SEC Form N-PX Final Rule: Disclosure Changes for Funds

The SEC’s updates to Form N-PX are giving investors a break. Funds have disclosed proxy voting records on the form for nearly two decades, but shareholders have struggled to parse and interpret issued information. To address these deficiencies and further empower investors and analysts, the SEC has adopted amendments. Below is a summary of the enhancements.  

Updates at a glance

Fund registrants—mutual funds, ETFs, pension funds, hedge funds, and other private funds—are required to present clearer and more transparent proxy voting proceedings with the following changes:

Votes are better classified for easier review

Fund managers must categorize each proxy voting matter by type. Also, the description and order of voting activities must coincide with the issued proxy. This upgrade creates more consistency for investors to sift through archives of often complex proxy voting affairs.   

Form N-PX is more presentable 

For improved data clarity and standardization, funds have to structure Form N-PX in a machine-readable format, such as eXtensible Markup Language (XML) or eXtensible Business Reporting LanguageTM (XBRL®) tagging, to enable more fluid comparative analysis and regulatory review. The form amendments also standardize the order of disclosure requirements and require that each fund, including each series of a multi-series trust, present its complete voting record separately.

Increased visibility into transferred shares

Funds have faced economic pressures to lend out shares rather than vote them for proxy interests. Since loaned shares remove voting rights for fund investors, funds are now required to disclose the number of shares balloted and those loaned and not recalled during securities lending.

New say-on-pay disclosure

The SEC has also obligated institutional investment managers to disclose how they voted on portfolio companies’ executive compensation proposals, or “say-on-pay” matters, finalizing a Dodd-Frank Act requirement within private markets. 

The SEC officially adopted the new regulations on Nov. 22, 2022, but they’re effective for votes occurring on or after July 1, 2023, with filings due in 2024.  

Next steps 

For investment companies to comply under this additional pressure, they should ensure their reporting processes are agile enough to: 

• Easily link proxy-related records across internal documents, marketing materials, and Form N-PX
• Sync overlapping information with other funds that have similar voting procedures 
• Tag and format data so investors can easily consume proceedings and figures
• Quickly update spreadsheets and other materials when the number of voted or loaned shares changes 

Discover how investment companies of many sizes and global asset managers are transforming their fund reporting. 

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