[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4645 Introduced in House (IH)]

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118th CONGRESS
  1st Session
                                H. R. 4645

  To amend the Investment Advisers Act of 1940 with respect to proxy 
       voting of passively managed funds, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 14, 2023

 Mr. Huizenga introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
  To amend the Investment Advisers Act of 1940 with respect to proxy 
       voting of passively managed funds, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Empowering Shareholders Act of 
2023''.

SEC. 2. PROXY VOTING OF PASSIVELY MANAGED FUNDS.

    (a) In General.--The Investment Advisers Act of 1940 (15 U.S.C. 
80b-1 et seq.) is amended by inserting after section 208 (15 U.S.C. 
80b-8) the following:

``SEC. 208A. PROXY VOTING OF PASSIVELY MANAGED FUNDS.

    ``(a) Investment Adviser Proxy Voting.--
            ``(1) In general.--An investment adviser that holds 
        authority to vote a proxy solicited by an issuer pursuant to 
        section 14 of the Securities Exchange Act of 1934 (15 U.S.C. 
        78n) in connection with any vote of covered securities held by 
        a passively managed fund shall--
                    ``(A) vote in accordance with the instructions of 
                the beneficial owner of such covered securities;
                    ``(B) vote in accordance with the voting 
                instructions of such issuer; or
                    ``(C) abstain from voting.
            ``(2) Exception.--Paragraph (1) shall not apply with 
        respect to a vote on a routine matter.
    ``(b) Safe Harbor.--With respect to a matter that is not a routine 
matter, in the case of a vote described in subsection (a)(1), an 
investment adviser shall not be liable to any person under any law or 
regulation of the United States, any constitution, law, or regulation 
of any State or political subdivision thereof, or under any contract or 
other legally enforceable agreement (including any arbitration 
agreement), for any of the following:
            ``(1) Not soliciting voting instructing from any person 
        under subsection (a)(1) with respect to such vote.
            ``(2) Voting in accordance with the voting instructions of 
        an issuer pursuant to subparagraph (B) of such subsection.
            ``(3) Abstaining from voting in accordance with 
        subparagraph (C) of such subsection.
    ``(c) Definitions.--In this section:
            ``(1) Covered security.--The term `covered security'--
                    ``(A) means a voting security, as that term is 
                defined in section 2(a) of the Investment Company Act 
                of 1940 (15 U.S.C. 80a-2(a)), in which a qualified fund 
                is invested; and
                    ``(B) does not include any voting security (as 
                defined in subparagraph (A)) of an issuer registered 
                with the Commission as an investment company under 
                section 8 of the Investment Company Act of 1940 (15 
                U.S.C. 80a-8).
            ``(2) Passively managed fund.--The term `passively managed 
        fund' means a qualified fund that--
                    ``(A) is designed to track, or is derived from, an 
                index of securities or a portion of such an index;
                    ``(B) discloses that the qualified fund is a 
                passive index fund; or
                    ``(C) allocates not less than 40 percent of the 
                total assets of the qualified fund to an investment 
                strategy that is designed to track, or is derived from, 
                an index of securities or a portion of such an index 
                fund.
            ``(3) Qualified fund.--The term `qualified fund' means--
                    ``(A) an investment company, as that term is 
                defined in section 3 of the Investment Company Act of 
                1940 (15 U.S.C. 80a-3);
                    ``(B) a private fund;
                    ``(C) an eligible deferred compensation plan, as 
                that term is defined in section 457(b) of the Internal 
                Revenue Code of 1986;
                    ``(D) a trust, plan, account, or other entity 
                described in section 3(c)(11) of the Investment Company 
                Act of 1940 (15 U.S.C. 80a-3(c)(11));
                    ``(E) a plan maintained by an employer described in 
                clause (i), (ii), or (iii) of section 403(b)(1)(A) of 
                the Internal Revenue Code of 1986 to provide annuity 
                contracts described in section 403(b) of such Code;
                    ``(F) a common trust fund, or similar fund, 
                maintained by a bank;
                    ``(G) any fund established under section 8438(b)(1) 
                of title 5, United States Code; or
                    ``(H) any separate managed account of a client of 
                an investment adviser.
            ``(4) Registrant.--The term `registrant' means an issuer of 
        covered securities.
            ``(5) Routine matter.--The term `routine matter'--
                    ``(A) includes a proposal that relates to--
                            ``(i) an election with respect to the board 
                        of directors of the registrant;
                            ``(ii) the compensation of management or 
                        the board of directors of the registrant;
                            ``(iii) the selection of auditors;
                            ``(iv) material conflicts;
                            ``(v) declassification; or
                            ``(vi) transactions that would transform 
                        the structure of the registrant, including--
                                    ``(I) a merger or consolidation; 
                                and
                                    ``(II) the sale, lease, or exchange 
                                of all, or substantially all, of the 
                                property and assets of a registrant; 
                                and
                    ``(B) does not include--
                            ``(i) a proposal that is not submitted to a 
                        holder of covered securities by means of a 
                        proxy statement comparable to that described in 
                        section 240.14a-101 of title 17, Code of 
                        Federal Regulations, or any successor 
                        regulation;
                            ``(ii) a proposal that is--
                                    ``(I) the subject of a counter-
                                solicitation; or
                                    ``(II) part of a proposal made by a 
                                person other than the applicable 
                                registrant; or
                            ``(iii) any other matter determined by the 
                        Commission or an exchange registered under 
                        section 6 of the Securities Exchange Act of 
                        1934 (15 U.S.C. 78f) to be not routine.''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the first August 1 that occurs after the date that is 2 years 
after the date of enactment of this Act.
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