In July 2020, the U.S. Securities and Exchange Commission (SEC) finalized a rulemaking intended to promote transparency within the proxy advisory industry and increase the quality of vote recommendations received by institutional investors (Proxy Advisor Rule). The SEC also issued Commission-level guidance clarifying the fiduciary duties of SEC-registered investment advisers when voting proxies on behalf of fund shareholders. (Commission Guidance).

Over the last decade, the U.S. Chamber’s Center for Capital Markets Competitiveness (CCMC) has educated members of Congress and the SEC on the problems within the proxy advisory industry and put forward a number of specific ideas for reform. During that same period, congressional hearings were held to examine the practices of proxy advisors, the SEC held roundtables and solicited public feedback on several occasions, and public companies of all sizes became activated on the issue.

This report includes a timeline of events that have informed the SEC’s actions, as well as a brief overview of the Proxy Advisor Rule and Commission Guidance, to help public companies understand how the proxy process and their relationship with proxy advisors will likely change in the coming years.