[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4662 Introduced in House (IH)]

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118th CONGRESS
  1st Session
                                H. R. 4662

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.


_______________________________________________________________________


                    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.

    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 ``Corporate Governance Examination 
Act''.

SEC. 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.''.
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