exception); Barnard 
Letter (same).
---------------------------------------------------------------------------

    The benefits of say-on-pay vote reporting to managers' clients and 
to other investors, as discussed above, do not appear to be limited to 
votes of a certain size. We also believe that the cost savings of a de 
minimis exception would be minimal. To the extent that a filing could 
reveal information about a filer's trading strategy that would permit 
it to be front-run, we believe that the instructions for requesting 
confidential treatment address this concern.
    We also considered as an alternative whether to reduce the burden 
on managers who have a stated practice of not voting shares, for 
instance by reducing their reporting obligations or not requiring them 
to make a filing at all. While this approach would reduce costs for 
relevant managers, it may limit the ability of investors to understand 
fully how managers exercise their voting power, including by 
determining not to vote shares.
    Another alternative we considered was allowing managers to not file 
on Form N-PX when they did not exercise voting power over securities 
that held say-on-pay votes during the reporting period. We do not 
believe this alternative would substantially reduce costs for relevant 
managers relative to the proposal because the proposal only requires 
these managers to state in a Form N-PX filing that they have no votes 
to report. Moreover, we believe that requiring all managers to make a 
filing would permit both Commission staff and investors to identify 
more easily managers who may have missed a filing obligation. Not 
requiring all managers to make a filing could reduce the usefulness of 
Form N-PX filings because investors would not necessarily understand 
whether a manager did not make a filing because it did not exercise 
voting power or because it simply neglected to file the form.
2. Amendments to Proxy Voting Information Reported on Form N-PX
    We are proposing changes to Form N-PX that would require disclosure 
of information about the number of shares that were voted (or, if not 
known, the number of shares that were instructed to be cast), as well 
as disclosure of the number of shares the reporting person loaned and 
did not recall.
    We considered proposing a requirement to disclose the number of 
shares voted (or instructed to be cast) and not proposing the 
requirement to disclose the number of shares the reporting person 
loaned and did not recall for these votes. This approach would provide 
information to understand split votes, but may have limited utility 
otherwise. Specifically, this approach would not provide information to 
help investors understand the full extent to which a reporting person 
is voting shares. While the alternative approach would reduce reporting 
burdens for some funds and managers, it would also have fewer benefits 
for investors such as transparency into how a reporting person's 
securities lending affects its proxy voting.\253\
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    \253\ See supra Section II.C.3.b. for detailed discussion.
---------------------------------------------------------------------------

3. Amendments to the Time of Reporting on Form N-PX or Placement of 
Funds' Voting Records
    As an alternative to maintaining the current timeline for filing 
reports on Form N-PX, we considered requiring funds or managers to 
report relevant proxy votes more frequently, such as on a semiannual, 
quarterly, or monthly basis, or shortly after a given vote is held. We 
also considered maintaining the current annual reporting requirement, 
but requiring reporting persons to file their reports more quickly 
(e.g., by the end of July, rather than by the end of August). In 
general, these alternatives would provide investors and other data 
users with more timely information about how a fund or manager votes.
    A semiannual reporting requirement could be incorporated into 
funds' current reporting of annual and semiannual shareholder reports 
on Form N-CSR. The Commission proposed a similar approach to requiring 
disclosure of funds' proxy voting records in 2002.\254\ At that time, 
some commenters raised concern about the burdens of such an approach 
for fund complexes with staggered fiscal year ends, as these fund 
complexes could be required to file reports on Form N-CSR with complete 
proxy voting records as many as twelve times per year.\255\ An approach 
to requiring more frequent reporting of proxy voting records that is 
tied to funds' fiscal year ends would likely create administrative 
complexity for many fund complexes and would increase costs associated 
with filing proxy voting information more frequently.
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    \254\ See Disclosure of Proxy Voting Policies and Proxy Voting 
Records by Registered Management Investment Companies, Investment 
Company Act File No. 25739 (Sept. 20, 2002).
    \255\ See Form N-PX Adopting Release, supra footnote 7, at 
paragraph accompanying n.39.
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    As for a semiannual or quarterly reporting requirement on Form N-PX 
that is based on the calendar year, either of these approaches may not 
significantly enhance the timeliness of voting information in many 
cases because most corporate issuers hold proxy votes within the few 
months leading up to June 30, which is the end of the current Form N-PX 
annual reporting period. As a result, if we required semiannual or 
quarterly reporting of Form N-PX, most votes would likely be in the 
reporting person's report for the first half of the year (for 
semiannual reports) or for the second calendar quarter (for quarterly 
reports). A semiannual or quarterly reporting requirement would also

[[Page 57508]]

increase reporting costs, as reporting persons would be required to 
file either two or four Form N-PX reports per year rather than one 
report per year.
    A requirement to report monthly or shortly after each proxy vote is 
held would provide voting information much more quickly to investors 
and this could provide certain benefits. For example, timelier public 
reporting of funds' proxy votes has the potential to facilitate fund 
shareholders' ability to monitor their funds' involvement in the 
governance activities of portfolio companies, including within a single 
proxy season.\256\ We currently are not proposing these alternative 
approaches, however, because we do not have evidence that most fund 
shareholders generally are interested in analyzing votes on a monthly 
basis or shortly after they are held rather than focusing on a 
reporting person's voting record more holistically. Also, these 
alternative approaches would require reporting persons to disclose a 
position in a security before disclosure of the position is required on 
Form 13F or Form N-PORT, increasing the potential for disclosure of 
sensitive information that competitors could use to front-run or 
reverse engineer investing strategies. In addition, we would expect 
both alternative approaches to increase costs associated with reporting 
proxy voting information more frequently.
---------------------------------------------------------------------------

    \256\ See supra footnote 191 and accompanying text.
---------------------------------------------------------------------------

    Shortening the timeline for filing annual Form N-PX reports, which 
is currently about two months after the end of the reporting period, 
would marginally improve the timeliness of the reported information. 
However, shortening the filing timeline by more than a few weeks would 
increase the possibility of a reporting person being required to 
disclose a vote on a security before otherwise being required to 
disclose a position in that security on Form 13F or Form N-PORT. As a 
result, this approach could to some extent increase the potential for 
disclosure of sensitive information that competitors could use to 
front-run or reverse engineer investing strategies.

F. Request for Comment

    We request comment on all aspects of our economic analysis, 
including the potential costs and benefits of the proposed amendments 
and alternatives thereto, and whether the amendments, if we were to 
adopt them, would promote efficiency, competition, and capital 
formation. In addition, we request comments on our selection of data 
sources, empirical methodology, and the assumptions we have made 
throughout the analysis. Commenters are requested to provide empirical 
data, estimation methodologies, and other factual support for their 
views, in particular, on costs and benefits estimates. In addition, we 
request comment on:
    93. To what extent would the proposed amendments affect funds' or 
managers' securities lending and have an impact on short-selling and 
arbitrage trading activities? What additional materials and data should 
we consider for estimating these effects?
    94. Are we correct to assume that the costs associated with the use 
of a custom XML language for preparing Form N-PX would be minimal for 
funds and managers? What would the impact of these costs be for small 
reporting persons?
    95. We considered requiring funds to report proxy votes 
semiannually, quarterly, or shortly after the vote is held. What are 
the costs and benefits of requiring funds to report proxy votes 
semiannually, quarterly, monthly, or shortly after the vote is held? 
Are we correct to assume that investors and other users of Form N-PX 
data generally are interested in analyzing a reporting person's voting 
record more holistically rather than focusing on individual votes held 
during time horizons shorter than one year and therefore likely would 
derive little additional benefit from this increased reporting 
frequency?

V. Paperwork Reduction Act

    Certain provisions of the proposed rules and form amendments 
contain ``collection of information'' requirements within the meaning 
of the Paperwork Reduction Act of 1995 (``PRA'').\257\ We are 
submitting the proposed collections of information to the Office of 
Management and Budget (``OMB'') for review in accordance with the 
PRA.\258\ The title for the collection of information is: ``Form N-PX--
Annual Report of Proxy Voting Record'' (OMB Control No. 3235-
0582).\259\ An agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a currently valid OMB control number.
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    \257\ 44 U.S.C. 3501 et seq.
    \258\ 44 U.S.C. 3507(d); 5 CFR 1320.11.
    \259\ The title for the collection of information relating to 
Form N-PX would be renamed from ``Form N-PX--Annual Report of Proxy 
Voting Record of Registered Management Investment Companies.''
---------------------------------------------------------------------------

    Section 14A(d) of the Exchange Act requires that every manager 
subject to section 13(f) of the Exchange Act report at least annually 
how it voted on say-on-pay votes, unless such vote is otherwise 
required to be reported publicly by rule or regulation of the 
Commission. To implement section 14A(d), we are proposing new rule 
14Ad-1 under the Exchange Act, which would require managers to file 
their record of say-on-pay votes with the Commission annually on Form 
N-PX.\260\ We are also proposing to amend Form N-PX, which was adopted 
pursuant to section 30 of the Investment Company Act and is currently 
used by funds to file their complete proxy voting records with the 
Commission, to accommodate the new filings by managers and to enhance 
the information funds provide on their proxy votes.\261\ In addition, 
we propose to amend Forms N-1A, N-2, and N-3 to disclose that their 
proxy voting records are available on (or through) their websites. 
Although the website availability requirement would be located in the 
relevant registration form, the Commission is reflecting the burden for 
these requirements in the burden estimate for Form N-PX--Annual Report 
of Proxy Voting Record, and not in the burden for Forms N-1A, N-2, or 
N-3.
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    \260\ For purposes of the PRA analysis, the burden associated 
with the requirements of proposed rule 14Ad-1 is included in the 
collection of information requirements of Form N-PX.
    \261\ 15 U.S.C. 80a-29.
---------------------------------------------------------------------------

    Form N-PX, including the amendments, contains collection of 
information requirements. Compliance with the disclosure requirements 
of the form is mandatory. Responses to the disclosure requirements will 
not be kept confidential unless granted confidential treatment.\262\
---------------------------------------------------------------------------

    \262\ See Section II.F supra.
---------------------------------------------------------------------------

    The Commission estimates that there are approximately 2,087 funds 
registered with the Commission.\263\ These registrants represent 
approximately 11,619 fund portfolios that are required to file Form N-
PX reports. The 11,619 portfolios are composed of approximately 7,064 
portfolios that do or may hold equity securities, 3,188 portfolios 
holding no equity securities, and 1,367 portfolios holding fund 
securities (i.e., fund of funds).\264\ In addition, the Commission 
estimates that there are approximately

[[Page 57509]]

7,550 managers required to file Form 13F reports with the Commission, 
which would be required to file Form N-PX reports under the 
proposal.\265\
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    \263\ The estimate of 2,087 funds is based on staff review of 
Form N-CEN filings of management investment companies registered 
with the Commission as of December 2020.
    \264\ The Commission staff estimates that there are 
approximately 6,301 portfolios that invest primarily in equity 
securities, 763 ``hybrid'' portfolios that may hold some equity 
securities (6,301 + 763 = 7,064), 2,848 bond portfolios that hold no 
equity securities and 340 money market fund portfolios (2,848 + 340 
= 3,188), and 1,367 funds of funds, for a total of 11,619 portfolios 
required to file Form N-PX reports. See ICI 2021 Fact Book, supra 
footnote 5, at 214-221.
    \265\ The estimate of 7,550 filers is based on the number of 
managers who made Form 13F-HR or Form 13F-NT filings covering the 
first quarter of 2021. Form 13F-NT filers report their holdings on 
the Form 13F-HR of a different filer; while certain of those filers 
may be eligible to use the joint reporting provisions of Form N-PX, 
we have assumed for the purpose of this analysis that they will file 
their own reports on Form N-PX.
---------------------------------------------------------------------------

    The tables below summarize the currently approved Form N-PX burden 
estimates and our initial and ongoing annual burden estimates 
associated with the proposed amendments, including proposed 
requirements to identify proxy matters using the language of the 
issuer's form of proxy, categorize proxy votes, provide quantitative 
information related to shares voted (or instructed to be voted) and 
shares the fund loaned and did not recall, follow specific formatting 
and presentation instructions, file Form N-PX using a custom XML 
language, and make proxy voting records available on (or through) fund 
websites.\266\
---------------------------------------------------------------------------

    \266\ The estimates differ from the estimates in the 2010 
Proposing Release for a variety of reasons, including that our 
current proposal differs from the 2010 proposal in several ways and 
the burden estimates of current Form N-PX have changed to some 
extent since 2010. We are further updating our PRA estimates based 
on our current estimates of the number of funds required to file 
Form N-PX.
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BILLING CODE 8011-01-P
[GRAPHIC] [TIFF OMITTED] TP15OC21.000

[[Page 57510]]

[GRAPHIC] [TIFF OMITTED] TP15OC21.001

[[Page 57511]]

[GRAPHIC] [TIFF OMITTED] TP15OC21.002

BILLING CODE 8011-01-C
    Some commenters suggested that the burdens of the 2010 proposal on 
funds and managers would be greater than the Commission's estimates at 
that time, although none submitted quantitative estimates of a higher 
burden.\267\ We also received a comment letter in connection with the 
Proxy Mechanics Concept Release regarding the estimated average burden 
hours per response on current Form N-PX, in which the commenter 
indicated that it believed the then-current PRA burden estimate 
understated the burden of an investment company's Form N-PX reporting 
obligations.\268\ We are updating our estimates of the PRA burden 
associated with Form N-PX to reflect our proposed amendments and have 
taken commenters' feedback into account when developing these 
estimates.
---------------------------------------------------------------------------

    \267\ Brown Letter; Fidelity Letter; Glass Lewis Letter I 
(suggesting that the time and expense to provide disclosure 
regarding shared voting authority would be greater than estimated); 
ICI Letter (suggesting that the preparation, filing, and 
recordkeeping activities associated with the proposed Form N-PX 
amendments in 2010 would involve more than 1.5 hours of review by a 
compliance attorney); ISS Letter; Reiland Letter.
    \268\ See BlackRock Letter on Concept Release (stating that the 
then-estimated PRA burden of 9.6 hours ``grossly understates'' the 
time and expense required for an investment company to complete Form 
N-PX); Memorandum from the Division of Investment Management 
regarding November 29, 2010 telephone call with BlackRock, Inc., 
representatives (November 30, 2010), available at http://www.sec.gov/comments/s7-30-10/s73010-33.pdf. Based on the staff's 
subsequent conversation with the commenter, we believe that the 
burden estimates of the current form requirements in this release 
are appropriate, recognizing that the burden estimates are on a per 
portfolio basis, rather than a per filing basis, and that Form N-PX 
filings often contain multiple portfolios.
---------------------------------------------------------------------------

    We estimate that the proposed amendments would result in initial 
and ongoing burdens for funds. For example, we recognize that funds may 
need to make systems and other changes to comply with the proposed 
requirement to file Form N-PX reports in an XML structured data 
language and to categorize proxy voting matters. In addition, we 
understand that the proposed requirement to categorize votes may 
require some manual categorization or review on an ongoing basis. 
Further, while funds should already have information about the number 
of shares they voted (or instructed to be voted), the number of shares 
loaned and not recalled, and the description of the voting matter from 
the issuer's form of proxy, some changes may be needed to report the 
currently available information on Form N-PX.
    In the 2010 proposal, we estimated that each manager required to 
file its record of say-on-pay votes on Form N-PX would have the same 
total internal hours burden and external cost burden as a fund. Our 
revised estimates take into account differences between the 2010 
proposal and our current proposal, as well as that managers will only 
be required to report say-on-pay votes

[[Page 57512]]

whereas funds are required to file their complete voting record. For 
example, we anticipate the proposed categorization requirement would be 
more burdensome for funds, which would be required to categorize each 
proxy vote, than for managers, which would be required to categorize 
only say-on-pay votes. We accordingly estimate that managers would bear 
approximately one-half of the ongoing annual burden borne by funds. We 
also estimate that managers would have larger initial burdens than 
funds because managers do not currently report on Form N-PX. While some 
managers advise funds and have experience with Form N-PX reporting, and 
some managers may otherwise be required to maintain records of their 
proxy voting decisions, we understand some systems or other changes may 
be needed to report information about say-on-pay votes on Form N-PX or 
to rely on the joint reporting provisions.\269\
---------------------------------------------------------------------------

    \269\ See DOL Interpretive Bulletin 2016-01 [29 CFR 2509.2016-
01] (noting the Department of Labor's view that an investment 
manager or other ERISA plan fiduciary would be required to maintain 
accurate records as to proxy voting decisions). Some commenters on 
the 2010 proposal indicated that some changes to recordkeeping and 
reporting systems may be necessary if the Commission were to adopt 
those proposed amendments. See Glass Lewis Letter I; IAA Letter; ISS 
Letter; ABA Letter.
---------------------------------------------------------------------------

    We also estimate that managers would file approximately 194 
amendments to Form N-PX reports as a result of the final adverse 
disposition of a request for confidential treatment or upon expiration 
of confidential treatment.\270\ For purposes of this estimate, we are 
assuming that every manager will file its full record of say-on-pay 
votes on ``voting'' report, and not file a ``notice'' report. In 
practice, because certain managers exercise voting power over the same 
securities as other managers, or exercise voting power over say-on-pay 
votes that funds already report, the number of parties who need to 
separately maintain records and prepare filings may be lower.
---------------------------------------------------------------------------

    \270\ See Confidential Treatment Instructions 6 and 7 to Form N-
PX. In the 2010 proposal, we estimated that approximately 200 
amendments to Form N-PX reports would be filed annually by managers 
as a result of the final adverse disposition of a request for 
confidential treatment or upon expiration of confidential treatment. 
Our current estimate is based on the number of Form 13F amendments 
received by the Commission during each of the four quarters in 2020, 
divided by four. For purposes of this estimate, we are 
conservatively assuming that all 194 amendments filed are related to 
the adverse disposition of a request for confidential treatment or 
the expiration of confidential treatment, and that this results in 
the full burden of a new Form N-PX filing being borne by the 
manager. We do so even though we recognize that Form 13F amendments 
also are filed to correct errors or omissions in a filing that does 
not relate to a request for confidential treatment. Like the 
existing PRA estimate for Form N-PX, our estimate does not allocate 
a separate burden to amendments that merely correct errors or 
omissions in a separate filing. For that reason, and because we 
assume funds would not file confidential treatment-related 
amendments, we are not including a burden estimate for amendments 
filed by funds. See supra Section II.G.
---------------------------------------------------------------------------

    We request comment on whether our estimates are reasonable. 
Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits comments 
to: (1) Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information will have practical 
utility; (2) evaluate the accuracy of the Commission's estimate of the 
burden of the proposed collection of information; (3) determine whether 
there are ways to enhance the quality, utility, and clarity of the 
information to be collected; and (4) determine whether there are ways 
to minimize the burden of the collection of information on those who 
are to respond, including through the use of automated collection 
techniques or other forms of information technology. Persons wishing to 
submit comments on the collection of information requirements of the 
proposed amendments should direct them to the OMB Desk Officer for the 
Securities and Exchange Commission, 
[email protected], and should send a copy to 
Vanessa A. Countryman, Secretary, Securities and Exchange Commission, 
100 F Street NE, Washington, DC 20549-1090, with reference to File No. 
S7-11-21. OMB is required to make a decision concerning the collections 
of information between 30 and 60 days after publication of this 
release; therefore a comment to OMB is best assured of having its full 
effect if OMB receives it within 30 days after publication of this 
release. Requests for materials submitted to OMB by the Commission with 
regard to these collections of information should be in writing, refer 
to File No. S7-11-21, and be submitted to the Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 
20549-2736.

VI. Regulatory Flexibility Act Certification for Managers and Initial 
Regulatory Flexibility Analysis for Funds

A. Regulatory Flexibility Act Certification for Managers

    Pursuant to section 605(b) of the Regulatory Flexibility Act 
(``RFA''), the Commission hereby certifies that proposed rule 14Ad-1 
and the proposed amendments to Form N-PX relating to managers would 
not, if adopted, have a significant economic impact on a substantial 
number of small entities.\271\ The Commission's rule under the Exchange 
Act that defines a ``small business'' and ``small organization'' does 
not explicitly reference managers.\272\ However, rule 0-10 provides 
that the Commission may ``otherwise define'' small entities for 
purposes of a particular rulemaking proceeding. For purposes of the 
proposed amendments relating to Form N-PX reporting requirements for 
managers, the Commission has determined to use the definition of small 
entity under 17 CFR 275.0-7(a) as more appropriate to the functions of 
managers. The Commission believes that the proposed definition would 
help ensure that all persons or entities that might be managers under 
section 13(f) of the Exchange Act will be included within a category 
addressed by the definition. Therefore, for purposes of this rulemaking 
and the RFA, a manager is a small entity if it: (i) Has assets under 
management having a total value of less than $25 million; (ii) did not 
have total assets of $5 million or more on the last day of its most 
recent fiscal year; and (iii) does not control, is not controlled by, 
and is not under common control with another investment adviser that 
has assets under management of $25 million or more, or any person 
(other than a natural person) that had total assets of $5 million or 
more on the last day of its most recent fiscal year.\273\ The 
Commission requests comments on the use of this definition.
---------------------------------------------------------------------------

    \271\ 5 U.S.C. 605(b).
    \272\ 17 CFR 240.0-10 (``rule 0-10'').
    \273\ 17 CFR 275.0-7(a) (``rule 0-7(a)'').
---------------------------------------------------------------------------

    We are proposing that rule 14Ad-1 and associated Form N-PX 
reporting obligations for say-on-pay votes would extend to each person 
that (i) is an ``institutional investment manager'' as defined in the 
Exchange Act; and (ii) is required to file reports under section 13(f) 
of the Exchange Act. Managers are not required to submit reports on 
Form 13F unless they exercise investment discretion with respect to 
accounts holding section 13(f) securities having an aggregate fair 
market value on the last trading day of any month of any calendar year 
of at least $100 million.\274\ Therefore, no small entities for 
purposes of rule 0-10 under the Exchange Act are affected by proposed 
rule 14Ad-1 and the amendments to Form N-PX relating to managers. Thus, 
there would be no significant economic impact on a substantial number 
of small entities associated with these aspects of the

[[Page 57513]]

proposal. The Commission requests comment regarding this certification. 
The Commission requests that commenters describe the nature of any 
impact on small businesses and provide empirical data to support the 
extent of the impact.
---------------------------------------------------------------------------

    \274\ See supra footnote 32.
---------------------------------------------------------------------------

B. Initial Regulatory Flexibility Act Analysis for Funds

    This Initial Regulatory Flexibility Analysis (``IRFA'') has been 
prepared in accordance with section 3 of the RFA.\275\ It relates to 
the Commission's proposed amendments to Form N-PX relating to funds, as 
well as proposed amendments to Forms N-1A, N-2, and N-3.
---------------------------------------------------------------------------

    \275\ 5 U.S.C. 603.
---------------------------------------------------------------------------

1. Reasons for and Objectives of the Proposed Actions
    The Commission is proposing to amend Form N-PX under Investment 
Company Act to enhance the information mutual funds, ETFs, and certain 
other funds currently report annually about their proxy votes and to 
make that information easier to analyze. In addition, we are proposing 
amendments to Forms N-1A, N-2, and N-3 to require these funds to 
disclose that their proxy voting records are publicly available on (or 
through) their websites and available upon request, free of charge in 
both cases.
2. Legal Basis
    The Commission is proposing the rule and form amendments that 
affect funds contained in this document under the authority set forth 
in the Securities Act [15 U.S.C. 77a et seq.], particularly sections 6, 
7, 10, and 19(a) thereof, the Exchange Act, particularly sections 
10(b), 13, 15(d), 23(a), 24, and 36 thereof [15 U.S.C. 78a et seq.], 
the Investment Company Act [15 U.S.C. 80a et seq.], particularly 
sections 8, 30, 31, 38, and 45 thereof.
3. Small Entities Subject to the Rule
    For purposes of Commission rulemaking in connection with the RFA, 
an investment company is a small entity if, together with other 
investment companies in the same group of related investment companies, 
it has net assets of $50 million or less as of the end of its most 
recent fiscal year.\276\ Commission staff estimates that, as of 
December 2020, approximately 31 registered open-end mutual funds, 9 
registered open-end ETFs, and 27 registered closed-end funds 
(collectively, 67 funds) are small entities.
---------------------------------------------------------------------------

    \276\ See 17 CFR 270.0-10(a) [rule 0-10(a) under the Investment 
Company Act] (``rule 0-10'').
---------------------------------------------------------------------------

4. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
    We are proposing to amend Form N-PX, which funds currently use to 
file their complete proxy voting records with the Commission, to 
require reporting in a custom XML language, to require other formatting 
and presentation changes, and to add certain new or modified disclosure 
items.
    We are proposing amendments to Form N-PX that would affect funds 
that are currently required to report on the form, including those that 
are small entities. For instance, we propose to require funds to tie 
the description of the voting matter to the issuer's form of proxy and 
to categorize voting matters by type. In addition, we are proposing to 
require information about the number of shares that were voted (or, if 
not known, the number of shares that were instructed to be cast), as 
well as the number of shares the fund loaned and did not recall. We are 
also proposing to require reporting of information on Form N-PX in a 
structured data language either via a Commission-supplied web-based 
form or as an XML file.
    We are proposing a new section on the cover page of Form N-PX where 
the reporting person would provide information in cases where the form 
is filed as an amendment to a previously filed Form N-PX report. We are 
also requiring that the cover page include information to help users 
identify whether the reporting person is a fund or a manager. We are 
adding a new summary page to Form N-PX, on which a fund would be 
required to provide information about series whose votes are included 
in the report, if applicable.
    For purposes of the PRA analysis, we have estimated that the 
aggregate annual reporting, administrative, and paperwork costs imposed 
by the form amendments on funds will be approximately $29 million.\277\ 
We also estimate aggregate one-time reporting, administrative, and 
paperwork costs of approximately $55 million for funds that hold equity 
securities.\278\
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    \277\ See supra Section V, Table 2.
    \278\ Id.
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5. Duplicative, Overlapping, or Conflicting Federal Rules
    Except as otherwise discussed below, the Commission has not 
identified any Federal rules that duplicate, overlap, or conflict with 
the proposed rule. Currently, funds must file their proxy voting 
records on EDGAR and either disclose that they make those records 
available on their websites or deliver them to investors upon request. 
Under the proposal, funds would disclose that their proxy voting 
records are available on their websites and delivered upon request to 
investors. We acknowledge that filing proxy voting records with the 
Commission, posting them online, and delivering them upon request could 
result in some investors being able to access the same information in 
multiple ways or at multiple times, which could be duplicative. 
However, each of these different requirements would serve a unique 
purpose. We believe it is important for regulatory disclosures to be 
filed with the Commission for oversight and compliance purposes. 
Website posting would provide investors with broad access to this 
information and conforms with evolving investor preferences regarding 
the availability of fund disclosures.\279\ Finally, delivery-upon-
request could be especially important for investors who might not have 
reliable access to the internet or who might prefer paper disclosures.
---------------------------------------------------------------------------

    \279\ See supra footnote 205.
---------------------------------------------------------------------------

6. Significant Alternatives
    The RFA directs us to consider significant alternatives that would 
accomplish our stated objective, while minimizing any significant 
adverse impact on small entities. In connection with the amendments, 
the Commission considered the following alternatives: (i) The 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (ii) the clarification, consolidation, or simplification of 
compliance and reporting requirements under the amendments for small 
entities; (iii) the use of performance rather than design standards; 
and (iv) an exemption from coverage of the amendments, or any part 
thereof, for small entities.
    The Commission believes that, at the present time, special 
compliance or reporting requirements for small entities, or an 
exemption from coverage for small entities, would not be appropriate. 
The proposed amendments are designed to increase transparency about how 
funds vote. Different disclosure requirements for small entities, such 
as reducing the level of proxy voting disclosure for small entities, 
could raise investor protection concerns for investors in small funds 
to the extent they would not have access to the same disclosures as 
investors in large funds. Small funds currently must follow the same 
proxy voting reporting

[[Page 57514]]

requirements as large funds in light of these concerns.
    We have endeavored through the proposed amendments to Form N-PX to 
minimize the regulatory burden, including on small entities, while 
meeting our regulatory objectives. In response to comments on the 2010 
proposal, we have modified the proposed quantitative disclosures in 
Form N-PX to: (1) Clarify the proposed disclosure of the number of 
shares voted; and (2) no longer propose to require disclosure of the 
number of shares the fund was entitled to vote. Reporting persons would 
be able to use a web-based reporting application developed by the 
Commission to generate the reports. We believe that these modifications 
to the approach in the 2010 proposal result in retention of key 
disclosures to help investors understand how a fund votes, while 
reducing the burdens on funds.
    We have endeavored to clarify, consolidate, and simplify the 
proposed requirements applicable to funds, including those that are 
small entities. Finally, we do not consider the use of performance 
rather than design standards to be consistent with our statutory 
mandate of investor protection with respect to reporting of proxy 
voting records.
7. General Request for Comment
    The Commission requests comments regarding this IRFA. We request 
comments on the number of small entities that may be affected by our 
proposed rules and guidelines, and whether the proposed rules and 
guidelines would have any effects not considered in this analysis. We 
request that commenters describe the nature of any effects on small 
entities subject to the rules and forms and provide empirical data to 
support the nature and extent of such effects. We also request comment 
on the proposed compliance burdens and the effect these burdens would 
have on smaller entities.

VII. Consideration of Impact on the Economy

    For purposes of the Small Business Regulatory Enforcement Fairness 
Act of 1996 (``SBREFA''),\280\ the Commission must advise OMB whether a 
proposed regulation constitutes a ``major'' rule. Under SBREFA, a rule 
is considered ``major'' where, if adopted, it results in or is likely 
to result in:
---------------------------------------------------------------------------

    \280\ Public Law 104-121, Title II, 110 Stat. 857 (1996) 
(codified in various sections of 5 U.S.C., 15 U.S.C., and as a note 
to 5 U.S.C. 601).
---------------------------------------------------------------------------

     An annual effect on the economy of $100 million or more;
     A major increase in costs or prices for consumers or 
individual industries; or
     Significant adverse effects on competition, investment, or 
innovation.
    We request comment on whether our proposal would be a ``major 
rule'' for purposes of SBREFA. We solicit comment and empirical data 
on:
     The potential effect on the U.S. economy on an annual 
basis;
     Any potential increase in costs or prices for consumers or 
individual industries; and
     Any potential effect on competition, investment, or 
innovation.
    Commenters are requested to provide empirical data and other 
factual support for their views to the extent possible.

VIII. Statutory Authority

    The Commission is proposing new rule 14Ad-1 pursuant to the 
authority set forth in sections 13, 14A, 23(a), 24, and 36 of the 
Exchange Act [15 U.S.C. 78m, 78n-1, 78w(a), 78x, and 78mm]. The 
Commission is proposing amendments to rule 30b1-4 pursuant to the 
authority set forth in sections 8, 30, 31, 38, and 45 of the Investment 
Company Act [15 U.S.C. 80a-8, 80a-29, 80a-30, 80a-37, and 80a-44]. The 
Commission is proposing amendments to Form N-PX pursuant to the 
authority set forth in sections 13, 14A, 23(a), 24, and 36 of the 
Exchange Act [15 U.S.C. 78m, 78n-1, 78w(a), 78x, and 78mm]; and 
sections 8, 30, 31, 38, and 45 of the Investment Company Act [15 U.S.C. 
80a-8, 80a-29, 80a-30, 80a-37, and 80a-44]. The Commission is proposing 
amendments to Forms N-1A, N-2, and N-3 pursuant to the authority set 
forth in sections 5, 6, 7, 10, 19(a), and 28 of the Securities Act [15 
U.S.C. 77e, 77f, 77g, 77j, 77s(a), and 77z-3], sections 10(b), 13, 
15(d), 23(a), and 36 of the Exchange Act [15 U.S.C. 78j(b), 78m, 
78o(d), 78w(a), and 78mm], and sections 6(c), 8, 24(a), 30, and 38 of 
the Investment Company Act [15 U.S.C. 80a-6(c), 80a-8, 80a-24(a), 80a-
29, and 80a-37]. The Commission is proposing amendments to rule 101 of 
Regulation S-T pursuant to the authority set forth in sections 14A(d), 
23(a), and 35A of the Exchange Act [15 U.S.C. 78n-1, 78w(a), and 78ll]. 
The Commission is proposing to amend the heading of Subpart D of Part 
249 pursuant to the authority set forth in sections 13 and 14A(d) of 
the Exchange Act [15 U.S.C. 78m and 78n-1].

List of Subjects

17 CFR Part 232

    Administrative practice and procedure, Reporting and recordkeeping 
requirements, Securities.

17 CFR Parts 240 and 249

    Reporting and recordkeeping requirements, Securities.

17 CFR Parts 270 and 274

    Investment companies, Reporting and recordkeeping requirements, 
Securities.

Text of Rule and Form Amendments

    For the reasons set out in the preamble, the Commission proposes to 
amend title 17, chapter II, of the Code of Federal Regulations as 
follows:

PART 232--REGULATION S-T--GENERAL RULES AND REGULATIONS FOR 
ELECTRONIC FILINGS

0
1. The general authority citation for part 232 is amended to read as 
follows:

    Authority:  15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s(a), 77z-3, 
77sss(a), 78c(b), 78l, 78m, 78n, 78n-1, 78o(d), 78w(a), 78ll, 80a-
6(c), 80a-8, 80a-29, 80a-30, 80a-37, 7201 et seq.; and 18 U.S.C. 
1350, unless otherwise noted.
* * * * *
0
2. Amend section 232.101 by revising paragraph (a)(1)(iii) to read as 
follows:

Sec.  232.101  Mandated electronic submissions and exceptions.

    (a) * * *
    (1) * * *
    (iii) Statements, reports, and schedules filed with the Commission 
pursuant to sections 13, 14, 14A(d), 15(d), or 16(a) of the Exchange 
Act (15 U.S.C. 78m, 78n, 78n-1(d), 78o(d), and 78p(a)), and proxy 
materials required to be furnished for the information of the 
Commission in connection with annual reports on Form 10-K (Sec.  
249.310 of this chapter), or Form 10-KSB (Sec.  249.310b of this 
chapter) filed pursuant to section 15(d) of the Exchange Act;

    Note 1 to paragraph (a)(1)(iii).  Electronic filers filing 
Schedules 13D and 13G with respect to foreign private issuers should 
include in the submission header all zeroes (i.e., 00-0000000) for 
the IRS tax identification number because the EDGAR system requires 
an IRS number tag to be inserted for the subject company as a 
prerequisite to acceptance of the filing.

    Note 2 to paragraph (a)(1)(iii).  Foreign private issuers must 
file or submit their Form 6-K reports (Sec.  249.306 of this 
chapter) in electronic format, except as otherwise permitted by 
paragraphs (b)(1) and (b)(7) of this section.

* * * * *

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 
1934

0
3. The general authority citation for part 240 continues to read as 
follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 
77eee, 77ggg, 77nnn,

[[Page 57515]]

77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i, 78j, 78j-
1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4, 78o-10, 78p, 78q, 
78q-1, 78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 
80a-37, 80b-3, 80b-4, 80b-11, 7201 et seq., and 8302; 7 U.S.C. 
2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350; Pub. L. 111-203, 
939A, 124 Stat. 1376 (2010); and Pub. L. 112-106, sec. 503 and 602, 
126 Stat. 326 (2012), unless otherwise noted.
* * * * *
0
4. Add section 240.14Ad-1 to read as follows:

Sec.  240.14Ad-1  Report of proxy voting record.

    (a) Subject to paragraphs (b) and (c) of this section, every 
institutional investment manager (as that term is defined in Section 
13(f)(6)(A) of the Act (15 U.S.C. 78m(f)(6)(A))) that is required to 
file reports under Section 13(f) of the Act (15 U.S.C. 78m(f)) must 
file an annual report on Form N-PX (Sec. Sec.  249.326 and 274.129 of 
this chapter) not later than August 31 of each year, for the most 
recent 12-month period ended June 30, containing the institutional 
investment manager's proxy voting record for each shareholder vote 
pursuant to Sections 14A(a) and (b) of the Act (15 U.S.C. 78n-1(a) and 
(b)) with respect to each security over which the manager exercised 
voting power (as defined in paragraph (d) of this section).
    (b) An institutional investment manager is not required to file a 
report on Form N-PX (Sec. Sec.  249.326 and 274.129 of this chapter) 
for the 12-month period ending June 30 of the calendar year in which 
the manager's initial filing on Form 13F (Sec.  249.325 of this 
chapter) is due pursuant to Sec.  240.13f-1 of this part. For purposes 
of this paragraph, ``initial filing'' on Form 13F means any quarterly 
filing on Form 13F if no filing on Form 13F was required for the 
immediately preceding calendar quarter.
    (c) An institutional investment manager is not required to file a 
report on Form N-PX (Sec. Sec.  249.326 and 274.129 of this chapter) 
with respect to any shareholder vote at a meeting that occurs after 
September 30 of the calendar year in which the manager's final filing 
on Form 13F (Sec.  249.325 of this chapter) is due pursuant to Sec.  
240.13f-1 of this chapter. An institutional investment manager is 
required to file a Form N-PX for the period July 1 through September 30 
of the calendar year in which the manager's final filing on Form 13F is 
due pursuant to Sec.  240.13f-1 of this chapter; this filing is 
required to be made not later than March 1 of the immediately following 
calendar year. For purposes of this paragraph, ``final filing'' on Form 
13F means any quarterly filing on Form 13F if no filing on Form 13F is 
required for the immediately subsequent calendar quarter.
    (d) For purposes of this section:
    (1) Voting power means the ability, through any contract, 
arrangement, understanding, or relationship, to vote the security or 
direct the voting of a security, including the ability to determine 
whether to vote the security or to recall a loaned security.
    (2) Exercise of voting power means using voting power to influence 
a voting decision with respect to a security.

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

0
5. The general authority citation for part 249 continues to read as 
follows:

    Authority: 15 U.S.C. 78a et seq. and 7201 et seq.; 12 U.S.C. 
5461 et seq.; and 18 U.S.C. 1350; Sec. 953(b) Pub. L. 111-203, 124 
Stat. 1904; Sec 102(a)(3) Pub. L. 112-106, 126 Stat. 309 (2012), 
Sec. 107 Pub. L. 112-106, 126 Stat. 313 (2012), Sec. 72001 Pub. L. 
114-94, 129 Stat. 1312 (2015, and secs. 2 and 3 Pub. L. 116-222, 134 
Stat. 1063 (2020), unless otherwise noted.
* * * * *

Subpart D--Forms for Annual and Other Reports of Issuers and Other 
Persons Required Under Sections 13, 14A, and 15(d) of the 
Securities Exchange Act of 1934

0
6. Revise the heading for Subpart D to read as set forth above:
0
7. Add Sec.  249.326 to read as follows:

Sec.  249.326  Form N-PX, annual report of proxy voting record.

    This form shall be used by institutional investment managers to 
file an annual report pursuant to Sec.  240.14Ad-1 of this chapter 
containing the manager's proxy voting record.

PART 270--RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940

0
8. The general authority citation for part 270 continues to read as 
follows:

    Authority:  15 U.S.C. 80a-1 et seq., 80a-34(d), 80a-37, 80a-39, 
and Pub. L. 111-203, sec. 939A, 124 Stat. 1376 (2010), unless 
otherwise noted.
* * * * *

Sec.  270.30b1-4  [Amended]

0
9. Amend Sec.  270.30b1-4 by removing the phrase ``Form N-PX (Sec.  
274.129 of this chapter)'' and adding in its place ``Form N-PX 
(Sec. Sec.  249.326 and 274.129 of this chapter)''.

PART 274--FORMS PRESCRIBED UNDER THE INVESTMENT COMPANY ACT OF 1940

0
10. The authority citation for part 274 is revised to read as follows:

    Authority:  15 U.S.C. 77f, 77g, 77h, 77j, 77s, 78c(b), 78l, 78m, 
78n, 78n-1, 78o(d), 80a-8, 80a-24, 80a-26, 80a-29, and Pub L. 111-
203, sec. 939A, 124 Stat. 1376 (2010), unless otherwise noted.

0
11. Amend Form N-1A (referenced in Sec. Sec.  239.15A and 274.11A) by 
revising Item 17(f) and Item 27(d)(5).
    The revisions read as follows:

    Note:  The text of Form N-1A does not, and these amendments will 
not, appear in the Code of Federal Regulations.

FORM N-1A

* * * * *

Item 17. Management of the Fund

* * * * *
    (f) Proxy Voting Policies. Unless the Fund invests exclusively in 
non-voting securities, describe the policies and procedures that the 
Fund uses to determine how to vote proxies relating to portfolio 
securities, including the procedures that the Fund uses when a vote 
presents a conflict between the interests of Fund shareholders, on the 
one hand, and those of the Fund's investment adviser; principal 
underwriter; or any affiliated person of the Fund, its investment 
adviser, or its principal underwriter, on the other. Include any 
policies and procedures of the Fund's investment adviser, or any other 
third party, that the Fund uses, or that are used on the Fund's behalf, 
to determine how to vote proxies relating to portfolio securities. 
Also, state that information regarding how the Fund voted proxies 
relating to portfolio securities during the most recent 12-month period 
ended June 30 is available (1) without charge, upon request, by calling 
a specified toll-free telephone number and, if any, contacting a 
specified email address; (2) on or through the Fund's website at a 
specified internet address; and (3) on the Commission's website at 
http://www.sec.gov.

Instructions

    1. A Fund may satisfy the requirement to provide a description of 
the policies and procedures that it uses to determine how to vote 
proxies relating to portfolio securities by including a copy of the 
policies and procedures themselves.
    2. If a Fund (or financial intermediary through which shares of the 
Fund may be purchased or sold) receives a request for the Fund's proxy 
voting record by

[[Page 57516]]

phone or email, the Fund (or financial intermediary) must send the 
information disclosed in the Fund's most recently filed report on Form 
N-PX in a human-readable format, within three business days of receipt 
of the request, by first-class mail or other means designed to ensure 
equally prompt delivery.
    3. A Fund must make publicly available free of charge the 
information disclosed in the Fund's most recently filed report on Form 
N-PX on or through its website as soon as reasonably practicable after 
filing the report with the Commission. The information disclosed in the 
Fund's most recently filed report on Form N-PX must be in a human-
readable format and remain available on or through the Fund's website 
for as long as the Fund remains subject to the requirements of Rule 
30b1-4 (17 CFR 270.30b1-4).
* * * * *

Item 27. Financial Statements

* * * * *
    (d) Annual and Semiannual Reports. Every annual and semiannual 
report to shareholders required by rule 30e-1 must contain the 
following:
* * * * *
    (5) Statement Regarding Availability of Proxy Voting Record. A 
statement that information regarding how the Fund voted proxies 
relating to portfolio securities during the most recent 12-month period 
ended June 30 is available (i) without charge, upon request, by calling 
a specified toll-free telephone number and, if any, contacting a 
specified email address; (ii) on or through the Fund's website at a 
specified internet address; and (iii) on the Commission's website at 
http://www.sec.gov.

Instructions

    1. If a Fund (or financial intermediary through which shares of the 
Fund may be purchased or sold) receives a request for the Fund's proxy 
voting record by phone or email, the Fund (or financial intermediary) 
must send the information disclosed in the Fund's most recently filed 
report on Form N-PX in a human-readable format, within three business 
days of receipt of the request, by first-class mail or other means 
designed to ensure equally prompt delivery.
    2. A Fund must make publicly available free of charge the 
information disclosed in the Fund's most recently filed report on Form 
N-PX on or through its website as soon as reasonably practicable after 
filing the report with the Commission. The information disclosed in the 
Fund's most recently filed report on Form N-PX must be in a human-
readable format and remain available on or through the Fund's website 
for as long as the Fund remains subject to the requirements of rule 
30b1-4 (17 CFR 270.30b1-4).
* * * * *
0
12. Amend Form N-2 (referenced in Sec. Sec.  239.14 and 274.11a-1) by 
revising Item 18.16, Item 24.6.d, and Item 24.8.
    The revisions read as follows:

    Note: The text of Form N-2 does not, and these amendments will 
not, appear in the Code of Federal Regulations.

FORM N-2

* * * * *

Item 18. Management

* * * * *
    16. Unless the Registrant invests exclusively in non-voting 
securities, describe the policies and procedures that the Registrant 
uses to determine how to vote proxies relating to portfolio securities, 
including the procedures that the Registrant uses when a vote presents 
a conflict between the interests of the Registrant's shareholders, on 
the one hand, and those of the Registrant's investment adviser; 
principal underwriter; or any affiliated person (as defined in Section 
2(a)(3) of the Investment Company Act and the rules thereunder) of the 
Registrant, its investment adviser, or its principal underwriter, on 
the other. Include any policies and procedures of the Registrant's 
investment adviser, or any other third party, that the Registrant uses, 
or that are used on the Registrant's behalf, to determine how to vote 
proxies relating to portfolio securities. Also, state that information 
regarding how the Registrant voted proxies relating to portfolio 
securities during the most recent 12-month period ended June 30 is 
available (i) without charge, upon request, by calling a specified 
toll-free telephone number and, if any, contacting a specified email 
address; (ii) on or through the Registrant's website at a specified 
internet address; and (iii) on the Commission's website at http://www.sec.gov.

Instructions

    1. A Registrant may satisfy the requirement to provide a 
description of the policies and procedures that it uses to determine 
how to vote proxies relating to portfolio securities by including a 
copy of the policies and procedures themselves.
    2. If a Registrant (or financial intermediary through which shares 
of the Registrant may be purchased or sold) receives a request for the 
Registrant's proxy voting record by phone or email, the Registrant (or 
financial intermediary) must send the information disclosed in the 
Registrant's most recently filed report on Form N-PX [17 CFR 274.129] 
in a human-readable format, within 3 business days of receipt of the 
request, by first-class mail or other means designed to ensure equally 
prompt delivery.
    3. A Registrant must make publicly available free of charge the 
information disclosed in the Registrant's most recently filed report on 
Form N-PX on or through its website as soon as reasonably practicable 
after filing the report with the Commission. The information disclosed 
in the Registrant's most recently filed report on Form N-PX must be in 
a human-readable format and remain available on or through the 
Registrant's website for as long as the Registrant remains subject to 
the requirements of Rule 30b1-4 under the Investment Company Act [17 
CFR 270.30b1-4].
* * * * *

Item 24. Financial Statements

* * * * *
    6. Every annual and semiannual report to shareholders required by 
Section 30(e) of the Investment Company Act and Rule 30e-1 thereunder 
shall contain the following information:
* * * * *
    d. A statement that information regarding how the Registrant voted 
proxies relating to portfolio securities during the most recent 12-
month period ended June 30 is available (1) without charge, upon 
request, by calling a specified toll-free telephone number and, if any, 
contacting a specified email address; (2) on or through the 
Registrant's website at a specified internet address; and (3) on the 
Commission's website at http://www.sec.gov.
* * * * *
    8. a. When a Registrant (or financial intermediary through which 
shares of the Registrant may be purchased or sold) receives a request 
for a description of the policies and procedures that the Registrant 
uses to determine how to vote proxies, the Registrant (or financial 
intermediary) must send the information most recently disclosed in 
response to Item 18.16 of this Form or Item 7 of Form N-CSR within 3 
business days of receipt of the request, by first-class mail or other 
means

[[Page 57517]]

designed to ensure equally prompt delivery.
    b. If a Registrant (or financial intermediary through which shares 
of the Registrant may be purchased or sold) receives a request for the 
Registrant's proxy voting record by phone or email, the Registrant (or 
financial intermediary) must send the information disclosed in the 
Registrant's most recently filed report on Form N-PX in a human-
readable format, within 3 business days of receipt of the request, by 
first-class mail or other means designed to ensure equally prompt 
delivery.
    c. A Registrant must make publicly available free of charge the 
information disclosed in the Registrant's most recently filed report on 
Form N-PX on or through its website as soon as reasonably practicable 
after filing the report with the Commission. The information disclosed 
in the Registrant's most recently filed report on Form N-PX must be in 
a human-readable format and remain available on or through the 
Registrant's website for as long as the Registrant remains subject to 
the requirements of Rule 30b1-4 under the Investment Company Act.
* * * * *
0
13. Amend Form N-3 (referenced in Sec. Sec.  239.17a and 274.11b) by 
revising Item 23(f), Item 31.4(d), and Item 31.6.
    The revisions read as follows:

    Note:  The text of Form N-3 does not, and these amendments will 
not, appear in the Code of Federal Regulations.

FORM N-3

* * * * *

Item 23. Management of the Registrant

* * * * *
    (f) Proxy Voting Policies. Unless the Registrant invests 
exclusively in non-voting securities, describe the policies and 
procedures that the Registrant uses to determine how to vote proxies 
relating to portfolio securities, including the procedures that the 
Registrant uses when a vote presents a conflict between the interests 
of investors, on the one hand, and those of the Registrant's investment 
adviser; principal underwriter; or any affiliated person of the 
Registrant, its investment adviser, or its principal underwriter, on 
the other. Include any policies and procedures of the Registrant's 
investment adviser, or any other third party, that the Registrant uses, 
or that are used on the Registrant's behalf, to determine how to vote 
proxies relating to portfolio securities. Also, state that information 
regarding how the Registrant voted proxies relating to portfolio 
securities during the most recent 12-month period ended June 30 is 
available (1) without charge, upon request, by calling a specified 
toll-free telephone number and, if any, contacting a specified email 
address; (2) on or through the Registrant's website at a specified 
internet address; and (3) on the Commission's website at http://www.sec.gov.

Instructions

    1. A Registrant may satisfy the requirement to provide a 
description of the policies and procedures that it uses to determine 
how to vote proxies relating to portfolio securities by including a 
copy of the policies and procedures themselves.
    2. If a Registrant (or financial intermediary through which shares 
of the Registrant may be purchased or sold) receives a request for the 
Registrant's proxy voting record by phone or email, the Registrant (or 
financial intermediary) must send the information disclosed in the 
Registrant's most recently filed report on Form N-PX [17 CFR 274.129] 
in a human-readable format, within three business days of receipt of 
the request, by first-class mail or other means designed to ensure 
equally prompt delivery.
    3. A Registrant must make publicly available free of charge the 
information disclosed in the Registrant's most recently filed report on 
Form N-PX on or through its website as soon as reasonably practicable 
after filing the report with the Commission. The information disclosed 
in the Registrant's most recently filed report on Form N-PX must be in 
a human-readable format and remain available on or through the 
Registrant's website for as long as the Registrant remains subject to 
the requirements of rule 30b1-4 [17 CFR 270.30b1-4].
* * * * *

Item 31. Financial Statements

* * * * *
    4. Every report required by section 30(e) of the 1940 Act and rule 
30e-1 under it [17 CFR 270.30e-1] shall contain the following 
information:
* * * * *
    (d) a statement that information regarding how the Registrant voted 
proxies relating to portfolio securities during the most recent 12-
month period ended June 30 is available (i) without charge, upon 
request, by calling a specified toll-free telephone number and, if any, 
contacting a specified email address; (ii) on or through the 
Registrant's website at a specified internet address; and (iii) on the 
Commission's website at http://www.sec.gov;
* * * * *
    6. (a) When a Registrant (or financial intermediary through which 
units of the Registrant may be purchased or sold) receives a request 
for a description of the policies and procedures that the Registrant 
uses to determine how to vote proxies, the Registrant (or financial 
intermediary) must send the information disclosed in response to Item 
23(f) of this Form, within three business days of receipt of the 
request, by first-class mail or other means designed to ensure equally 
prompt delivery.
    (b) If a Registrant (or financial intermediary through which units 
of the Registrant may be purchased or sold) receives a request for the 
Registrant's proxy voting record by phone or email, the Registrant (or 
financial intermediary) must send the information disclosed in the 
Registrant's most recently filed report on Form N-PX [17 CFR 274.129] 
in a human readable format, within three business days of receipt of 
the request, by first-class mail or other means designed to ensure 
equally prompt delivery.
    (c) A Registrant must make publicly available free of charge the 
information disclosed in the Registrant's most recently filed report on 
Form N-PX on or through its website as soon as reasonably practicable 
after filing the report with the Commission. The information disclosed 
in the Registrant's most recently filed report on Form N-PX must be in 
a human-readable format and remain available on or through the 
Registrant's website for as long as the Registrant remains subject to 
the requirements of rule 30b1-4 under the Investment Company Act [17 
CFR 270.30b1-4].
* * * * *
0
14. The heading of Sec.  274.129 is revised to read as follows:

Sec.  274.129   Form N-PX, annual report of proxy voting record.

* * * * *
0
15. Form N-PX (referenced in Sec. Sec.  249.326 and 274.129) is revised 
to read as follows:

    Note: The text of Form N-PX does not, and these amendments will 
not, appear in the Code of Federal Regulations.

[[Page 57518]]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Washington, DC 20549

FORM N-PX

Annual Report of Proxy Voting Record

General Instructions

A. Rule as to Use of Form N-PX

    Form N-PX is to be used by a registered management investment 
company, other than small business investment company registered on 
Form N-5 (17 CFR 239.24 and 274.5), to file the registered management 
investment company's complete proxy voting record pursuant to Section 
30 of the Investment Company Act of 1940 (``Investment Company Act'') 
and Rule 30b1-4 thereunder (17 CFR 270.30b1-4). Form N-PX also is to be 
used by a person that is required to file reports under Rule 13f-1 
(``Institutional Manager''), to file the Institutional Manager's proxy 
voting record regarding votes pursuant to Sections 14A(a) and (b) of 
the Securities Exchange Act of 1934 (``Exchange Act'') on certain 
executive compensation matters, pursuant to Section 14A(d) of the 
Exchange Act and Rule 14Ad-1 thereunder (17 CFR 240.14Ad-1). Form N-PX 
is to be filed not later than August 31 of each year for the most 
recent 12-month period ended June 30, except in the case of 
Institutional Managers that make initial or final filings on Form 13F 
during the relevant 12-month period as described in General Instruction 
F.

B. Application of General Rules and Regulations

    The General Rules and Regulations under the Investment Company Act 
and the Exchange Act contain certain general requirements that are 
applicable to reporting on any form under those Acts. These general 
requirements should be read and observed carefully in the preparation 
and filing of reports on this form, except that any provision in the 
form or in these instructions is controlling.

C. Joint Reporting Rules

    1. If two or more Institutional Managers, each of which is required 
by Rule 14Ad-1 to file a report on Form N-PX for the reporting period, 
exercised voting power over the same securities on a vote pursuant to 
Section 14A(a) or (b) of the Exchange Act, only one such Institutional 
Manager must include the information regarding that vote in its report 
on Form N-PX.
    2. Two or more Institutional Managers that are affiliated persons, 
as defined in Section 2(a)(3) of the Investment Company Act, may file a 
joint report on a single Form N-PX notwithstanding that such 
Institutional Managers do not exercise voting power over the same 
securities.
    3. An Institutional Manager is not required to report proxy votes 
that are reported on a Form N-PX report that is filed by a Fund.
    4. An Institutional Manager that exercised voting power over any 
security with respect to proxy votes that are reported by another 
Institutional Manager or Managers pursuant to General Instruction C.1 
or C.2, or are reported on a Form N-PX report filed by a Fund, must 
identify each Institutional Manager and Fund reporting on its behalf in 
the manner described in Special Instruction B.2.c. and d.
    5. An Institutional Manager reporting proxy votes on behalf of 
another Institutional Manager pursuant to General Instruction C.1 or 
C.2 must identify any other Institutional Managers on whose behalf the 
filing is made in the manner described in Special Instruction C.2.
    6. A Fund reporting proxy votes that would otherwise be required to 
be reported by an Institutional Manager must identify any Institutional 
Managers on whose behalf the filing is made in the manner described in 
Special Instruction C.2.

D. Signature and Filing of Report

    1. a. For reports filed by a Fund, the report must be signed on 
behalf of the Fund by its principal executive officer or officers. For 
reports filed by Institutional Managers, the report must be signed on 
behalf of the Institutional Manager by an authorized person. Attention 
is directed to Rule 12b-11 under the Exchange Act and Rule 8b-11 under 
the Investment Company Act concerning signatures.
    b. The name and title of each person who signs the report shall be 
typed or printed beneath his or her signature.
    2. A reporting person must file reports on Form N-PX electronically 
using the Commission's Electronic Data Gathering, Analysis, and 
Retrieval (``EDGAR'') system in accordance with Regulation S-T, except 
as provided by the Confidential Treatment Instructions. Consult the 
EDGAR Filer Manual and Appendices for EDGAR filing instructions.

E. Definitions

    As used in this Form N-PX, the terms set out below have the 
following meanings:
    ``Fund'' means a registered management investment company (other 
than a small business investment company registered on Form N-5 (17 CFR 
239.24 and 274.5)) or a separate Series of the registered management 
investment company.
    ``Institutional Manager'' means a person that is required to file 
reports under Rule 13f-1 under the Exchange Act.
    ``Reporting Person'' means the Institutional Manager or Fund filing 
this report or on whose behalf the report is filed.
    ``Series'' means shares offered by a registered management 
investment company that represent undivided interests in a portfolio of 
investments and that are preferred over all other series of shares for 
assets specifically allocated to that series in accordance with Rule 
18f-2(a) under the Investment Company Act [17 CFR 270.18f-2(a)].

F. Transition Rules for Institutional Managers

    1. An Institutional Manager is not required to file a report on 
Form N-PX for the 12-month period ending June 30 of the calendar year 
in which the manager's initial filing on Form 13F is due pursuant to 
Rule 13f-1 under the Exchange Act. For purposes of this paragraph, an 
``initial filing'' on Form 13F means any quarterly filing on Form 13F 
if no filing on Form 13F was required for the immediately preceding 
calendar quarter.
    2. An Institutional Manager is not required to file a report on 
Form N-PX with respect to any shareholder vote at a meeting that occurs 
after September 30 of the calendar year in which the manager's final 
filing on Form 13F is due pursuant to Rule 13f-1 under the Exchange 
Act. An Institutional Manager is required to file a Form N-PX for the 
period July 1 through September 30 of the calendar year in which the 
manager's final filing on Form 13F is due pursuant to Rule 13f-1 under 
the Exchange Act; this filing is required to be made not later than 
March 1 of the immediately following calendar year. For purposes of 
this paragraph, a ``final filing'' on Form 13F means any quarterly 
filing on Form 13F if no filing on Form 13F is required for the 
immediately subsequent calendar quarter.

Special Instructions

A. Organization of Form N-PX

    1. This form consists of three parts: the Form N-PX Cover Page 
(``Cover Page''), the Form N-PX Summary Page (``Summary Page''), and 
the proxy voting information required by the form (``Proxy Voting 
Information'').
    2. Present the Cover Page and the Summary Page information in the

[[Page 57519]]

format and order provided in the form. Do not include any additional 
information on the Summary Page.

B. Cover Page

    1. Amendments to a Form N-PX report must either restate the Form N-
PX report in its entirety or include only proxy voting information that 
is being reported in addition to the information already reported in a 
current public Form N-PX report for the same period. If the Form N-PX 
report is filed as an amendment, then the reporting person must check 
the amendment box on the Cover Page, enter the amendment number, and 
check the appropriate box to indicate whether the amendment (a) is a 
restatement or (b) adds new Proxy Voting Information. Each amendment 
must include a complete Cover Page and, if applicable, a Summary Page.
    2. Designate the Report Type for the Form N-PX report by checking 
the appropriate box in the Report Type section of the Cover Page, and 
include, where applicable, the List of Other Persons Reporting for this 
Manager (on the Cover Page), the Summary Page, and the Proxy Voting 
Information, as follows:
    a. For a report by a Fund, check the box for Report Type 
``Registered Management Investment Company Report,'' omit from the 
Cover Page the List of Other Persons Reporting for this Manager, and 
include both the Summary Page and the Proxy Voting Information.
    b. For a report by an Institutional Manager that includes all proxy 
votes required to be reported by the Institutional Manager, check the 
box for Report Type ``Institutional Manager Voting Report,'' omit from 
the Cover Page the List of Other Persons Reporting for this Manager, 
and include both the Summary Page and the Proxy Voting Information.
    c. For a report by an Institutional Manager, when all proxy votes 
required to be reported by the Institutional Manager are reported by 
another Institutional Manager or Managers or by one or more Funds, 
check the box for Report Type ``Institutional Manager Notice,'' include 
(on the Cover Page) the List of Other Persons Reporting for this 
Manager, and file the Cover Page and required signature only.
    d. For a report by an Institutional Manager, if only part of the 
proxy votes required to be reported by the Institutional Manager are 
reported by another Institutional Manager or Managers or one or more 
Funds, check the box for Report Type ``Institutional Manager 
Combination Report,'' include (on the Cover Page) the List of Other 
Persons Reporting for this Manager, and include both the Summary Page 
and the Proxy Voting Information.
    3. If the Institutional Manager has a number assigned by the 
Financial Industry Regulatory Authority's Central Registration 
Depository system or by the Investment Adviser Registration Depository 
system (``CRD number''), provide the Manager's CRD number. If the 
Institutional Manager has a file number (e.g., 801-, 8-, 866-, 802-) 
assigned by the Commission (``SEC file number''), provide the Manager's 
SEC file number.
    4. The Cover Page may include information in addition to the 
required information, so long as the additional information does not, 
either by its nature, quantity, or manner of presentation, impede the 
understanding or presentation of the required information. Place all 
additional information at the end of the Cover Page, except as 
permitted by paragraph (m) of Item 1.

C. Summary Page

    1. Include on the Summary Page the number of included Institutional 
Managers with votes reported in this Form N-PX report pursuant to 
General Instruction C. Enter as the number of included Institutional 
Managers the total number of Institutional Managers in the list of 
included Institutional Managers on the Summary Page, and do not count 
the reporting person filing this report. See Special Instruction C.2. 
If none, enter the number zero (``0'').
    2. Include on the Summary Page the list of included Institutional 
Managers with votes reported in this Form N-PX report pursuant to 
General Instruction C. Use the title, column headings, and format 
provided.
    a. If this Form N-PX report does not report the proxy votes of any 
Institutional Manager other than the reporting person, enter the word 
``NONE'' under the title and omit the column headings and list entries.
    b. If this Form N-PX report reports the proxy votes of one or more 
Institutional Managers other than the reporting person, enter in the 
list of included Institutional Managers all such Institutional Managers 
together with their respective Form 13F file numbers, if known and 
their respective CRD Numbers and SEC File Numbers, if applicable and if 
known. (The Form 13F file numbers are assigned to Institutional 
Managers when they file their first Form 13F). Assign a number to each 
Institutional Manager in the list of included Institutional Managers, 
and present the list in sequential order. The numbers need not be 
consecutive. Do not include the reporting person filing this report.
    3. For reports filed by a Fund, include on the Summary Page the 
total number of Series of the Fund reported in this Form N-PX, if any, 
the name of each Series included, and each Series identification 
number. If this Form N-PX report does not report the proxy votes of any 
Series, enter the word ``NONE'' under the title and omit the column 
headings and list entries.

D. Proxy Voting Information

    1. Disclose the information required or permitted by Item 1 in the 
order presented in paragraphs (a) through (m) of Item 1.
    2. The CUSIP number or ISIN required by paragraph (b) or (c) of 
Item 1 may be omitted if it is not available through reasonably 
practicable means, e.g., in the case of certain securities of foreign 
issuers. The ISIN may also be omitted if the CUSIP number is reported.
    3. Item 1(e) requires an identification of the matter for all 
matters. In responding to Item 1(e), identify all matters in the same 
order as on the form of proxy and identify each matter using the same 
language as on the form of proxy. For election of directors, identify 
each director separately in the same order as on the form of proxy, 
even if the election of directors is presented as a single matter on 
the form of proxy.
    4. Item 1(f) requires the reporting person to categorize each 
matter from a list of categories and subcategories that may apply to 
such matter. In responding to Item 1(f), a reporting person must choose 
all categories or subcategories applicable to such matter.
    5. In responding to paragraph (h) of Item 1, a reporting person may 
use the number of shares voted as reflected in its records at the time 
of filing a report on Form N-PX. If the reporting person has not 
received confirmation of the actual number of votes cast prior to 
filing a report on Form N-PX, the numbers reported may reflect the 
number of shares instructed to be cast. A reporting person is not 
required to amend a previously filed Form N-PX report if the reporting 
person subsequently receives confirmation of the actual number of votes 
cast.
    6. In responding to paragraphs (h) and (i) of Item 1:
    a. An Institutional Manager must report the number of shares that 
the Institutional Manager is reporting on behalf of another 
Institutional Manager pursuant to General Instruction C.1 or C.2 
separately from the number of shares that the Institutional Manager is

[[Page 57520]]

reporting only on its own behalf. An Institutional Manager also must 
separately report shares when the groups of Institutional Managers on 
whose behalf the shares are reported are different. For example, if the 
reporting Institutional Manager is reporting on behalf of Manager A 
with respect to 10,000 shares and on behalf of Managers A and B with 
respect to 50,000 shares, then the groups of 10,000 and 50,000 shares 
must be separately reported.
    b. A Fund must separately report shares that are reported on behalf 
of different Institutional Managers or groups of Institutional Managers 
pursuant to General Instruction C.3.
    7. For purposes of paragraph (i) of Item 1, a reporting person is 
considered to have loaned securities if it loaned the securities 
directly or loaned the securities indirectly through a lending agent.
    8. If management did not make a recommendation on how to vote on a 
particular matter, a reporting person should respond ``none'' to 
paragraph (k) of Item 1 for that matter.
    9. In the case of a reporting person that is a Fund that offers 
multiple series of shares, provide the information required by Item 1 
separately by Series (for example, provide Series A's full proxy voting 
record, followed by Series B's full proxy voting record).
    10. In response to paragraph (m), a reporting person may provide 
additional information about the matter or how it voted, provided the 
information does not, either by its nature, quantity, or manner of 
presentation, impede the understanding or presentation of the required 
information. The disclosure permitted by paragraph (m) is optional. A 
reporting person is not required to respond to paragraph (m) for any 
vote, and if a reporting person does provide additional information for 
one or more votes, it is not required to provide this information for 
all votes.

Confidential Treatment Instructions

    1. A reporting person should make requests for confidential 
treatment of information reported on this form in accordance with Rule 
24b-2 under the Exchange Act (17 CFR 240.24b-2).
    2. Rule 24b-2 requires a person filing confidential information 
with the Commission to indicate at the appropriate place in the public 
filing that the confidential portion has been so omitted and filed 
separately with the Commission. A reporting person should comply with 
this provision by including on the Summary Page, after the number of 
included Institutional Managers and prior to the list of included 
Institutional Managers, a statement that confidential information has 
been omitted from the public Form N-PX report and filed separately with 
the Commission.
    3. A reporting person must file all requests for and information 
subject to the request for confidential treatment in accordance with 
the instructions for filing confidential treatment requests for 
information filed on Form 13F.
    4. A reporting person requesting confidential treatment must 
provide enough factual support for its request to enable the Commission 
to make an informed judgment as to the merits of the request, including 
a demonstration that the information is both customarily and actually 
kept private by the reporting person, and that release of this 
information could cause harm to the reporting person. If a request for 
confidential treatment of information filed on Form N-PX relates to a 
request for confidential treatment of information included in an 
Institutional Manager's filing on Form 13F, the Institutional Manager 
should so state and identify the related request. In such cases, the 
Institutional Manager need not repeat the analysis set forth in the 
request for confidential treatment in connection with the Form 13F 
filing. The Institutional Manager's request, however, must explain 
whether and, if so, how the Form N-PX and Form 13F confidential 
treatment requests are related and should identify if any of the 
analysis in its request for confidential treatment on Form 13F does not 
apply, or applies differently, to its report on Form N-PX.
    5. State the period of time for which confidential treatment of the 
proxy voting information is requested. The time period specified may 
not exceed one (1) year from the date that the Form N-PX report is 
required to be filed with the Commission. The request must include a 
justification of the time period for which confidential treatment is 
requested, as required by Rule 24b-2(b)(2)(ii).
    6. At the expiration of the period for which confidential treatment 
has been granted (the ``Expiration Date''), the Commission, without 
additional notice to the reporting person, will make the proxy voting 
information public unless a de novo request for confidential treatment 
of the information that meets the requirements of Rule 24b-2 and these 
Confidential Treatment Instructions is filed with the Commission at 
least fourteen (14) days in advance of the Expiration Date.
    7. Upon the final adverse disposition of a request for confidential 
treatment, or upon the expiration of the confidential treatment 
previously granted for a filing, unless a hardship exemption is 
available, the reporting person must submit electronically, within six 
(6) business days of the expiration or notification of the final 
disposition, as applicable, an amendment to its publicly filed Form N-
PX report that includes the proxy voting information as to which the 
Commission denied confidential treatment or for which confidential 
treatment has expired. An amendment filed under such circumstances must 
not be a restatement; the reporting person must designate it as an 
amendment which adds new proxy voting information. The reporting person 
must include at the top of the Form N-PX Cover Page the following 
legend to correctly designate the type of filing being made:
    This filing lists proxy vote information reported on the Form N-PX 
filed on (date) pursuant to a request for confidential treatment and 
for which (that request was denied/confidential treatment expired) on 
(date).

Paperwork Reduction Act Information

    Form N-PX is to be used by a Fund to file reports with the 
Commission pursuant to Section 30 of the Investment Company Act and 
Rule 30b1-4 thereunder. Form N-PX also is to be used by an 
Institutional Manager to file reports with the Commission as required 
by Section 14A(d) of the Exchange Act and Rule 14Ad-1 thereunder. Form 
N-PX is to be filed not later than August 31 of each year, containing 
the reporting person's proxy voting record for the most recent 12-month 
period ended June 30. The Commission may use the information provided 
on Form N-PX in its regulatory, disclosure review, inspection, and 
policymaking roles.
    Funds and Institutional Managers are required to disclose the 
information specified by Form N-PX, and the Commission will make this 
information public. Funds and Institutional Managers are not required 
to respond to the collection of information contained in Form N-PX 
unless the Form displays a currently valid Office of Management and 
Budget (``OMB'') control number. Please direct comments concerning the 
accuracy of the information collection burden estimate and any 
suggestions for reducing the burden to the Secretary, Securities and 
Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. The 
OMB has reviewed this collection of information under the clearance 
requirements of 44 U.S.C. 3507.
BILLING CODE 8011-01-P

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[[Page 57522]]

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[[Page 57523]]

[GRAPHIC] [TIFF OMITTED] TP15OC21.005

FORM N-PX

Item 1. Proxy Voting Record

    If the reporting person is a Fund, disclose the following 
information for each matter relating to a portfolio security considered 
at any shareholder meeting held during the period covered by the report 
and with respect to which the reporting person was entitled to vote, 
including securities on loan for purposes of this form. If the 
reporting person is an Institutional Manager, disclose the following 
information for each shareholder vote pursuant to Sections 14A(a) and 
(b) of the Exchange Act over which the manager exercised voting power, 
as defined in Rule 14Ad-1(d) under the Exchange Act [17 CFR 240.14Ad-
1]. If a reporting person does not have any proxy votes to report for 
the reporting period, the reporting person must file a report with the 
Commission stating that the reporting person does not have proxy votes 
to report.
    (a) The name of the issuer of the security;
    (b) The Council on Uniform Securities Identification Procedures 
(``CUSIP'') number for the security;
    (c) The International Securities Identification Number (``ISIN'') 
for the security;
    (d) The shareholder meeting date;

[[Page 57524]]

    (e) An identification of the matter voted on;
    (f) All categories and subcategories applicable to the matter voted 
on from the following list of categories and subcategories:
    (A) Board of directors (subcategories: director election, term 
limits, committees, size of board, or other board of directors matters 
(along with a brief description));
    (B) Section 14A say-on-pay votes (subcategories: 14A executive 
compensation, 14A executive compensation vote frequency, or 14A 
extraordinary transaction executive compensation);
    (C) Audit-related (subcategories: Auditor ratification, auditor 
rotation, or other audit-related matters (along with a brief 
description));
    (D) Investment company matters (subcategories: Change to investment 
management agreement, new investment management agreement, assignment 
of investment management agreement, business development company 
approval of restricted securities, closed-end investment company 
issuance of shares below net asset value, business development company 
asset coverage ratio change, or other investment company matters (along 
with a brief description));
    (E) Shareholder rights and defenses (subcategories: Adoption or 
modification of a shareholder rights plan, control share acquisition 
provisions, fair price provisions, board classification, cumulative 
voting, or other shareholder rights and defenses matters (along with a 
brief description));
    (F) Extraordinary transactions (subcategories: Merger, asset sale, 
liquidation, buyout, joint venture, going private, spinoff, delisting, 
or other extraordinary transaction matters (along with a brief 
description));
    (G) Security issuance (subcategories: Equity, debt, convertible, 
warrants, units, rights, or other security issuance matters (along with 
a brief description));
    (H) Capital structure (subcategories: Stock split, reverse stock 
split, dividend, buyback, tracking stock, adjustment to par value, 
authorization of additional stock, or other capital structure matters 
(along with a brief description));
    (I) Compensation (subcategories: Board compensation, executive 
compensation (other than Section 14A say-on-pay), board or executive 
anti-hedging, board or executive anti-pledging, compensation clawback, 
10b5-1 plans, or other compensation matters (along with a brief 
description));
    (J) Corporate governance (subcategories: Articles of incorporation 
or bylaws, board committees, codes of ethics, or other corporate 
governance matters (along with a brief description));
    (K) Meeting governance (subcategories: Approval to adjourn, 
acceptance of minutes, or other meeting governance matters (along with 
a brief description));
    (L) Environment or climate (subcategories: Greenhouse gas (GHG) 
emissions, transition planning or reporting, biodiversity or ecosystem 
risk, chemical footprint, renewable energy or energy efficiency, water 
issues, waste or pollution, deforestation or land use, say-on-climate, 
environmental justice, or other environment or climate matters (along 
with a brief description));
    (M) Human rights or human capital/workforce (subcategories: 
Workforce-related mandatory arbitration, supply chain exposure to human 
rights risks, outsourcing or offshoring, workplace sexual harassment, 
or other human rights or human capital/workforce matters (along with a 
brief description));
    (N) Diversity, equity, and inclusion (subcategories: Board 
diversity, pay gap, or other diversity, equity, and inclusion matters 
(along with a brief description));
    (O) Political activities (subcategories: Lobbying, political 
contributions, or other political activity matters (along with a brief 
description));
    (P) Other social (subcategories: Data privacy, responsible tax 
policies, charitable contributions, consumer protection, or other 
social matters (along with a brief description)); or
    (Q) Other (along with a brief description).
    (g) For reports filed by Funds, disclose whether the matter was 
proposed by the issuer or by a security holder and, if by a security 
holder, whether the matter was a proposal or counterproposal;
    (h) The number of shares that were voted, with the number zero 
(``0'') entered if no shares were voted;
    (i) The number of shares that the reporting person loaned and did 
not recall;
    (j) How the shares in paragraph (h) were voted (e.g., for or 
against proposal, or abstain; for or withhold regarding election of 
directors) and, if the votes were cast in multiple manners (e.g., for 
and against), the number of shares voted in each manner;
    (k) Whether the votes disclosed in paragraph (j) represented votes 
for or against management's recommendation;
    (l) Identify each Institutional Manager on whose behalf this Form 
N-PX report is being filed (other than the reporting person filing the 
report) and that exercised voting power over the securities voted by 
entering the number assigned to the Institutional Manager in the List 
of Included Institutional Managers; and
    (m) Any other information the reporting person would like to 
provide about the matter or how it voted.

SIGNATURE

[See General Instruction D]
    Pursuant to the requirements of the [Securities Exchange Act of 
1934 (for Institutional Managers)] [Investment Company Act of 1940 (for 
Funds)], the reporting person has duly caused this report to be signed 
on its behalf by the undersigned, thereunto duly authorized.
(Reporting Person)-----------------------------------------------------

By (Signature and Title) *---------------------------------------------

Date-------------------------------------------------------------------

    * Print the name and title of each signing officer under his or her 
signature.

    By the Commission.

    Dated: September 29, 2021.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2021-21549 Filed 10-14-21; 8:45 am]
BILLING CODE 8011-01-C