I 118th CONGRESS 1st Session H. R. 4662 IN THE HOUSE OF REPRESENTATIVES July 14, 2023 Mrs. Wagner introduced the following bill; which was referred to the Committee on Financial Services A BILL To require the Securities and Exchange Commission to conduct a study of certain issues with respect to shareholder proposals, proxy advisory firms, and the proxy process, and for other purposes.

1. Short title This Act may be cited as the Corporate Governance Examination Act . 2. Study of certain issues with respect to shareholder proposals, proxy advisory firms, and the proxy process Section 4(j) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78d(j) ) is amended by adding at the end the following: (10) Study of certain issues with respect to shareholder proposals, proxy advisory firms, and the proxy process (A) In general Not later than 180 days after the date of the enactment of this paragraph, and every 5 years thereafter, the Commission shall conduct a comprehensive study on shareholder proposals, proxy advisory firms, and the proxy process. (B) Scope of study The studies required under subparagraph (A) shall cover— (i) the previous 10 years, with respect to the initial study; and (ii) the previous 5 years, with respect to each other study. (C) Contents Each study required under subparagraph (A) shall address the following issues: (i) The financial and other incentives and obligations of all groups involved in the proxy process. (ii) A consideration of whether financial and other incentives have created a process that no longer serves the economic interests of long-term retail investors. (iii) An analysis of whether regulations and financial incentives have created and protected the outsized influence of proxy advisors or a duopoly in proxy advice, and if so, what are the benefits and costs of that outsized influence or duopoly. (iv) The costs incurred by issuers in responding to politically-, environmentally-, or socially-motivated shareholder proposals. (v) An assessment, including a cost-benefit analysis, of the adequacy of the current submission thresholds in Rule 14a–8 (17 C.F.R. 240.14a–8) to ensure that shareholder proponents have demonstrated a meaningful economic stake in a company, which is appropriate to effectively serve markets and shareholders at large. (vi) An examination of the extent to which the politicization of the shareholder proposal process is increasing the operating costs of public companies. (vii) An analysis of the impact that shareholder proposals have on discouraging private companies from going public. (viii) An evaluation of the risk that shareholder proposals may contribute to the balkanization of the U.S. economy over time. (ix) A thorough assessment of the economic analysis, if any, conducted by proxy advisory firms and institutional shareholders when recommending or voting in favor of shareholder proposals. (x) A review of the extent to which institutional investors, who owe fiduciary duties, rely on proxy advisory firm recommendations. (xi) An assessment of whether, in light of their significant influence on corporate actions and vote outcomes, proxy advisors are subject to sufficient and effective regulation to ensure that their policies and recommendations are accurate, free of conflicts, and benefit the economic best interest of shareholders at large. (D) Report At the completion of each study required under subparagraph (A) the Commission shall issue a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives that includes the results of the study. (E) Proxy advisory firm defined In this paragraph, the term proxy advisory firm — (i) means any person who is primarily engaged in the business of providing proxy voting advice, research, analysis, ratings, or recommendations to clients, which conduct constitutes a solicitation within the meaning of section 14 of the Securities Exchange Act of 1934; and (ii) does not include any person that is exempt under law or regulation from the requirements otherwise applicable to persons engaged in such a solicitation. .