[Federal Register Volume 87, Number 245 (Thursday, December 22, 2022)]
[Rules and Regulations]
[Pages 78770-78818]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24292]



[[Page 78769]]

Vol. 87

Thursday,

No. 245

December 22, 2022

Part II





 Securities and Exchange Commission





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17 CFR Parts 200, 232, 240, et al.





Enhanced Reporting of Proxy Votes by Registered Management Investment 
Companies; Reporting of Executive Compensation Votes by Institutional 
Investment Managers; Final Rule

  Federal Register / Vol. 87, No. 245 / Thursday, December 22, 2022 / 
Rules and Regulations  

[[Page 78770]]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 200, 232, 240, 249, 270, and 274

[Release Nos. 33-11131; 34-96206; IC-34745; File No. S7-11-21]
RIN 3235-AK67


Enhanced Reporting of Proxy Votes by Registered Management 
Investment Companies; Reporting of Executive Compensation Votes by 
Institutional Investment Managers

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: The Securities and Exchange Commission (``Commission'') is 
adopting amendments to Form N-PX under the Investment Company Act of 
1940 (``Investment Company Act'') to enhance the information mutual 
funds, exchange-traded funds (``ETFs''), and certain other funds 
currently report about their proxy votes and to make that information 
easier to analyze. The Commission also is adopting rule and form 
amendments under the Securities Exchange Act of 1934 (``Exchange Act'') 
that would require an institutional investment manager subject to the 
Exchange Act to report on Form N-PX how it voted proxies relating to 
executive compensation matters, as required by the Exchange Act. The 
reporting requirements for institutional investment managers complete 
implementation of those requirements added by the Dodd-Frank Wall 
Street Reform and Consumer Protection Act (``Dodd-Frank Act'').

DATES: Effective date: This rule is effective July 1, 2024.

FOR FURTHER INFORMATION CONTACT: Christian Corkery, David Driscoll, or 
Nathan R. Schuur, Senior Counsels; Bradley Gude and Angela Mokodean, 
Branch Chiefs; or Brian M. Johnson, Assistant Director at (202) 551-
6792, Investment Company Regulation Office, Division of Investment 
Management, Securities and Exchange Commission, 100 F Street NE, 
Washington, DC 20549-8549.

SUPPLEMENTARY INFORMATION: The Commission is adopting new 17 CFR 
240.14Ad-1 (``rule 14Ad-1'') under the Exchange Act and amendments to 
17 CFR 200.30-5 (``rule 30-5''); 17 CFR 240.24b-2 (``rule 24b-2'') 
under the Exchange Act; 17 CFR 270.30b1-4 (``rule 30b1-4'') under the 
Investment Company Act; Form N-1A [referenced in 17 CFR 239.15A and 17 
CFR 274.11A], Form N-2 [referenced in 17 CFR 239.14 and 17 CFR 274.11a-
1], and Form N-3 [referenced in 17 CFR 239.17a and 17 CFR 274.11b] 
under the Securities Act of 1933 (``Securities Act'') and Investment 
Company Act; Form N-PX [referenced in 17 CFR 249.326 and 17 CFR 
274.129] under the Exchange Act and Investment Company Act; and 17 CFR 
232.101 of Regulation S-T (``rule 101 of Regulation S-T'').

Table of Contents

I. Introduction and Background
II. Discussion
    A. Scope of Funds' Form N-PX Reporting Obligations
    B. Scope of Managers' Form N-PX Reporting Obligations
    1. Managers Subject to Form N-PX and Categories of Votes They 
Must Report
    2. Managers' Exercise of Voting Power
    3. Additional Scoping Matters for Manager Reporting of Say-on-
Pay Votes
    C. Proxy Voting Information Reported on Form N-PX
    1. Identification of Proxy Voting Matters
    2. Identification of Proxy Voting Categories
    3. Quantitative Disclosures
    4. Additional Amendments to Form N-PX
    D. Joint Reporting Provisions
    E. The Cover Page
    F. The Summary Page
    G. Form N-PX Reporting Data Language
    H. Time of Reporting
    I. Requests for Confidential Treatment
    J. Website Availability of Fund Proxy Voting Records
    K. Effective Date
    L. Transition Rules for Managers
    M. Technical and Conforming Amendments
    N. Delegation of Commission Authority
III. Other Matters
IV. Economic Analysis
    A. Introduction
    B. Economic Baseline
    1. Funds' Reporting of Proxy Voting Records
    2. Managers' Reporting of Say-on-Pay Votes
    3. Other Affected Parties
    C. Benefits and Costs
    1. Amendments to Funds' Reporting of Proxy Votes
    2. Amendments To Require Manager Reporting of Say-on-Pay Votes
    D. Effects on Efficiency, Competition, and Capital Formation
    1. Amendments to Funds' Reporting of Proxy Votes
    2. Amendments To Require Manager Reporting of Say-on-Pay Votes
    E. Reasonable Alternatives
    1. Scope of Managers' Say-on-Pay Reporting Obligations
    2. Amendments to Proxy Voting Information Reported on Form N-PX
    3. Amendments to the Time of Reporting on Form N-PX or Placement 
of Funds' Voting Records
V. Paperwork Reduction Act Analysis
VI. Regulatory Flexibility Act Certification for Managers and Final 
Regulatory Flexibility Analysis for Funds
    A. Regulatory Flexibility Act Certification for Managers
    B. Final Regulatory Flexibility Act Analysis for Funds
    1. Need for and Objectives of the Final Fund Rules
    2. Significant Issues Raised by Public Comment
    3. Small Entities Subject to the New Rule and Amendments
    4. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
    5. Agency Action To Minimize Effect on Small Entities Statutory 
Authority

I. Introduction and Background

    Mutual funds, ETFs, and other registered management investment 
companies (collectively, ``funds'') in the aggregate hold substantial 
institutional voting power that they exercise on behalf of millions of 
fund investors.\1\ Funds own around 32% of the market capitalization of 
all U.S.-issued equities outstanding and in some cases funds hold a 
larger percent of a single company's stock.\2\ As a result, funds can 
influence the outcome of a wide variety of matters that companies 
submit to a shareholder vote, including matters related to governance, 
corporate actions, and shareholder proposals. Funds' proxy voting 
decisions also can play an important role in maximizing the value of 
their investments, affecting the more than 45% of U.S. households that 
own funds, as well as other investors in U.S. equity markets.\3\ Due to 
funds' significant voting power and the effects of funds' proxy voting 
practices on the actions of corporate issuers and the value of these 
issuers' securities, investors have an interest in how funds vote.
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    \1\ Mutual funds and most ETFs are open-end management 
investment companies registered on Form N-1A. An open-end management 
investment company is an investment company, other than a unit 
investment trust or face-amount certificate company, that offers for 
sale or has outstanding any redeemable security of which it is the 
issuer. See sections 4 and 5(a)(1) of the Investment Company Act [15 
U.S.C. 80a-4 and 80a-5(a)(1)]. The amendments also will apply to 
registered closed-end management investment companies (which 
register on Form N-2) and insurance company separate accounts 
organized as management investment companies that offer variable 
annuity contracts (which register on Form N-3). Small business 
investment companies (which register on Form N-5) are not required 
to file Form N-PX and are not subject to these amendments or 
included in the defined term ``fund'' used throughout this release.
    \2\ Investment Company Institute (``ICI''), 2022 Investment 
Company Fact Book (2022), at Figure 2.7, available at https://icifactbook.org/pdf/2022_factbook.pdf (``ICI 2022 Fact Book'') 
(stating that mutual funds and other registered investment companies 
held 32 percent of U.S. corporate equities as of year-end 2021).
    \3\ See ICI 2022 Fact Book, supra footnote 2, at Figure 7.1.
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    In 2003, the Commission adopted Form N-PX, which requires funds to 
report publicly their proxy voting

[[Page 78771]]

records on an annual basis.\4\ To improve the utility of Form N-PX 
information for investors, in September 2021 the Commission proposed 
amendments to enhance the information funds currently report about 
their proxy votes on Form N-PX and to make that information easier to 
analyze (``proposed amendments'').\5\ Specifically, the Commission 
proposed to require funds to tie the description of the voting matter 
on Form N-PX to the issuer's form of proxy and categorize voting 
matters by type. In addition, the proposed amendments would have 
required disclosure of the number of shares that were voted (or, if not 
known, the number of shares that were instructed to be cast) and the 
number of shares that were loaned and not recalled. To enhance 
investors' access to funds' proxy voting records, the proposed 
amendments would have required funds to report information on Form N-PX 
in a structured data language and to provide their voting record on (or 
through) their websites.\6\
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    \4\ See Disclosure of Proxy Voting Policies and Proxy Voting 
Records by Registered Management Investment Companies, Investment 
Company Act Release No. 25922 (Jan. 31, 2003) [68 FR 6563 (Feb. 7, 
2003)] (``2003 Adopting Release'').
    \5\ See Enhanced Reporting of Proxy Votes by Registered 
Management Investment Companies; Reporting of Executive Compensation 
Votes by Investment Managers; Investment Company Act Release No. 
34389 (Sept. 29, 2021) [86 FR 57478 (Oct. 15, 2021)] (``Proposing 
Release''). For a discussion of difficulties investors may face 
using Form N-PX reports today, see id. at paragraphs accompanying 
nn.16 and 20.
    \6\ Cf. Recommendations of the Investor Advisory Committee 
Regarding the SEC and the Need for the Cost Effective Retrieval of 
Information by Investors (adopted July 25, 2013), at 5, available at 
https://www.sec.gov/spotlight/investor-advisory-committee-2012/data-tagging-resolution-72513.pdf (recommending amendments to Form N-PX 
to provide for the tagging of data).
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    Institutional investment managers \7\ subject to the reporting 
requirements of section 13(f) of the Exchange Act (each a ``manager'' 
and collectively with funds, ``reporting persons'') also have 
substantial voting power.\8\ In addition to proposing to amend Form N-
PX to enhance disclosure of funds' proxy voting records, the Commission 
also proposed to require a manager to report annually on Form N-PX how 
it voted proxies relating to shareholder advisory votes on executive 
compensation (or ``say-on-pay'') matters.\9\ Specifically, the proposed 
amendments would have required a manager to report say-on-pay votes 
when it exercised voting power over the securities--meaning the manager 
both has the ability to vote, or direct the voting of, a security and 
influences the voting decision. To reduce the potential for duplicative 
reporting when more than one manager exercises voting power or when a 
manager exercises voting power on behalf of a fund, the Commission 
proposed to allow managers to rely on joint reporting provisions. The 
proposed amendments also addressed confidential treatment requests and 
provided transition rules based upon when managers begin or cease to be 
obligated to file Form 13F reports.
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    \7\ The term ``institutional investment manager'' includes any 
person, other than a natural person, investing in or buying and 
selling securities for its own account, and any person exercising 
investment discretion with respect to the account of any other 
person. See section 13(f)(6)(A) of the Exchange Act [15 U.S.C. 
78m(f)(6)]. The term ``person'' includes any natural person, 
company, government, or political subdivision, agency, or 
instrumentality of a government. See section 3(a)(9) of the Exchange 
Act [15 U.S.C. 78c(a)(9)]. Entities serving as managers could 
include, for example: banks, insurance companies, and broker-dealers 
that invest in, or buy and sell, securities for their own accounts; 
corporations and pension funds that manage their own investment 
portfolios; or investment advisers that manage private accounts, 
mutual fund assets, or pension plan assets.
    \8\ See Proposing Release, supra footnote 5, at n.24 and 
accompanying text (stating that institutional investment managers 
subject to section 13(f) reporting requirements exercised investment 
discretion over approximately $39.79 trillion in section 13(f) 
securities as of March 31, 2021).
    \9\ In addition to amendments to Form N-PX, the Commission 
proposed new rule 14Ad-1 under the Exchange Act to require managers 
to annually report their say-on-pay votes on Form N-PX.
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    The proposed amendments to require manager reporting of say-on-pay 
votes were aimed at completing implementation of section 951 of the 
Dodd-Frank Act.\10\ The Commission first proposed rule and form changes 
in October 2010 to implement this provision of the Dodd-Frank Act and 
the proposed amendments in 2021 took into account the comments received 
in response to that earlier proposal.\11\
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    \10\ See 15 U.S.C. 78n-1(d).
    \11\ See Exchange Act Release No. 63123 (Oct. 18, 2010) [75 FR 
66622 (Oct. 28, 2010)] (``2010 Proposing Release'').
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    The Commission received a number of comment letters on the 2021 
proposal.\12\ Many commenters believed the proposed amendments would 
improve the proxy information available to investors, such as by making 
it easier and more efficient for investors to get this information or 
by addressing information asymmetries that exist between investors and 
fund managers.\13\ Some of these commenters highlighted the 
difficulties in using current fund proxy information.\14\ Many other 
commenters supported enhancing the proxy voting record disclosure on 
Form N-PX, but raised concerns about some of the specific elements of 
the proposal.\15\ For example, some of these commenters suggested 
changes to the proposed requirements to categorize voting matters and 
use the language from the issuer's form of proxy due, in part, to 
concerns about the scope of the proposed requirements.\16\ Some 
commenters also expressed concern about the operational costs and 
effects of the requirement to provide information about the number of 
securities a fund or manager did not vote because the securities were 
out on loan.\17\ To reduce burdens of the manager reporting 
requirements, some commenters supported using a different standard to 
determine when a manager should report a say-on-pay vote on Form N-PX 
and suggested that managers have certain exceptions from Form N-PX 
reporting requirements, including exceptions for managers with a 
disclosed policy of not voting.\18\ Some commenters suggested that 
funds and managers should be required to report their votes more 
frequently than annually to provide investors with more current 
information.\19\ Some commenters generally were supportive of the other 
specific elements of the proposed amendments, such as the requirement 
to report in structured data

[[Page 78772]]

language.\20\ Other commenters, however, had general concerns about the 
proposed amendments, questioning the Form N-PX approach to fund proxy 
vote reporting or suggesting that the costs of the proposed amendments 
would be high relative to the expected benefits.\21\
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    \12\ The comment letters on the Proposing Release (File No. S7-
11-21) are available at https://www.sec.gov/comments/s7-11-21/s71121.htm.
    \13\ See, e.g., Comment Letter of the American Sustainable 
Business Council (Oct. 12, 2021) (``ASBC Comment Letter''); Comment 
Letter of the Long-Term Stock Exchange, Inc. (Dec. 13, 2021) (``LTSE 
Comment Letter''); Comment Letter of the Consumer Federation of 
America (Dec. 14 2021) (``CFA Comment Letter''); Comment Letter of 
Better Markets (Dec. 14, 2021) (``Better Markets Comment Letter''); 
and Comment Letter of the Vanguard Group, Inc. (Dec. 14, 2021) 
(``Vanguard Comment Letter'').
    \14\ See Comment Letter of As You Sow (Dec. 14, 2021) (``As You 
Sow Comment Letter''); and Comment Letter of Ceres Accelerator for 
Sustainable Capital Markets (Dec. 14, 2021) (``Ceres Comment 
Letter'').
    \15\ See, e.g., Comment Letter of the Investment Company 
Institute (Dec. 14, 2021) (``ICI Comment Letter I''); Comment Letter 
of Federated Hermes, Inc. (Dec. 14, 2021) (``Federated Hermes 
Comment Letter''); Comment Letter of BlackRock, Inc. (Dec. 14, 2021) 
(``BlackRock Comment Letter''); Comment Letter of the Managed Funds 
Association (Dec. 14, 2021) (``MFA Comment Letter''); and Comment 
Letter of Glass Lewis (Dec. 14, 2021) (``Glass Lewis Comment 
Letter'').
    \16\ See, e.g., ICI Comment Letter I; Comment Letter of the 
State of Utah (Dec. 14, 2021) (``Utah Comment Letter''); and Comment 
Letter of Institutional Shareholder Services, Inc. (Dec. 14, 2021) 
(``ISS Comment Letter'').
    \17\ See, e.g., Comment Letter of Teachers Insurance and 
Annuities Association of America (Dec. 14, 2021) (``TIAA Comment 
Letter''); and Comment Letter of Pickard Djinis and Pisarri LLP 
(Nov. 23, 2021) (``Pickard Comment Letter'').
    \18\ See, e.g., Comment Letter of the Alternative Investment 
Management Association (Dec. 14, 2021) (``AIMA Comment Letter''); 
and MFA Comment Letter.
    \19\ See, e.g., Comment Letter of Betterment LLC (Dec. 14, 2021) 
(``Betterment Comment Letter''); Comment Letter of Morningstar, Inc. 
(Dec. 13, 2021) (``Morningstar Comment Letter'').
    \20\ See, e.g., Morningstar Comment Letter; Comment Letter of 
the CFA Institute and the Council of Institutional Investors (Dec. 
14, 2021) (``CFA/CII Comment Letter'').
    \21\ See Comment Letter of Caleb N. Griffin, Brian R. Knight, 
and Andrew N. Vollmer (Nov. 11, 2021) (``Mercatus Center Comment 
Letter'') (suggesting an alternative proxy voting approach where 
funds seek investor input prior to voting proxies and vote in 
reasonable accord with such input); and Comment Letter of the Mutual 
Fund Directors Forum (Dec. 14, 2021) (``MFDF Comment Letter'').
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    We are adopting the amendments largely as proposed, but with 
certain modifications in response to the comments we received. First, 
while we will require reporting persons to categorize the voting 
matters reported on Form N-PX as proposed, the categories we are 
adopting are consolidated from those in the proposal, and we are not 
adopting the proposed requirement for reporting persons to use 
subcategories. Second, Form N-PX as amended will require reporting 
persons to identify proxy voting matters using the same language as 
disclosed in the issuer's form of proxy, presented in the same order as 
the matters appear in the form of proxy, and identify directors 
separately for director election matters only if a form of proxy in 
connection with a matter is subject to 17 CFR 240.14a-4 (``rule 14a-
4''). Third, Form N-PX as amended will allow managers that have a 
disclosed policy of not voting proxies and that did not vote during the 
reporting period to indicate this on the form without providing 
additional information about each voting matter individually. We 
discuss these changes, among others, in more detail below.

II. Discussion

A. Scope of Funds' Form N-PX Reporting Obligations

    Every fund is required to file its proxy voting record annually on 
Form N-PX. We did not propose to modify the scope of investment 
companies subject to Form N-PX reporting requirements, but we did 
propose to amend the scope of voting decisions these funds must report. 
Currently, funds are required to report information for each matter 
relating to a portfolio security considered at any shareholder meeting 
held during the reporting period and with respect to which the fund was 
entitled to vote.\22\ We are amending this standard, as proposed, to 
provide that, for purposes of Form N-PX, a fund would be entitled to 
vote on a matter if its portfolio securities are on loan as of the 
record date for the meeting. Because the reporting fund could recall 
and vote these loaned securities, this amendment is designed to ensure 
that a fund's filings on Form N-PX reflect the effect of its securities 
lending activities on its proxy voting, providing context to the 
information funds already provide about revenue from securities 
lending.\23\
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    \22\ See Item 1 of current Form N-PX.
    \23\ See Proposing Release, supra footnote 5, at section II.A. 
See also infra section II.C.3.b.
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    A number of commenters offered their views on the effect of 
including lent share disclosure in the form, which is discussed in more 
detail below in section II.C.3. On the overall scope of the form as it 
relates to funds, one commenter recommended requiring equity unit 
investment trusts (``UITs'') to file reports on Form N-PX.\24\ Due to 
the unmanaged nature of UITs and the fixed nature of their portfolios, 
we do not think it is appropriate to require periodic reporting from 
UITs regarding proxy voting at this time. We understand that UITs 
largely vote their securities in the same proportion as the vote of all 
other holders of those securities (``mirror vote''), which limits the 
ability of such funds to influence the outcome of shareholder votes and 
therefore reduces the benefit that is provided by periodic reporting on 
Form N-PX.\25\
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    \24\ See Morningstar Comment Letter. This commenter also 
recommended that both the lender and borrower be required to report 
what was lent or borrowed, respectively, and voted. A fund or 
manager typically will not know how a borrower has voted borrowed 
shares. If a borrower is itself a reporting person, however, the 
borrower will report its own voting record on Form N-PX, including 
votes cast with respect to borrowed shares. See infra section 
II.C.3.
    \25\ See Fund of Funds Arrangements, Investment Company Act 
Release No. 33329 (Dec. 19, 2018) [84 FR 1286 (Feb. 1, 2019)] 
(suggesting that mirror voting ``effectively nullifies'' the voting 
power of a fund that utilizes it).
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B. Scope of Managers' Form N-PX Reporting Obligations

1. Managers Subject to Form N-PX and Categories of Votes They Must 
Report
    We are adopting amendments, as proposed, that require each person 
that (1) is an ``institutional investment manager'' as defined in the 
Exchange Act; and (2) is required to file reports under section 13(f) 
of the Exchange Act, to report its say-on-pay votes on Form N-PX.\26\ 
This reporting obligation is consistent with the reporting obligation 
in section 14A(d) of the Exchange Act and provides that a manager 
otherwise required to report on Form 13F is required to disclose its 
say-on-pay votes on Form N-PX.\27\ The types of say-on-pay votes that 
managers must report are the same as the types of shareholder advisory 
votes section 14A of the Exchange Act requires. This includes votes on 
the approval of executive compensation and on the frequency of such 
executive compensation approval votes, as well as votes to approve 
``golden parachute'' compensation in connection with a merger or 
acquisition.\28\
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    \26\ See rule 14Ad-1(a); 15 U.S.C. 78m(f). See also Proposing 
Release, supra footnote 5, at section II.B.1.
    \27\ Rule 14Ad-1(a); Item 1 of amended Form N-PX.
    \28\ See section 14A(a) and (b) of the Exchange Act; 17 CFR 
240.14a-21. Shareholder votes on executive compensation that are not 
required by sections 14A(a) and (b), such as in the case of foreign 
private issuers (as defined in 17 CFR 240.3b-4(c) (``rule 3b-4(c) 
under the Exchange Act'')) that are exempt from the proxy 
solicitation rules, will not be required to be reported on Form N-
PX.
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    Commenters generally supported the requirement for managers to 
report say-on-pay votes.\29\ Some commenters agreed that the reporting 
requirement was appropriately tailored to managers who file Form 
13F.\30\ Certain commenters also agreed that the proxy vote reporting 
requirements for managers should be focused only on say-on-pay votes, 
as proposed.\31\ Other commenters, however, suggested that managers 
should be required to report other proxy votes in addition to say-on-
pay votes.\32\ We continue to believe that it is appropriate at this 
time to limit managers' reporting obligations to say-on-pay votes, 
consistent with the statutory mandate in section 14A.\33\
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    \29\ See e.g., AIMA Comment Letter; ASBC Comment Letter; Better 
Markets Comment Letter; Comment Letter of Kyle Ratcliff (Oct. 15, 
2021) (``Ratcliff Comment Letter''); Pickard Comment Letter; Comment 
Letter of Seattle City Employees' Retirement System (Dec. 7, 2021) 
(``SCERS Comment Letter''); Comment Letter of Shareholder Commons 
and B Lab US/CAN (Dec. 13, 2021) (``Shareholder Commons Comment 
Letter I''); CFA/CII Comment Letter; ASBC Comment Letter; Comment 
Letter of Christopher Pearce (Oct. 8, 2021) (``Pearce Comment 
Letter''); Comment Letter of John C. Friess (Nov. 22, 2021) 
(``Friess Comment Letter''); ICI Comment Letter I.
    \30\ See AIMA Comment Letter; Better Markets Comment Letter; MFA 
Comment Letter.
    \31\ See Pickard Comment Letter; MFA Comment Letter; AIMA 
Comment Letter.
    \32\ See Comment Letter of Alan Reid (Oct. 18, 2021) (``Reid 
Comment Letter''); Comment Letter of Heather Rhee (Nov. 18, 2021) 
(``Rhee Comment Letter''); Shareholder Commons Comment Letter I; 
SCERS Comment Letter (recommending the reporting of votes related to 
climate change metrics and qualitative reporting, net zero 
commitments, and board member elections).
    \33\ See Proposing Release, supra footnote 5, at the paragraph 
containing nn.35-36; see also 2010 Proposing Release, supra footnote 
11, at section II.B.1 (``The scope of votes that would be required 
to be reported under the proposal is the same as the scope provided 
by new Section 14A(d) of the Exchange Act.'').

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[[Page 78773]]

    One commenter suggested that managers and funds should have 
different reporting forms.\34\ Another commenter suggested that the 
Commission permit managers to file their say-on-pay votes through a 
revised Form 13F to relieve the additional regulatory burden that would 
result from a new, separate filing requirement.\35\ We believe that 
both managers and funds should report proxy voting matters on the same 
form to reduce the potential for investor confusion and to enhance 
investors' ability to compare voting records from various reporting 
persons both over a uniform reporting period and through the use of a 
single form. In addition, the use of a revised Form 13F for managers 
would necessitate the creation and use of an expanded custom XML schema 
for Form 13F that would mirror the new custom XML schema for Form N-PX, 
leading to technical redundancies and inefficiencies compared to using 
a single new custom XML schema for Form N-PX that covers both funds and 
managers. It also would be confusing for both reporting persons and 
investors if managers included say-on-pay votes on Form 13F because, as 
the final rule provides, reports on Form N-PX cover different periods 
and different securities than those covered by reports on Form 13F.
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    \34\ See Rhee Comment Letter.
    \35\ See AIMA Commenter Letter.
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2. Managers' Exercise of Voting Power
    We are adopting, as proposed, a two-part test for determining 
whether a manager ``exercised voting power'' over a security and must 
report a say-on-pay vote on Form N-PX.\36\ As proposed, a manager is 
required to report a say-on-pay vote for a security only if the 
manager: (1) has the power to vote, or direct the voting of, a 
security; and (2) ``exercises'' this power to influence a voting 
decision for the security.\37\ In the first part of the test, the 
ability to vote the security or direct the voting of the security 
includes the ability to determine whether to vote the security at all, 
or to recall a loaned security before a vote. Under the rule, voting 
power could exist or be exercised either directly or indirectly by way 
of a contract, arrangement, understanding, or relationship. Per this 
analysis, multiple parties could both have and exercise voting power 
over the same securities and, in the proposal, we provided the example 
of a party exercising voting power when it influences the way a third 
party votes the security, even where the manager is not the sole 
decision-maker.\38\
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    \36\ See Proposing Release, supra footnote 5, at section II.B.2.
    \37\ See rule 14Ad-1(d)(1) (defining voting power) and rule 
14Ad-1(d)(2) (defining exercise of voting power). This approach is 
tailored to considerations associated with section 14A of the 
Exchange Act and the scope of say-on-pay reporting obligations. As a 
result, the definitions of ``voting power'' and the ``exercise'' of 
voting power do not affect the meaning of these or similar terms 
used in other Commission rules.
    \38\ Proposing Release, supra footnote 5, at section II.B.2.
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    As proposed, we are defining the exercise of voting power to mean 
the actual use of voting power to influence a voting decision. The 
framework focuses on the exercise, rather than mere possession, of 
voting power. Thus, managers will exercise voting power when they vote 
or influence a vote using their own independent judgment. As an 
example, a manager exercises voting power when it votes (or directs 
another party to vote) in accordance with the manager's own guidelines 
or based on the manager's own judgment, including exercising 
independent judgment or expertise to determine how a client's voting 
policies should apply to a say-on-pay vote. A manager also exercises 
voting power when it influences the decision of whether to vote a 
security, such as by determining not to vote on a say-on-pay matter or 
whether to recall loaned securities in advance of a vote in order to 
vote the shares. Given this focus on a manager influencing the voting 
decision, a manager will have no reporting obligation with respect to a 
voting decision that is entirely determined by its client or another 
party.\39\ We are adopting the amendments as proposed because we 
believe the two-part test balances investor informational needs, 
reporting burdens, and the statutory obligations.
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    \39\ For a discussion of examples where a manager does or does 
not exercise voting power, see Proposing Release, supra footnote 5, 
at section II.B.2.
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    Some commenters generally supported our proposed definition of the 
exercise of voting power.\40\ Other commenters preferred what they 
viewed as a more objective approach, suggesting that the ``exercise of 
voting power'' standard could be subjective, burdensome, and cause 
confusion in situations in which multiple managers exercise voting 
power over the same security.\41\ One commenter recommended either 
basing the reporting obligation on who actually marks the proxy card 
or, in the alternative, limiting the reporting obligation to the party 
who ``primarily'' influences a voting decision.\42\ Another commenter 
suggested that only the managers who actually voted or instructed an 
intermediary to vote securities should be required to report.\43\
---------------------------------------------------------------------------

    \40\ See ICI Comment Letter I; Morningstar Comment Letter.
    \41\ See Pickard Comment Letter; MFA Comment Letter.
    \42\ See Pickard Comment Letter.
    \43\ See MFA Comment Letter.
---------------------------------------------------------------------------

    We recognize that the framework we are adopting could result in 
some subjectivity in some cases. Nonetheless, this approach addresses 
the section 14A requirement for managers to report how they voted. We 
believe the appropriate focus is on when a manager exercises discretion 
in determining how to vote on a say on pay matter, as implemented in 
the final rule's definition of the exercise of voting power. This 
provides more comprehensive information for investors by requiring each 
manager who uses its voting power to influence a say-on-pay vote to 
report how the manager voted (or determined not to vote), even though 
there may be some degree of subjectivity in particular cases in 
determining whether a given manager is required to report a vote.
    Conversely, the tests suggested by commenters would limit the 
utility of Form N-PX for investors. For example, while it may lessen 
the reporting obligations for some managers, a test based on who 
physically marks the proxy card (or its electronic equivalent), who 
primarily influenced a voting decision, or who actually voted or 
instructed a vote would exclude managers' votes that would be covered 
under the final rules, depriving investors of useful information 
regarding say-on-pay voting decisions. For example, if both managers A 
and B influenced a voting decision and manager B marked the proxy card, 
a test that only requires the manager marking the proxy card to report 
the vote would not provide investors any information about manager A's 
participation in the voting decision. As another example, a test that 
focuses exclusively on situations in which a manager actually votes or 
instructs a vote would not capture instances in which a manager 
determines not to cast a vote. Determining when a manager ``primarily'' 
influences a voting decision would create its own subjective analysis 
and thus does not appear to address commenter concerns about 
subjectivity. As for situations in which multiple managers exercise 
voting power over the same security, those managers will be able to 
rely on the joint reporting provisions to reduce the associated 
reporting burdens.
    One commenter questioned whether a manager would ``influence'' a 
voting

[[Page 78774]]

decision if the advice given to a client or co-manager was not taken 
and the vote was cast differently than the manager suggested.\44\ Under 
the approach we are adopting, and in keeping with exercise of voting 
power analysis, a manager would not be viewed as influencing a vote if 
the vote is cast differently than the manager's recommendation or 
suggestion.
---------------------------------------------------------------------------

    \44\ See Pickard Comment Letter.
---------------------------------------------------------------------------

3. Additional Scoping Matters for Manager Reporting of Say-on-Pay Votes
    We are adopting, as proposed, amendments that require a manager to 
report say-on-pay votes under section 14A with respect to any security 
over which it exercised voting power. Like both the 2010 Proposing 
Release and the Proposing Release, we are not modifying the scope of 
securities to align with those reported on Form 13F or to provide an 
exception from reporting where the manager does not vote. We are, 
however, amending Form N-PX to limit the reporting obligation for 
managers who have a disclosed policy of not voting proxies and who, in 
line with those policies, have in fact not voted proxies during the 
reporting period.
    Some commenters supported the Commission's proposal to require 
managers to report all say-on-pay votes, suggesting that such a 
requirement provides investors with a manager's full voting record.\45\ 
Other commenters recommended that we align the scope of securities 
reported on Form N-PX with those reported on Form 13F and proposed 
various ways to do so.\46\ Some commenters suggested that the 
Commission provide a de minimis exemption that would, consistent with 
Form 13F, exclude from the Form N-PX reporting obligation securities 
holdings of fewer than 10,000 shares and less than $200,000 aggregate 
fair market value.\47\ Some commenters suggested that the Form N-PX 
reporting requirements should be limited to the kinds of securities 
managers are required to report on Form 13F (i.e., section 13(f) 
securities) on the basis that such an approach would be clearer to 
investors and would limit regulatory costs.\48\ One of these commenters 
suggested this would be consistent with the Exchange Act, which imposes 
the say-on-pay vote reporting requirement on managers subject to 
section 13(f) of that Act.\49\ Another one of these commenters urged 
the Commission to exclude from the reporting obligation securities that 
are exempt from registration under section 12 of the Exchange Act.\50\ 
This commenter asserted that managers would have difficulty obtaining 
the information needed to complete Form N-PX for these securities 
because of a lack of adequate and reliable data. Another commenter 
suggested that managers who do not report a security on Form 13F 
because they lack investment discretion over such security should not 
be required to disclose on Form N-PX votes related to that 
security.\51\ Other commenters suggested that only securities held at 
the end of a calendar quarter be reported because these securities 
would also be reported on Form 13F.\52\ Some commenters urged that, in 
the alternative, short-term positions, such as those held for fewer 
than 30 days, should be excluded from the reporting obligation.\53\
---------------------------------------------------------------------------

    \45\ See, e.g., Better Markets Comment Letter; CFA/CII Comment 
Letter; Comment Letter of Principles for Responsible Investment 
(Dec. 14, 2021) (``PRI Comment Letter'').
    \46\ See, e.g., AIMA Comment Letter; MFA Comment Letter; Pickard 
Comment letter.
    \47\ See Pickard Comment Letter; AIMA Comment Letter; MFA 
Comment Letter; see also Special Instruction 10 of Form 13F. But see 
Better Markets Comment Letter; Morningstar Comment Letter 
(suggesting that we not provide a de minimis exemption because it 
would reduce the value of votes by omitting a manager's full voting 
record and would create the wrong incentives by encouraging managers 
to leave shares out on loan to stay below the reporting threshold).
    \48\ See AIMA Comment Letter; MFA Comment Letter. Section 13(f) 
securities are equity securities of a class described in section 
13(d)(1) of the Exchange Act that are admitted to trading on a 
national securities exchange or quoted on the automated quotation 
system of a registered securities association. The Commission 
publishes a list of these securities pursuant to section 13(f)(4) of 
the Exchange Act. See 17 CFR 240.13f-1(c).
    \49\ See MFA Comment Letter.
    \50\ See AIMA Comment Letter.
    \51\ See Pickard Comment Letter.
    \52\ See MFA Comment Letter; AIMA Comment Letter.
    \53\ See AIMA Comment Letter; MFA Comment Letter.
---------------------------------------------------------------------------

    We are not limiting the scope of securities subject to the Form N-
PX reporting requirement as these commenters suggested because doing so 
would exclude say-on-pay voting information that would be beneficial to 
investors. A more limited reporting obligation would reduce the utility 
of the say-on-pay reporting disclosure by depriving investors of a 
manager's full voting record.\54\ We do not believe that section 14A 
suggests or requires that the Commission align the scope of securities 
required to be reported on Form N-PX with those required for Form 13F 
or apply Form 13F's de minimis exemption to Form N-PX. Section 14A 
requires every institutional investment manager subject to section 
13(f) to report how it voted on any say-on-pay shareholder vote, which 
would include say-on-pay votes held by issuers of securities that are 
not reported on Form 13F. If Form N-PX reporting contained a de minimis 
exemption or were limited only to those securities reported on Form 13F 
or only those securities over which managers have investment 
discretion, then investors would not be able to identify on Form N-PX 
all say-on-pay votes required under the statute.
---------------------------------------------------------------------------

    \54\ Proposing Release, supra footnote 5, at section II.B.3; see 
also Better Markets Comment Letter (suggesting that a de minimis 
exception or otherwise limiting say-on-pay votes to securities that 
managers report on Form 13F would exclude votes that section 14A(d) 
is meant to capture).
---------------------------------------------------------------------------

    In addition, a commenter urged the Commission to limit the 
reporting requirement to section 13(f) securities because managers may 
not have sufficient information to report say-on-pay votes conducted by 
issuers whose securities are exempt from registration under section 12 
of the Exchange Act. There are, however, securities other than section 
13(f) securities that are subject to section 12 registration, including 
certain non-exchange-traded securities.\55\ Moreover, issuers of 
securities that are exempt from section 12 are not required to conduct 
say-on-pay votes in the first instance, and if such an issuer were to 
conduct a say-on-pay vote voluntarily, managers would not be required 
to report that vote because section 14A(d) only requires managers to 
report votes pursuant to subsections 14A(a) and 14A(b).\56\
---------------------------------------------------------------------------

    \55\ See section 12(g) of the Exchange Act [15 U.S.C. 78l(g)].
    \56\ See Shareholder Approval of Executive Compensation and 
Golden Parachute Compensation, Exchange Act Release No. 63768 (Jan. 
25, 2011) [76 FR 6010 (Feb. 2, 2011)], at n.38 (``[The say-on-pay 
rules for issuers] as adopted apply to issuers who have a class of 
equity securities registered under section 12 [15 U.S.C. 78l] of the 
Exchange Act and are subject to our proxy rules.'')
---------------------------------------------------------------------------

    We also are not adopting commenters' suggestions to align Form N-PX 
reporting requirements with Form 13F such that a manager would only 
report votes for securities reported at quarter end on Form 13F. Doing 
so would potentially exclude a significant number of say-on-pay votes, 
thus limiting the usefulness of the information for investors as well 
as potentially omitting the reporting of how a manager voted on a say-
on-pay vote as required pursuant to section 14A. For example, Form 13F 
reports are not required to include securities held during the quarter 
but subsequently disposed of prior to the end of the quarter.\57\ We 
are also not

[[Page 78775]]

adopting a framework that would only require the reporting of 
securities held for at least a specified period of time for similar 
reasons.
---------------------------------------------------------------------------

    \57\ See Proposing Release, supra footnote 5, at section II.B.3. 
See also Better Markets Comment Letter (suggesting that say-on-pay 
vote reporting should not be limited to positions reported on Form 
13F because securities disposed of before quarter end would not be 
reported).
---------------------------------------------------------------------------

    Some commenters responded to our request for comment as to whether 
we should modify our proposed approach for managers who do not vote 
their shares. For example, the Commission requested comment on whether 
to exempt a manager who does not vote its shares from certain 
disclosure requirements and whether any modified approach should be 
subject to conditions, such as the manager having disclosed to its 
clients that it does not vote.\58\ Commenters addressing these points 
suggested that the Commission limit the reporting obligation for 
managers who have a disclosed policy of not voting proxies.\59\ These 
commenters stated that some registered investment advisers do not vote 
proxies and disclose their general policy of not voting proxies in 
other materials, including Part 2A of their Form ADV. One of these 
commenters suggested that, under the proposed rule, these advisers 
would only be disclosing their security holdings, not the quantitative 
voting data contemplated by the proposed amendments.\60\ Other 
commenters articulated their view that disclosure of a no-vote policy 
sufficiently addresses any transparency concerns by providing investors 
with an understanding of a manager's votes.\61\ Relatedly, one of these 
commenters suggested that imposing the full reporting obligation on 
managers who have a disclosed policy of not voting creates a burden on 
managers, is of limited value to investors, and thus these managers 
should be exempted.\62\ Other commenters suggested a more streamlined 
reporting process for managers with no or limited say-on-pay votes, 
with one such commenter suggesting that Form N-PX include a checkbox 
for managers that have a general policy of not participating in one or 
more categories of say-on-pay votes to alleviate such managers of 
reporting non-votes in those categories.\63\
---------------------------------------------------------------------------

    \58\ See Proposing Release, supra footnote 5, at section II.B.3.
    \59\ See Pickard Comment Letter; AIMA Comment Letter; MFA 
Comment Letter.
    \60\ See AIMA Comment Letter.
    \61\ See Pickard Comment Letter; AIMA Comment Letter (suggesting 
that many registered investment advisers disclose in Form ADV that 
they do not vote proxies).
    \62\ See Pickard Comment Letter.
    \63\ See MFA Comment Letter.
---------------------------------------------------------------------------

    As a result, we are adopting a streamlined reporting option for 
managers who have a disclosed policy of not voting proxies and in fact 
have not voted proxies during the reporting period. After considering 
those comments, we believe there is limited value for investors in 
requiring the full scope of Form N-PX reporting by managers, such as 
information about individual voting matters, under these circumstances. 
Accordingly, we are adding a designation to Form N-PX that would permit 
managers who have a disclosed policy of not voting proxies, and who did 
not in fact vote during the reporting period, to indicate such in a 
notice report. The manager would not have to report any information on 
a security-by-security basis and instead would be required only to file 
N-PX's cover page and required signature. This approach balances 
appropriate transparency with the reporting burden. However, we do not 
believe it is appropriate to exempt these managers fully from reporting 
on Form N-PX as this may limit the ability of investors to understand 
fully how a manager exercises its voting power.\64\ Further, these 
notice reports will aid in the effectiveness of the Commission's 
oversight of managers in complying with the requirements of section 
14A. Information filed on Form N-PX in a structured data language is 
easier to analyze systematically than a narrative disclosure and has 
the benefit of differentiating cases where a manager has no votes to 
report from cases where a manager simply fails to report. For similar 
reasons, as proposed, we are requiring managers that do not have any 
proxy votes to report for the reporting period to file a notice report 
to this effect.\65\
---------------------------------------------------------------------------

    \64\ See Proposing Release, supra footnote 5, at n.63 and 
accompanying paragraph.
    \65\ As discussed in more detail below, we have moved this 
language from the form to the cover page.
---------------------------------------------------------------------------

C. Proxy Voting Information Reported on Form N-PX

    We are adopting the proposed amendments to the proxy voting 
information reported on Form N-PX largely as proposed, but have made 
certain revisions as laid out below . We believe the amendments we are 
adopting will make the information more useful to investors as compared 
to both the current form and the proposal. For example, the amendments 
facilitate investors' ability to locate the same proxy voting matter on 
different reports on Form N-PX, aiding investor identification of proxy 
voting matters that are of interest to them. The amendments also 
provide additional quantitative information to help investors 
understand how reporting persons balance voting decisions against other 
priorities, and, in general, make the information reported more useful 
to investors.
1. Identification of Proxy Voting Matters
    We proposed to require reporting persons to use the same language 
that is on the form of proxy to identify the matter on Form N-PX, and 
to report proxy voting matters in the same order in which they are 
presented on the issuer's form of proxy, including identifying each 
director separately in the same order as on the form of proxy, even if 
the election of directors is presented as a single matter on the form 
of proxy (``voting matter identification requirements''). We are 
adopting these amendments as proposed, but with two modifications.
    First, under the amendments, these requirements will only apply to 
proxy votes if a form of proxy in connection with a matter is subject 
to rule 14a-4 under the Exchange Act. That rule requires the form of 
proxy, or ``proxy card,'' included in the proxy materials to clearly 
and impartially identify each voting matter (an ``SEC proxy card''). 
SEC proxy cards contain the information reporting persons need to 
comply with the new voting matter identification requirements. Second, 
in all other cases, reporting persons will be subject to the current 
requirement to provide a ``brief identification of the matter voted 
on,'' except that we are adopting one modification limiting 
abbreviations used in the descriptions of these voting matters as 
described in more detail below. The amendments, with these 
modifications to the proposal, are designed to address challenges 
identified by commenters with respect to certain voting matters, while 
making it easier for investors to locate identical voting matters on 
different Form N-PX reports by different reporting persons.
    Commenters supporting the proposed voting matter identification 
requirements asserted that they would assist investors in understanding 
how reporting persons vote shares and make the form more useful.\66\ 
For instance, one commenter stated that non-standard descriptions made 
it difficult to

[[Page 78776]]

compare votes across different reports on Form N-PX.\67\ A different 
commenter stated that the current lack of standardization imposes a 
cost on investors, who need to expend time and resources to compare 
different reporting persons.\68\
---------------------------------------------------------------------------

    \66\ See, e.g., CFA/CII Comment Letter; Morningstar Comment 
Letter; Comment Letter of James McRitchie (Dec. 13, 2021) 
(``McRitchie Comment Letter II''). James McRitchie also wrote a 
separate comment letter dated Dec. 13, 2021 (``McRitchie Comment 
Letter I'') and a comment letter dated Dec. 14, 2021 (``McRitchie 
Comment Letter III''). The letters are referred to collectively as 
if they were a single letter (``McRitchie Comment Letter'').
    \67\ See Ceres Comment Letter.
    \68\ See CFA/CII Comment Letter.
---------------------------------------------------------------------------

    Conversely, many commenters suggested that the proposed voting 
matter identification requirements could raise challenges, especially 
in the case of foreign issuers. For example, one commenter stated that 
``the descriptions of proxy voting matters by [companies not subject to 
the Commission's proxy rules] vary widely between markets and, at least 
in some cases, are neither concise nor particularly descriptive, and in 
many cases are not in English.'' \69\ Several other commenters also 
noted that non-English filings could create special challenges.\70\ 
Commenters also stated that, in certain cases, voting matters may not 
be clearly described, and that descriptions of proxy voting matters can 
be quite extensive and can surpass standard character count limits, 
either of which could result in N-PX filings being longer than they are 
currently.\71\ With regard to the ordering requirement, two commenters 
stated that the items presented in proxy materials issuers provide are 
not in a standardized order, with one stating that issuers may present 
a particular matter in multiple orders in different parts of the 
filing.\72\ Another commenter suggested that, while a consistent 
ordering of content would be helpful for reading the data without using 
a program to analyze it, ordering is not needed when data is reported 
in structured format.\73\ However, several commenters that raised 
concerns with the proxy voting matter identification requirements 
suggested their concerns would not extend to issuers whose form of 
proxy meets the proxy requirements of the Exchange Act.\74\
---------------------------------------------------------------------------

    \69\ Glass Lewis Comment Letter.
    \70\ See ISS Comment Letter; ICI Comment Letter (stating that it 
was not clear whether or not reporting persons would be permitted to 
file N-PX in a language other than English); Federated Hermes 
Comment Letter.
    \71\ See Bloomberg Comment Letter (not clearly described); ISS 
Comment Letter (descriptions can be extensive).
    \72\ Federated Hermes Comment Letter (with regards to foreign 
issuers); Bloomberg Comment Letter.
    \73\ XBRL Comment Letter.
    \74\ See, e.g., Glass Lewis Comment Letter (stating that the 
justification for requiring standardization only applies to issuers 
subject to the Commission's proxy rules); Federated Hermes Comment 
Letter (``[W]e believe this aspect of the Proposal to be workable 
where it concerns domestic issuers''). The proxy requirements of the 
Exchange Act are largely limited to securities registered pursuant 
to section 12 of the Exchange Act. See, e.g., 15 U.S.C. 78n(a)(1). 
Foreign private issuers are exempted from these requirements. See 17 
CFR 240.3a12-3(b).
---------------------------------------------------------------------------

    After considering the comments, we are adopting the voting matter 
identification requirements as proposed, except that they will only 
apply if a form of proxy in connection with a matter is subject to the 
requirements of rule 14a-4 under the Exchange Act, i.e., an SEC proxy 
card is available for the matter.\75\ As noted in the Proposing Release 
and as required by rule 14a-4, ``the descriptions and ordering used on 
an issuer's form of proxy, which is publicly available and must 
identify clearly and impartially each separate matter intended to be 
acted upon, would address the previously identified practical issues 
associated with standardized descriptions.'' \76\ Forms of proxy 
subject to rule 14a-4 therefore will identify the matter in a clear 
manner, listed in order where the form of proxy covers multiple 
matters, and be in the English language. Reporting persons would not 
need to review other documents or filings of the issuer, such as a 
proxy statement, beyond the form of proxy to determine the description 
or order of presentation. We recognize that the voting matter 
identification requirements will involve changes to reporting persons' 
processes, or those of their service providers,\77\ in order to comply 
with the voting matter identification requirements. These costs are 
justified by the benefits of the disclosure and may be reduced by 
applying the voting matter identification requirements only where a 
form of proxy is available to supply the information.\78\
---------------------------------------------------------------------------

    \75\ Special Instruction D.3 of amended Form N-PX.
    \76\ See Proposing Release, supra footnote 5, at n.76 and 
accompanying text (citing rule 14a-4(a)(3), which requires that the 
form of proxy identify clearly and impartially each separate matter 
intended to be acted upon, and associated guidance on descriptions 
of matters in forms of proxy). See also 17 CFR 240.14a-4(a)(3); see 
17 CFR 232.306 (requiring the use of the English language in all 
electronic filings); Division of Corporation Finance, Compliance and 
Disclosure Interpretations, Section 301 (Mar. 22, 2016), available 
at https://www.sec.gov/divisions/corpfin/guidance/exchange-act-rule-14a-4a3-301.htm.
    \77\ See ICI Comment Letter I; ISS Comment Letter.
    \78\ In addition, recognizing that the structured data 
requirements may reduce the need for a consistent ordering when the 
filings are analyzed with the assistance of a computer program, the 
consistent ordering requirement should nonetheless aid investors who 
choose to review the filings in plain text format.
---------------------------------------------------------------------------

    Reporting persons, however, may hold securities for which voting 
matters are not subject to our proxy rules and for which an SEC proxy 
card is not available. In this case the associated proxy materials may 
not clearly provide the information required to satisfy the voting 
matter identification requirements, or may not provide that information 
in English. We recognize the practical challenges raised by commenters 
in complying with the proposed proxy voting matter identification 
requirements in these circumstances. Requiring reporting persons to use 
the same language that is on the form of proxy to identify the matter 
will be less useful to investors if the language on the form of proxy 
is not in English, or is not clearly presented. Reporting persons also 
would face challenges in reporting proxy voting matters in the same 
order in which they are presented on the issuer's form of proxy if, as 
some commenters asserted, items presented in proxy materials provided 
by some issuers are not in a standardized order.
    The modifications to the voting matter identification requirements 
are intended to address these concerns because, under the amendments, 
these requirements will only apply when the reporting person will have 
the information necessary to satisfy them from an SEC proxy card. Where 
an SEC proxy card is not available for a matter, reports regarding the 
matter will instead be required to provide ``a brief identification of 
the matter voted on,'' consistent with the current requirement.\79\ In 
an effort to improve the usefulness of this information to investors, 
and in a change from the proposal, descriptions of these matters will 
be required to limit the use of abbreviations to commonly understood 
terms or terms that the issuer abbreviated in its description of the 
matter. As we discussed in the Proposing Release, abbreviations and 
other shorthand were one of the fund practices that can make it 
difficult for investors to identify and compare voting matters.\80\ The 
requirement to limit abbreviations should help ensure that, to the 
extent that a reporting person is abbreviating terminology on the form, 
the reporting person is doing so consistently, either because the 
abbreviation is commonly understood or was part of the issuer's 
description of the matter.
---------------------------------------------------------------------------

    \79\ See Item 1(e) of current Form N-PX.
    \80\ See Proposing Release, supra footnote 5, at text 
accompanying n.222.
---------------------------------------------------------------------------

2. Identification of Proxy Voting Categories
    As proposed, we are adopting a requirement for reporting persons to 
select from specified, standardized categories to identify the subject 
matter of each reported proxy voting item. The

[[Page 78777]]

categories are designed to cover matters on which funds frequently 
vote. In a change from the proposal, we have streamlined and 
consolidated the proposed list of categories, based on suggestions from 
commenters, to reduce overlap and make the categories easier to use. We 
also have eliminated the proposed requirement to select from a list of 
subcategories and have included in Form N-PX examples of matters that 
would fall into each category that generally track subjects that were 
previously proposed as subcategories. Collectively, we believe these 
changes from the proposal will increase the usefulness of the 
categories while reducing potential difficulties identified by 
commenters.
    In general, commenters who supported the proposed categorization 
requirement believed the requirement would provide benefits to users of 
the form. For example, commenters stated that categorizing proxy votes 
makes a fund's disclosed proxy voting record more useful because it is 
more searchable, which makes it easier for investors to focus on topics 
they find important.\81\ As one commenter stated, this ``significantly 
lowers the costs of consumption'' of the data.\82\ Another commenter 
stated that categorizing proxy votes provides a signal to investors of 
the fund's investment criteria and overarching goals.\83\
---------------------------------------------------------------------------

    \81\ See, e.g., Morningstar Comment Letter; CFA/CII Comment 
Letter.
    \82\ Bloomberg Comment Letter.
    \83\ LTSE Comment Letter.
---------------------------------------------------------------------------

    Most commenters who addressed the categorization requirement stated 
that the proposed version would be burdensome for reporting persons and 
would not provide useful information for investors. For example, many 
commenters asserted that the proposed 17 categories and approximately 
90 subcategories would not be helpful to investors, with some 
suggesting that the granularity could complicate investors' ability to 
compare different filings to locate matters relating to particular 
categories.\84\ Some stated the proposed approach would result in 
numerous judgments as to the category or subcategory in which a matter 
belonged.\85\ Commenters also suggested that a categorization 
requirement with fewer, broader categories would accomplish what they 
viewed as the main policy objective of the proposal while also reducing 
the likelihood of potential differences among reporting persons.\86\ A 
number of commenters suggested that we remove the proposed 
subcategories but retain them as examples of matters to be included in 
the categories.\87\ Certain commenters objected to particular 
categories or subcategories, asserting that they might not be 
representative of voting matters in future years.\88\ Others suggested 
the burden of categorization would be better assigned to issuers, to 
reduce burdens on funds and provide consistency in funds' 
categorizations, or that we exempt small funds because they do not 
typically have enough voting power to change the outcome of most proxy 
votes.\89\
---------------------------------------------------------------------------

    \84\ See, e.g., ICI Comment Letter I.
    \85\ See, e.g., Blackrock Comment Letter.
    \86\ See, e.g., Federated Hermes Comment Letter.
    \87\ See, e.g., ICI Comment Letter I; CFA/CII Comment Letter; 
Federated Hermes Comment Letter. Some commenters also suggested that 
we change one or more subcategories. See, e.g., PRI Comment Letter; 
CFA/CII Comment Letter. However, we are not adopting the 
subcategorization requirement.
    \88\ See Comment Letter of the National Center for Public Policy 
Research (Dec. 9, 2021) (``NCPPR Comment Letter''); US Chamber of 
Commerce Comment Letter; Utah Comment Letter; McRitchie Comment 
Letter.
    \89\ See, e.g., AIMA Comment Letter (issuers should categorize), 
but see Blackrock Comment Letter (funds, not issuers, should 
categorize); Ultimus Comment Letter (issuers should categorize and 
exempt small funds).
---------------------------------------------------------------------------

    After considering these comments, we are modifying the proposed 
categorization requirement to reduce the burden and the level of 
uncertainty among potentially overlapping categories for reporting 
persons while enhancing the usefulness of categorization to investors. 
Specifically, based in part on suggestions from commenters, we have 
streamlined the list of categories, including combining certain 
categories that were particularly likely to overlap and thus could 
cause confusion on how to categorize. For example, one commenter 
recommended that we change the board of directors category to only 
address director elections and add the remaining elements of the board 
of directors category to the corporate governance category, combine 
meeting governance with the corporate governance category, combine 
securities issuance with capital structure, and combine political 
activities with other social issues.\90\ As detailed in the chart 
below, we have made changes to the categories that are generally 
consistent with these recommendations. These changes should reduce 
questions about how to categorize voting matters on these topics and 
reduce overlap between categories.
---------------------------------------------------------------------------

    \90\ See, e.g., ICI Comment Letter I.
---------------------------------------------------------------------------

    We are not, however, combining section 14A reporting with other 
compensation matters, as one commenter suggested, in order to aid 
managers in complying with this categorization requirement given that 
they are only reporting say-on-pay votes, and to aid investors in 
finding say-on-pay votes efficiently.\91\ We are also not combining or 
otherwise changing the categories relating to environmental or climate, 
human rights or human capital/workforce, or diversity, equity, and 
inclusion as we believe that these are sufficiently distinct topics 
that they should be separately identified.\92\
---------------------------------------------------------------------------

    \91\ See id.
    \92\ See id.; see also PRI Comment Letter.
---------------------------------------------------------------------------

    We also are removing entirely the proposed requirement to assign 
matters to subcategories. Instead, the amendments include examples of 
matters that would be included within each category. The examples we 
are adopting are largely the same as the proposed subcategories, but, 
when combining categories, we added the subcategories from the 
eliminated category as examples in the combined category.\93\ In 
addition because these examples are now illustrative rather than 
comprehensive, we eliminated proposed subcategories that simply 
clarified that any other matter within a category needed to be included 
(e.g., ``other audit-related matters (along with a brief 
description)'').
---------------------------------------------------------------------------

    \93\ In addition, we added the example of ``proxy access'' in 
the corporate governance category to further clarify where those 
votes should be categorized.
---------------------------------------------------------------------------

    Accordingly, relative to the proposal we are adopting a 
categorization requirement with fewer, but broader, categories. 
Adopting broader categories and eliminating subcategories seeks to 
reduce potential overlap among categories and also reduce the 
likelihood that the categories are not representative since they are 
broader and less likely to change.\94\ As a result, the changes should 
reduce the need for subjective judgments on the part of reporting 
persons in determining the applicable categories. In particular, the 
differences between categories should be clearer and reporting persons 
need not determine which of several subcategories may apply to a 
matter. This, in turn, will increase comparability, and therefore the 
utility, of the information for investors.\95\ We

[[Page 78778]]

therefore believe the modifications to the proposal balance the 
concerns raised by commenters on the proposed categorization 
requirement with the benefits provided by voting matter 
classifications. We also believe that the reduced burden further 
reinforces our decision not to require issuers to categorize voting 
matters. In the context of this rulemaking, which is focused on the 
requirement for funds to report their proxy voting records and 
implementing section 14A for managers, we believe the categorization 
requirement should apply to those reporting persons. The reduced burden 
of the categorization requirement relative to the proposal also 
supports not exempting small funds, therefore allowing investors in 
those funds to benefit from the categorization requirement. The table 
below outlines the changes to the categories in the proposal.
---------------------------------------------------------------------------

    \94\ While any chosen list of categories may not perfectly 
capture unanticipated trends that arise in the future, the use of 
broader categories that are less likely to change helps to address 
concerns that the chosen categories are based on a proxy season that 
some commenters asserted was not representative. See, e.g., NCPPR 
Comment Letter; US Chamber of Commerce Comment Letter.
    \95\ Although one commenter suggested that activists, rather 
than fund investors, would use this information to try to influence 
how funds vote, fund advisers are subject to fiduciary duties and 
thus must make voting determinations in the best interest of the 
fund and its shareholders. See Utah Comment Letter; see also infra 
footnotes 331-333 and accompanying text. In addition, the amendments 
to the format and content of Form N-PX may also help deter fund 
voting decisions motivated by conflicts of interest. See infra 
footnotes 281-284 and accompanying text.

            Table 1--Changes to Categories From the Proposal
------------------------------------------------------------------------
                                                          Change from
        Proposed category          Adopted category        proposal
------------------------------------------------------------------------
Board of directors..............  Director elections  Limited to
                                                       elections; other
                                                       board matters
                                                       categorized as
                                                       corporate
                                                       governance.
Section 14A.....................  Section 14A.......  None.
Audit-related...................  Audit-related.....  None.
Investment company matters......  Investment company  None.
                                   matters.
Shareholder rights and defenses.  Shareholder rights  None.
                                   and defenses.
Extraordinary transactions......  Extraordinary       None.
                                   transactions.
Security Issuance...............  n/a...............  Consolidated with
                                                       capital
                                                       structure.
Capital structure...............  Capital structure.  Now includes
                                                       security
                                                       issuance.
Compensation....................  Compensation......  None.
Corporate governance............  Corporate           Includes board
                                   governance.         matters other
                                                       than director
                                                       elections and
                                                       meeting
                                                       governance.
Meeting governance..............  n/a...............  Consolidated with
                                                       corporate
                                                       governance.
Environment or climate..........  Environment or      None.
                                   climate.
Human rights or human capital/    Human rights or     None.
 workforce.                        human capital/
                                   workforce.
Diversity, equity, and inclusion  Diversity, equity,  None.
                                   and inclusion.
Political activities............  n/a...............  Consolidated with
                                                       other social
                                                       issues.
Other social issues.............  Other social        Now includes
                                   issues.             political
                                                       activities.
Other...........................  Other.............  None.
------------------------------------------------------------------------

    As proposed, the list of categories will be non-exclusive and 
reporting persons are instructed to select all categories applicable to 
the matter.\96\ This approach will further aid investors in locating 
useful information by allowing them to identify multiple topics that 
may be of interest. For example, a fund that casts a vote on a proxy 
proposal tying executive compensation to the completion of a merger 
(other than a section 14A proposal) would categorize the vote in both 
the compensation and extraordinary transactions categories, enabling 
investors who are interested in either the fund's votes on compensation 
issues or its votes on the merger to locate the vote.
---------------------------------------------------------------------------

    \96\ Special Instruction D.4 of amended Form N-PX.
---------------------------------------------------------------------------

3. Quantitative Disclosures
    We are adopting as proposed changes to Form N-PX that will require 
reporting persons to disclose quantitative information about the shares 
that were voted or instructed to be voted, as well as shares the 
reporting person loaned and did not recall.
(a) Disclosure of Number of Shares Voted or Instructed To Be Voted
    Consistent with the proposal, amended Form N-PX will require 
reporting persons to disclose the number of shares voted (or instructed 
to be voted) and how those shares were voted (e.g., for or against 
proposal, or abstain), as reflected in their records at the time of 
filing a report on Form N-PX. If a reporting person has not received 
confirmation of the actual number of votes cast, the Form N-PX report 
instead may reflect the number of shares instructed to be cast on the 
date of the vote. If the votes were cast in multiple manners (e.g., 
both for and against), reporting persons will be required to disclose 
the number of shares voted (or instructed to be voted) in each 
manner.\97\
---------------------------------------------------------------------------

    \97\ Item 1(k) of amended Form N-PX. As proposed, in the case of 
a shareholder vote on the frequency of executive compensation votes, 
a reporting person will be required to disclose the number of 
shares, if any, voted in favor of each of one-year frequency, two-
year frequency, or three-year frequency, and the number of shares, 
if any, that abstained. The number zero (``0'') would be entered if 
no shares were voted, so that responses to this item would be 
uniformly numeric in nature. Item 1(i) of amended Form N-PX.
---------------------------------------------------------------------------

    We are requiring this disclosure because providing the number of 
votes cast improves the transparency of fund and manager voting records 
and more effectively enables investors to monitor their funds' and 
managers' involvement in the governance activities of their 
investments. It also provides information about the magnitude of a 
reporting person's voting power. This disclosure also provides 
important context for the disclosure of the number of shares the 
reporting person loaned and did not recall and disclosures where a 
manager votes in multiple ways on the same matter.\98\
---------------------------------------------------------------------------

    \98\ See Proposing Release, supra footnote 5, at section 
II.C.3.a. While we understand that funds do not split votes 
regularly, investors should benefit from parity in disclosure 
between funds and managers in cases where funds do split votes.
---------------------------------------------------------------------------

    Many commenters supported the proposed approach, although some of 
these commenters suggested that we require additional information.\99\ 
Specifically, some of these commenters suggested that reporting persons 
should be required to identify the number of shares voted by 
subadvisers or other third parties such as an independent fiduciary 
retained to avoid conflicts of interest.\100\ In initially adopting 
Form

[[Page 78779]]

N-PX, the Commission stated that investors in mutual funds have a 
fundamental right to know how a fund casts proxy votes on its 
shareholders' behalf.\101\ Consistent with this view, how a fund casts 
its proxy votes is the more salient information for investors than 
whether, for example, a particular subadviser cast the vote.
---------------------------------------------------------------------------

    \99\ See, e.g., Better Markets Comment Letter; Morningstar 
Comment Letter; see also ICI Comment Letter I (not objecting to 
providing quantitative data generally, but objecting to the lent 
share quantitative data requirement).
    \100\ See Morningstar Comment Letter; Bloomberg Comment Letter.
    \101\ See 2003 Adopting Release, supra footnote 4, at section I.
---------------------------------------------------------------------------

    In addition, the form will provide investors with some indication 
of how subadvisers may have influenced the fund's votes. For example, a 
fund may have multiple subadvisers exercising the power to vote over a 
portion of securities held by the fund. To the extent one of these 
subadvisers voted a reporting fund's shares differently than the other 
subadvisers to the fund, the fund's quantitative disclosures will 
reflect this split vote by showing the fund had a number of shares 
voted both for and against. Further, investors will continue to have 
access to descriptions of funds' proxy voting policies and procedures 
through required disclosures, which would include applicable 
descriptions of the policies and procedures of investment advisers or 
other third parties that are used to determine how to vote fund 
proxies.\102\ In addition, some subadvisers or third parties will 
likely be managers subject to say-on-pay reporting and so investors 
will also have access to how those parties voted on say on pay 
matters.\103\
---------------------------------------------------------------------------

    \102\ See, e.g., Item 17(f) of Form N-1A (``[D]escribe the 
policies and procedures that the Fund uses to determine how to vote 
proxies relating to portfolio securities . . . Include any policies 
and procedures of the Fund's investment adviser, or any other third 
party, that the Fund uses, or that are used on the Fund's behalf, to 
determine how to vote proxies relating to portfolio securities.''); 
Item 18.16 of Form N-2. A fund may satisfy the requirement to 
provide a description of the policies and procedures that it uses to 
determine how to vote proxies by including a copy of the policies 
and procedures themselves.
    \103\ See Special Instruction D.6.b to amended Form N-PX.
---------------------------------------------------------------------------

    One commenter also suggested that we require funds to indicate, per 
ballot, how many shares were voted, along with associated share class 
voted, noting that in some cases companies offer multiple share classes 
with different voting rights.\104\ In this circumstance, reporting 
persons should report different share classes separately as different 
portfolio securities for purposes of Form N-PX because of this 
difference in relative voting power and rights.
---------------------------------------------------------------------------

    \104\ See Morningstar Comment Letter.
---------------------------------------------------------------------------

    Another commenter objected to disclosure of the number of shares 
voted, particularly its application to manager say-on-pay votes.\105\ 
This commenter argued that quantitative information about the number of 
shares voted went beyond the statutory mandate regarding say-on-pay and 
did not provide any useful information that was not already available 
to investors under 17 CFR 275.206(4)-6 (``rule 206(4)-6''), the 
investment adviser proxy voting rule. This commenter suggested instead 
that we only require disclosure of the number of shares voted in split 
vote situations. We are not adopting this change because requiring 
quantitative disclosure only for split votes could result in 
potentially confusing inconsistencies within each report on Form N-PX. 
Moreover, this disclosure provides a number of benefits beyond 
illustrating how reporting persons split votes. It improves the 
transparency of fund and manager involvement in corporate governance, 
including providing relevant information about the magnitude of the 
reporting person's voting power.\106\ To enable investors to understand 
how a fund or manager has exercised its voting power, investors need to 
have access to quantitative information about the number of shares 
voted, in addition to shares on loan and not recalled. For these 
reasons, requiring quantitative information about the number of shares 
voted is consistent with the statutory mandate for a manager to report 
``how it voted'' pursuant to section 14A(d).
---------------------------------------------------------------------------

    \105\ See Pickard Comment Letter.
    \106\ See, e.g., Proposing Release, supra footnote 5, at section 
I (discussing the substantial institutional voting power that funds 
exercise on behalf investors).
---------------------------------------------------------------------------

    We also disagree that the Form N-PX disclosure does not provide 
useful information beyond that already required to be disclosed under 
rule 206(4)-6. That rule requires a registered investment adviser to 
disclose to clients how they may obtain information from the adviser 
about how it voted with respect to their securities. Thus, it does not 
apply to all managers because not all managers are registered 
investment advisers. Further, it does not provide the same level of 
transparency as the amendments we are adopting, because voting 
information under rule 206(4)-6 is only required to be made available 
to a single client, related solely to that client's securities, and 
only upon the client's request. Voting records on Form N-PX are 
available to the public. Even if a client were to request information 
from its adviser about how it voted with respect to the client's 
securities, that client could not use it to compare their manager's 
voting activities to other managers' voting activities unless that 
client had an existing advisory relationship with those other 
managers.\107\
---------------------------------------------------------------------------

    \107\ See rule 206(4)-6(b).
---------------------------------------------------------------------------

    The amendments permit a reporting person to report the number of 
shares voted as reflected in its records at the time of filing a report 
on Form N-PX.\108\ If the reporting person has not received 
confirmation of the actual number of votes cast prior to filing a 
report on Form N-PX, the reporting person may report the number of 
shares instructed to be cast. If the reporting person learns prior to 
filing its Form N-PX that a different number of shares were voted than 
were instructed to be cast, the reporting person will be required to 
report the actual number of votes cast.\109\ However, if confirmation 
of the actual number of votes cast occurs after the reporting person 
files the Form N-PX report, a reporting person will not be required to 
amend a previously filed Form N-PX report.\110\ This approach will 
limit the compliance burden of providing information regarding the 
number of shares voted and, in situations where the actual number of 
votes cast may differ from the number of shares instructed to be cast, 
the information provided will reflect how a reporting person intended 
to vote such shares.
---------------------------------------------------------------------------

    \108\ Item 1(i) of amended Form N-PX; Special Instruction D.5 to 
amended Form N-PX.
    \109\ Special Instruction D.5 to amended Form N-PX.
    \110\ Id.
---------------------------------------------------------------------------

(b) Disclosure of Number of Shares the Reporting Person Loaned and Did 
Not Recall
    As proposed, we are requiring disclosure of the number of shares 
the reporting person loaned and did not recall in addition to the 
number of shares a reporting person voted.\111\ This requirement is 
designed to provide transparency into how a reporting person's 
securities lending activities affects its proxy voting, which had been 
raised by commenters in the context of the 2010 Proposing Release and 
Proxy Mechanics Concept Release.\112\ It also would help address 
commenter concerns with a requirement in the 2010 proposal to disclose 
the total number of shares a fund was entitled to vote or over which a 
manager had or shared voting power.\113\
---------------------------------------------------------------------------

    \111\ Item 1(i) of amended Form N-PX.
    \112\ See Proposing Release, supra footnote 5, at n.99 and 
accompanying text.
    \113\ See Proposing Release, supra footnote 5, at nn.100-103 and 
accompanying text.
---------------------------------------------------------------------------

    Commenters were mixed on this aspect of the proposal. A number of 
commenters supported this disclosure,

[[Page 78780]]

suggesting it would provide helpful context to investors about how 
securities lending activities affect voting practices and help issuers 
better understand their shareholder base.\114\ Commenters opposing this 
aspect of the proposal argued that the disclosures would not provide 
meaningful information to investors, particularly in light of expected 
costs.\115\ Some were also concerned that these disclosures did not 
reflect the complete context of the analysis reporting persons perform 
when determining whether to engage in securities lending and did not 
show the benefits of keeping shares on loan during a vote.\116\ Many of 
these commenters suggested that these disclosures, or fund securities 
lending practices in general, would provide an incomplete picture of 
the securities lending activities and could be viewed in a negative 
light, for example by market data firms that provide environmental, 
social, and governance (``ESG'') rankings, which may consider these 
disclosures in forming their ESG rankings.\117\ Some commenters 
asserted that reporting persons may programmatically recall lent shares 
to avoid a negative implication, resulting in negative impacts both to 
the reporting person and the securities lending market in general.\118\ 
A number of commenters recommended that, instead of the proposed 
quantitative disclosure, we require a narrative discussion to provide 
investors additional context, such as disclosure of the reporting 
person's policies and procedures for determining whether to recall lent 
shares ahead of a proxy vote.\119\
---------------------------------------------------------------------------

    \114\ See, e.g., Better Markets Comment Letter (``Form N-PX does 
not currently account for loaned securities that are not recalled, a 
major loophole that the SEC should close as proposed. This will 
ensure that investors and the public have a more complete picture of 
how funds' and managers' securities lending activities, in search of 
revenue, impact their ability to vote shares in their investors' 
interests.''); Public Citizen Comment Letter; LTSE Comment Letter 
(``Having actual knowledge of the extent to which an investor 
retained its voting rights--or relinquished them by having loaned 
the shares--can help a company better understand its shareholder 
base.'') (footnote omitted); Morningstar Comment Letter; Bloomberg 
Comment Letter.
    \115\ See, e.g., ISS Comment Letter; BlackRock Comment Letter; 
ICI Comment Letter I; MFDF Comment Letter; Utah Comment Letter.
    \116\ See, e.g., TIAA Comment Letter; BlackRock Comment Letter; 
Comment Letter of the Securities Lending Council of the Risk 
Management Ascociation (Dec. 14, 2021) (``RMA Comment Letter''); 
Federated Hermes Comment Letter.
    \117\ See, e.g., RMA Comment Letter; TIAA Comment Letter; 
Pickard Comment Letter; AIMA Comment Letter.
    \118\ See, e.g., RMA Comment Letter; Federated Hermes Comment 
Letter; TIAA Comment Letter.
    \119\ See, e.g., ISS Comment Letter; ICI Comment Letter I; IAA 
Comment Letter.
---------------------------------------------------------------------------

    The disclosure of the number of shares the reporting person loaned 
and did not recall will provide transparency on a specific, security-
by-security basis. Absent this disclosure, investors would not have 
quantified information showing how securities lending may have impacted 
the degree of proxy voting by the reporting person.\120\ As a result, 
we believe that the quantitative disclosure in the final amendments 
will provide important information to investors and that it is 
consistent with other information provided on Form N-PX in enabling 
shareholders to monitor how the reporting person voted on a particular 
voting matter.\121\ For these reasons, we believe that the costs to 
respondents in providing the quantitative disclosures are justified in 
light of the increased level of information and transparency provided 
to investors.
---------------------------------------------------------------------------

    \120\ See Proposing Release, supra footnote 5, at n.106 and 
accompanying text.
    \121\ See Proposing Release, supra footnote 5, at n.15 and 
accompanying text.
---------------------------------------------------------------------------

    We appreciate that the quantitative disclosures, alone, will not 
provide the full context of a decision of whether to recall a security 
on loan. An adviser must make a determination regarding whether to 
retain a security and vote the accompanying proxy or lend out the 
security that is in the client's best interest.\122\ The considerations 
underlying this analysis will not be reflected in the disclosed number 
of shares on loan and not recalled. Reporting persons will, however, 
have the option to provide this or other information on Form N-PX. The 
form as amended permits a reporting person to provide additional 
information on the cover page and/or on a vote-by-vote basis.\123\ This 
flexibility will facilitate a reporting person's ability to provide 
additional information about a particular vote, such as with respect to 
portfolio securities on loan, or about the reporting person's voting 
practices in general, if the reporting person so chooses. For example, 
in a given case where a fund did not recall loaned securities, the fund 
could disclose that not recalling the shares provided the fund with 
additional revenue in order to show the benefits fund shareholders 
received by leaving the securities out on loan. Therefore, although 
some commenters were concerned that the quantitative disclosure alone 
would not provide full context, a reporting person with this concern 
will have the option to provide additional information about its 
process for determining whether to recall lent shares ahead of a proxy 
vote in order to provide investors with additional context in cases 
where the reporting person believes the information is helpful.
---------------------------------------------------------------------------

    \122\ See Proposing Release, supra footnote 5, at nn.104-105 and 
accompanying text; Commission Guidance Regarding Proxy Voting 
Responsibilities of Investment Advisers, Investment Company Release 
No. 33605 (Aug. 21, 2019) [84 FR 47420 (Sept. 10, 2019)], at n.34 
(``Proxy Voting Guidance''); see also BlackRock Comment Letter; TIAA 
Comment Letter.
    \123\ See Special Instruction B.4 to amended Form N-PX; Item 
1(o) to amended Form N-PX. The disclosures permitted by these items 
are optional. A reporting person is not required to respond to Item 
1(o) for any vote. If a reporting person does provide additional 
information for one or more votes, it is not required to provide 
this information for all votes.
---------------------------------------------------------------------------

    We do not believe that the narrative discussion or disclosure of 
the reporting person's policies and procedures for determining whether 
to recall lent shares ahead of a proxy vote that some commenters 
suggested would be an adequate substitute for the quantitative 
disclosure we are adopting.\124\ The commenters' alternative would not 
provide investors with an understanding of the specific number of 
shares a reporting person has or has not recalled to vote a proxy, 
which is important to understand the relationship between securities 
lending and proxy voting. While a narrative discussion or disclosure of 
the reporting person's policies and procedures may provide some overall 
context, it may be difficult for investors to understand how the 
narrative disclosures suggested by commenters relate to the reporting 
person's voting record disclosed on the form, particularly if that 
disclosure applies to a number of funds covered in the report, or is 
otherwise not specific to any vote. Under the final amendments to Form 
N-PX, in contrast, reporting persons will be permitted to provide 
optional narrative disclosure in their reports alongside the required 
quantitative disclosure, which can be provided on a vote-by-vote basis 
or on their voting record as a whole.
---------------------------------------------------------------------------

    \124\ See, e.g., RMA Comment Letter; Federated Hermes Comment 
Letter; TIAA Comment Letter.
---------------------------------------------------------------------------

    Finally, we recognize that an adviser and its client may agree that 
the adviser would not vote due to the opportunity costs of recalling 
the loaned securities in order to vote and that it can be in the 
client's best interest not to recall the loaned securities.\125\ There 
are legitimate reasons why an adviser or other reporting person may 
decide not to recall any loaned securities. The quantitative disclosure 
we are adopting is designed to provide investors with additional 
information about a reporting person's proxy voting activities. The

[[Page 78781]]

disclosure requirement is not intended to change the analysis reporting 
persons may undertake currently as to whether to recall a loaned 
security, such as by creating pressure for reporting persons to 
programmatically recall lent shares, or to create a negative 
implication when a reporting person does not recall a loaned security 
in any given case. Such determinations are subject to an adviser's 
fiduciary duties owed to its clients.\126\ If a reporting person 
believes that leaving securities on loan is in the client's best 
interest, the reporting person should leave those securities on loan. 
Further, as discussed above, to the extent a reporting person believes 
additional narrative information may be helpful for investors to 
understand fully a determination whether to recall a loaned security 
and mitigate any perceived negative implications of this reporting, the 
reporting person will have the option of providing additional 
information on Form N-PX as amended.
---------------------------------------------------------------------------

    \125\ Proxy Voting Guidance, supra footnote 122, at n.34.
    \126\ See Proxy Voting by Investment Advisers, Investment 
Advisers Act Release No. 2106 (Jan. 31, 2003), at 15 (stating that 
under the Advisers Act, ``an adviser is a fiduciary that owes each 
of its clients duties of care and loyalty with respect to all 
services undertaken on the client's behalf, including proxy 
voting,'' citing SEC v. Capital Gains Research Bureau, Inc., 375 
U.S. 180 (1963)).
---------------------------------------------------------------------------

    Some commenters raised the concern that reporting persons are often 
not aware of the issues that will be voted on at a particular 
shareholder meeting at the record date because proxy materials often 
are not distributed until after that date, leaving reporting persons 
with limited information to make a determination as to whether to 
recall shares to vote proxies.\127\ We understand that industry 
practices have developed that allow reporting persons to make informed 
decisions about voting matters and whether to recall loaned securities 
in these circumstances. For example, one commenter has previously told 
the Commission that, even though proxy statements often are sent after 
the record date, funds ``have long been in the business of loaning 
securities and have been able to develop methods to monitor corporate 
developments and make arrangements to recall shares in the event of a 
vote on a material matter'' and that it, at the time, did ``not believe 
it is essential for the Commission to adopt additional regulations to 
facilitate the recall of securities for voting purposes.'' \128\ 
Reporting persons today already are analyzing whether to recall loaned 
securities, even though proxy materials may be distributed after the 
record date for a vote.\129\ This disclosure is not intended to change 
that analysis.
---------------------------------------------------------------------------

    \127\ See, e.g., BlackRock Comment Letter; ICI Comment Letter I; 
AIMA Comment Letter.
    \128\ Comment Letter of the Investment Company Institute (Oct. 
20, 2010) (regarding the concept release on the U.S. proxy system 
(File No. S7-14-10)).
    \129\ See, e.g., AIMA Comment Letter; BlackRock Comment Letter 
(stating that in the United States, the record date of a shareholder 
meeting typically falls before the proxy mateirals are released).
---------------------------------------------------------------------------

    Commenters also raised concerns that information about the number 
of shares on loan and not recalled may not be readily available in all 
cases. Specifically, some commenters stated that custodians do not 
always provide full information on the number of shares on loan with 
the proxy ballot, which reporting persons could use to provide the 
disclosure.\130\ We recognize that practices may vary and that in some 
cases providing the disclosure may require coordination among reporting 
persons, custodians, proxy voting services providers, and others, as 
some commenters observed.\131\ Disclosure requirements for reporting 
persons under the Federal securities laws often can require some degree 
of coordination amongst parties to produce required information, and we 
believe the costs associated with this quantitative disclosure are 
justified in light of the increased level of information and 
transparency provided to investors.
---------------------------------------------------------------------------

    \130\ See BlackRock Comment Letter; ISS Comment Letter.
    \131\ See Glass Lewis Comment Letter; Broadridge Comment Letter.
---------------------------------------------------------------------------

    As proposed, the disclosure we are adopting will be required only 
where the reporting person has loaned the securities. The reporting 
person may have loaned such securities directly or indirectly through a 
lending agent.\132\ However, the disclosures would not be required in 
scenarios where the manager is not involved in lending shares in a 
client's account, either directly or indirectly. For example, if a 
manager is not a party to the client's securities lending agreement and 
has not itself (rather than the client) loaned the securities, such as 
when a manager's prime broker has rehypothecated securities in a 
manager's margin account, then the manager would not be involved in 
decisions to lend securities or recall loaned securities for that 
account.\133\
---------------------------------------------------------------------------

    \132\ See Special Instruction D.7 to amended Form N-PX. To the 
extent a reporting person allocates a number of securities to the 
lending agent for lending purposes and treats that number of 
securities as being on loan when determining how many shares it can 
vote in a matter, the reporting person should report all of the 
allocated shares as being on loan and not recalled (excluding any 
shares the reporting person recalled for the vote).
    \133\ Cf. MFA Comment Letter (raising concerns about obtaining 
the required information in this scenario).
---------------------------------------------------------------------------

    Similarly, a manager will not exercise voting power over loaned 
securities when its client hires a securities lending agent to lend 
securities in the client's account and the manager has no involvement 
in the securities lending arrangement or in decisions to recall loaned 
securities.\134\ In these cases, as when a client entirely directs a 
given vote, the manager would not report because the manager did not 
make a determination to lend a security in the first instance or to 
leave it on loan. Thus, the manager would not have any say-on-pay 
reporting obligations with respect to those loaned securities because 
it did not exercise voting power. Alternatively, if a reporting person 
has loaned securities and instructs its lending agent, custodian, or 
other service provider to recall lent shares but for various reasons 
those shares are not returned on time for a proxy vote, the reporting 
person would report these shares as being on loan but not recalled 
because they were not in fact recalled in time for the vote.\135\ The 
reporting person may, however, choose to explain that it attempted to 
recall the securities in Item 1(o) of the amended form.
---------------------------------------------------------------------------

    \134\ See supra footnote 39 and accompanying text.
    \135\ See Item 1(j) of amended Form N-PX.
---------------------------------------------------------------------------

4. Additional Amendments to Form N-PX
    We are adopting as proposed all but two of the proposed additional 
amendments designed to enhance the usability of Form N-PX reports and 
to modernize or clarify existing form requirements.
    First, we are adopting as proposed the requirement for funds that 
have multiple series of shares to provide each series' Form N-PX 
disclosure separately by series.\136\ We received no comments on this 
aspect of the proposal. This change will make Form N-PX disclosure 
easier to review and compare among reporting persons by allowing 
investors to focus on disclosure relevant to them, rather than to 
investors in other series.
---------------------------------------------------------------------------

    \136\ Special Instruction D.9 to amended Form N-PX. For example, 
a fund that has multiple series of shares would provide Series A's 
full proxy voting record, followed by Series B's full proxy voting 
record.
---------------------------------------------------------------------------

    We also are adopting as proposed the instruction requiring the 
information otherwise required or permitted to be reported on Form N-PX 
to be reported in the order presented on the form.\137\ No commenters 
discussed this aspect of the proposal and we continue to believe it 
will make Form N-PX disclosure

[[Page 78782]]

easier to review and compare among reporting persons.\138\
---------------------------------------------------------------------------

    \137\ Special Instruction D.1 to amended Form N-PX.
    \138\ One commenter did express that it generally supported the 
goal of formatting reports on Form N-PX consistently. See Vanguard 
Comment Letter. The requirement to report the required information 
in the order presented on Form N-PX is distinct from the requirement 
to report the votes themselves in the same order as they are 
displayed on the issuer's form of proxy, which we are also adopting. 
Compare Proposing Release, supra footnote 5, at n.112 and 
accompanying text and Special Instruction D.1 to amended Form N-PX 
with Proposing Release, supra footnote 5, at n.74 and accompanying 
text and Special Instruction D.3 to amended Form N-PX.
---------------------------------------------------------------------------

    We are not, however, adopting the proposed requirement to identify 
whether a voting matter is a proposal or a counterproposal. Some 
commenters who discussed this aspect of the proposal opposed it, 
stating that, in practice, the difference between a proposal or 
counterproposal would not always be clear.\139\ After considering these 
comments, we agree that it may be challenging to distinguish between 
proposals and counterproposals, which could make this requirement 
challenging for reporting persons to implement and the information less 
useful for investors. In addition and discussed above, we are adopting 
requirements that will standardize the ways in which proxy voting 
matters are identified and require reporting persons to identify the 
category of each voting matter, both of which could assist investors in 
identifying the information they seek.
---------------------------------------------------------------------------

    \139\ See Blackrock Comment Letter; ISS Comment Letter. But see 
Bloomberg Comment Letter (suggesting that this is an important data 
point that should be given an XML or JSON tag as it may not be 
sufficiently clear to investors).
---------------------------------------------------------------------------

    As proposed, the revised form will require that a reporting person 
disclose whether a vote was for or against management's 
recommendation.\140\ Two commenters recommended that we remove this 
item, arguing that investors can determine this themselves if 
management's recommendation was disclosed as well.\141\ It will be 
easier for investors to understand whether a reporting person voted for 
or against management's recommendation with this information, rather 
than trying to discern it from the other information reported on the 
form.
---------------------------------------------------------------------------

    \140\ This is conceptually similar to the current form's 
requirement, which requires that reporting persons identify whether 
the votes being disclosed represent votes for or against management. 
The changed wording is intended to more clearly describe what is 
being reported, that is, whether the reporting voted for or against 
management's recommendation.
    \141\ See Bloomberg Comment Letter; ISS Comment Letter.
---------------------------------------------------------------------------

    As proposed, we are amending Form N-PX to require a reporting 
person to report only one security identifier, the security's Committee 
on Uniform Securities Identification Procedures (``CUSIP'') number or 
International Securities Identification Number (``ISIN''), as opposed 
to the form's current requirement to report both a security's CUSIP and 
ticker symbol. Under the amendments, a reporting person will be 
required to report the security's CUSIP unless it is not available 
through reasonably practicable means. If the CUSIP number is not 
reported, then Form N-PX will require the security's ISIN, unless it 
also is not available through reasonably practicable means. We also are 
removing the current requirement to report the ticker symbol of a 
security, as proposed.\142\
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    \142\ We proposed this change in response to a comment to the 
2010 Proposing Release that recommended that a ticker symbol be 
required only if a CUSIP number was unavailable since certain 
securities listed on more than one exchange have multiple ticker 
symbols. See Proposing Release, supra footnote 5, at section II.C.4.
---------------------------------------------------------------------------

    In addition to proposing these changes related to security 
identifiers, the Commission also sought comment on whether to require 
an alternative identifier instead of, or in addition to, CUSIP, and we 
received several comments suggesting alternative identifiers.\143\ In 
particular, some commenters requested that we use an open-source 
securities identifier, such as the security's Financial Instrument 
Global Identifier (``FIGI''), and one suggested concerns with CUSIP 
identifiers in particular due to concerns relating to CUSIP licensing 
fees.\144\ Although we appreciate that CUSIPs have licensing fees, 
reporting persons are already subject to CUSIP reporting requirements, 
such as on Form 13F and Form N-PORT, and would therefore incur 
licensing costs associated with storing CUSIPs for their holdings even 
if CUSIPs were not required to be reported on Form N-PX. While the 
final rules will maintain the requirement to disclose CUSIP, we believe 
that providing the flexibility of reporting an additional security 
identifier, along with CUSIP, would be appropriate. CUSIP numbers and 
FIGIs are both able to provide the unique identification of a reported 
security in a manner that is standard across datasets.\145\ Reporting 
persons choosing to report using FIGI would provide the share class 
level FIGI which, like CUSIP, is standard across exchanges.\146\ 
Providing reporting persons with the option of reporting a FIGI, in 
addition to the mandatory CUSIP number, for some or all of the 
reporting person's securities will enhance the utility of holdings data 
reported on Form N-PX and the usefulness of such information to the 
Commission, other regulators, or members of the public and other market 
participants by allowing analysis based on FIGI where managers choose 
to report that identifier. For example, investors who analyze data 
reported on Form N-PX and that use FIGIs in their internal analyses 
could use the reported FIGIs without having to first convert a 
security's CUSIP number to a FIGI.
---------------------------------------------------------------------------

    \143\ See, e.g., GLEIF Comment Letter (suggesting use of LEI).
    \144\ See XBRL Comment Letter (support for FIGI); Morningstar 
Comment Letter (same); Bloomberg Comment Letter (same); McRitchie 
Comment Letter (same); IAA Comment Letter (specific concerns with 
CUSIP).
    \145\ FIGI is an open-sourced, non-proprietary, data standard 
for the identification of financial instruments across asset 
classes. FIGI allows users to link various identifiers for the same 
security to each other, which includes mapping the CUSIP number of a 
security to its corresponding FIGIs. See Object Management Group 
Standards Development Organization, Financial Instrument Global 
Identifier, available at https://www.omg.org/figi/.
    \146\ See About OpenFigi, available at https://www.openfigi.com/about (stating that the Share Class level FIGI is assigned to 
equities and enables users to link multiple FIGIs for the same 
instrument in order to obtain an aggregated view for that instrument 
across all countries globally).
---------------------------------------------------------------------------

    By contrast we are not amending the form to allow a reporting 
person to report the corresponding legal entity identifier (``LEI'') of 
the issuer of such security as one commenter suggested.\147\ Because an 
LEI is an identifier of legal entities (such as issuers of securities 
reported on Form N-PX), rather than an identifier of securities, it 
would not provide comparable information to a CUSIP number or a 
FIGI.\148\
---------------------------------------------------------------------------

    \147\ See GLEIF Comment Letter.
    \148\ See Introducing the Legal Entity Identifier (LEI), 
available at https://www.gleif.org/en/about-lei/introducing-the-legal-entity-identifier-lei (stating that the LEI ``connects to key 
reference information that enables clear and unique identification 
of legal entities participating in financial transactions''). Cf. 
supra section II.E.
---------------------------------------------------------------------------

D. Joint Reporting Provisions

    We are adopting, as proposed, amendments that permit reporting 
persons to report jointly their say-on-pay votes in three scenarios. 
Specifically, we will permit a single manager to report say-on-pay 
votes in cases where multiple managers exercise voting power. We are 
also permitting a fund to report a manager's say-on-pay votes on behalf 
of a manager exercising voting power over some or all of the fund's 
securities. Lastly, we are allowing two or more managers who are 
affiliated persons to file a single report on Form N-PX for all 
affiliated person managers within the group, notwithstanding that they 
do not exercise voting power over the same securities. In any of these 
instances, the non-reporting manager would be

[[Page 78783]]

required to file a ``notice'' or ``combination'' Form N-PX report that 
identifies each manager or fund reporting on its behalf.\149\ We also 
are making certain technical amendments to Form N-PX to specify on 
whose behalf reporting is being made and to permit the reporting of 
votes by parties other than the reporting person.
---------------------------------------------------------------------------

    \149\ If the manager is relying upon another manager or a fund 
to report all of its say-on-pay votes, it would file an 
``Institutional Manager Notice Report,'' whereas if the manager is 
reporting some votes but is relying on another manager or a fund to 
report others, it would file an ``Institutional Manager Combination 
Report.'' See Special Instructions B.2.d and B.2.e to amended Form 
N-PX.
---------------------------------------------------------------------------

    We are adopting, as proposed, a number of technical changes to 
facilitate joint reporting. Specifically, in all three cases, the non-
reporting manager's notice or combination report on Form N-PX will have 
to identify the other managers or funds reporting on its behalf.\150\ 
In addition, where another reporting person reports say-on-pay votes on 
a manager's behalf, the report on Form N-PX that includes the non-
reporting manager's votes would be required to identify that manager 
(and any other managers) on whose behalf the filing is being made on 
the Summary Page. Further, we will require a manager to report the 
number of shares the manager is reporting on behalf of another manager 
pursuant to the joint reporting provisions separately from the number 
of shares the manager is reporting only on its own behalf. A manager 
will also be required to separately report shares when the groups of 
managers on whose behalf the shares are reported are different. For 
example, if the reporting manager is reporting on behalf of Manager A 
with respect to 10,000 shares and on behalf of Managers A and B with 
respect to 50,000 shares, then the groups of 10,000 and 50,000 shares 
must be separately reported. Similarly, a fund will be required to 
report separately shares that are reported on behalf of different 
managers or groups of managers.\151\
---------------------------------------------------------------------------

    \150\ General Instructions C.5 and C.6 to amended Form N-PX; 
Special Instructions C.2 and D.6 to amended Form N-PX.
    \151\ Special Instruction D.6 to amended Form N-PX. Reporting 
persons will not be required to report shares separately when they 
are not relying on the joint reporting provisions, even if another 
manager exercised voting power over some of the shares reported.
---------------------------------------------------------------------------

    This approach is designed to allow managers' clients and investors 
to easily search for all votes where the manager exercised voting 
power, whether or not those votes are reported on the manager's own 
Form N-PX. Use of the joint reporting provisions is optional, however, 
and reporting persons can elect to report the relevant say-on-pay votes 
individually instead of relying on the joint reporting provisions. If a 
manager does not rely on the joint reporting provisions, it would not 
be subject to the disclosure requirements tied to joint reporting that 
facilitate identification of all of a manager's say-on-pay votes. In 
such case, the manager's report on Form N-PX would provide its complete 
proxy voting record for say-on-pay votes during the reporting period, 
without reference to any other reports on Form N-PX, and would not 
include any votes where the manager did not exercise voting power. This 
requirement is designed to further our goal of providing meaningful 
information to investors by allowing investors to clearly see how a 
particular manager exercised voting power.
    As discussed in the Proposing Release, we believe that joint 
reporting will implement the statutory mandate to require say-on-pay 
vote reporting and mitigate potentially confusing duplicative 
reporting.\152\ It should also reduce the reporting burden for 
reporting persons by permitting them to either divide reporting 
responsibility among themselves or to report individually, creating 
operational efficiencies for reporting persons without negatively 
impacting the quality or accessibility of the information they report 
on Form N-PX. The votes of each relevant manager will be identifiable 
under the joint reporting framework since the amendments require 
reporting persons that are reporting say-on-pay votes on behalf of 
other managers (including a fund on behalf of their sub-advisers) to 
separately report the number of shares being reported for those other 
managers.\153\ The requirement to submit Form N-PX reports in a 
structured data format also will allow for the joint reporting data to 
be sorted and filtered in a manner that gives investors the ability to 
view votes by each relevant manager.
---------------------------------------------------------------------------

    \152\ See Proposing Release, supra footnote section 5, at 
section II.D.1 (noting that section 14A(d) generally requires 
managers to report say-on-pay votes and stating that ``we believe 
that allowing consolidated reporting in this manner would yield 
reported data that would be at least as useful as separately 
reported data while reducing burden for reporting persons who may 
prefer to report jointly.'').
    \153\ See Special Instruction D.6 to amended Form N-PX.
---------------------------------------------------------------------------

    Commenters who addressed these amendments generally supported 
them.\154\ One commenter, however, stated that each reporting person 
should be required to make its own report, though that commenter did 
not object to joint filing if voting information was transparent and 
provided for each voting entity.\155\ As discussed, reporting persons 
that rely on the joint reporting provisions must identify all managers 
included in the report and separate reporting of the shares reported on 
behalf of the non-reporting managers. One commenter suggested that a 
manager completing Form N-PX should not be required to separately 
identify the relevant managers for each vote and, instead, should be 
allowed to jointly report say-on-pay votes without separate attribution 
to each specific manager.\156\ This commenter suggested that allowing 
large groups of affiliated managers to aggregate votes would be less 
complex and burdensome and would avoid providing unnecessary detail 
regarding the underlying portfolio to persons who are neither clients 
nor investors associated with the managers. We are not making this 
change because we do not believe that aggregated data is consistent 
with section 14A, as investors would be unable to determine in such 
circumstances how each manager voted.
---------------------------------------------------------------------------

    \154\ See, e.g., Pickard Comment Letter; ICI Comment Letter I; 
Bloomberg Comment Letter.
    \155\ See Morningstar Comment Letter.
    \156\ See MFA Comment Letter.
---------------------------------------------------------------------------

E. The Cover Page

    We are adopting the amendments to the cover page of Form N-PX 
largely as proposed, but with some changes intended to increase the 
efficiency of filing for reporting persons. The amendments are designed 
to address the addition of managers as a class of reporting persons and 
to facilitate the joint reporting provisions we are adopting. As 
proposed, we are adopting amendments to require reporting persons to 
identify more clearly whether the reporting person is a fund or a 
manager and the type of report being filed. Also, as proposed, managers 
will be required to disclose on the cover page the name of the 
reporting person, the address of its principal executive offices, the 
name and address of the agent for service, the telephone number of the 
reporting person, identification of the reporting period, and the 
reporting person's file number. In addition, managers will be required 
to provide their Central Registration Depository (``CRD'') number and 
other SEC file number, if any. In a change from the proposal, and as 
detailed below, we have expanded the types of ``notice'' reports 
relative to those in the proposal.\157\ Specifically, reporting

[[Page 78784]]

persons will be required to check a box in order to identify the report 
as one of the following types:
---------------------------------------------------------------------------

    \157\ The proposal provided check boxes for ``Registered 
Management Investment Company,'' ``Institutional Manager Voting,'' 
``Institutional Manager Notice,'' and ``Institutional Manager 
Combination'' reports.
---------------------------------------------------------------------------

     ``Fund Voting Report:'' to be used when the fund holds one 
or more securities it is entitled to vote. As proposed, this reporting 
type is for registered investment companies with votes to report. In a 
change from the proposal, we changed the title of the report type from 
``Registered Management Investment Company Report'' to ``Fund Voting 
Report.'' We are adopting a clearer name that reflects that this fund 
report, in contrast to the newly added Fund Notice Report type, 
contains a report of the fund's votes;
     ``Fund Notice Report:'' to be used when the fund does not 
hold any securities it is entitled to vote. Under the proposal, if a 
reporting person did not have any proxy votes to report for the 
reporting period, the reporting person would have been required to file 
a report with the Commission stating that fact. In a change from the 
proposal, rather than requiring a fund to file with the Commission a 
report stating the fact that it had no proxy votes to report, under the 
amendments the fund would instead indicate: (i) that the fund has no 
votes to report by ticking this box on the cover page; and (ii) file 
only the cover page, required signature, and information about the 
series on the summary page. This change only relates to the manner in 
which the information is provided and does not change the scope of what 
is to be reported. Ticking a box on the cover page will be more 
efficient for funds than affirmatively stating they have no votes to 
report. This approach will be more efficient for investors because they 
can identify a fund that does not vote via a check box on the cover 
page, as opposed to having to review the report and find the manager's 
affirmative assertion that it has no votes to report;
     ``Institutional Manager Voting Report:'' to be used when a 
manager is reporting all of its proxy votes that are required to be 
reported in a single report. As proposed, this reporting type is for 
managers when the report contains all say-on-pay votes of the manager;
     ``Institutional Manager Notice Report:'' to be used when 
the report contains no say-on-pay votes of the manager. As proposed, a 
manager would use the notice report option when all of its say-on-pay 
votes are reported by other managers or funds under the joint reporting 
provisions. In a change from the proposal, a manager also will be 
permitted to file a notice report in two additional circumstances. 
First, consistent with the addition of a fund notice report, a manager 
that does not exercise voting power for any reportable voting matter 
during the reporting period and therefore does not have any proxy votes 
to report would file a notice report and indicate this fact on the 
cover page. This should be more efficient for managers and investors 
than requiring managers to affirmatively state they have no votes to 
report. Second, as discussed above, Form N-PX as amended will allow 
managers that have a disclosed policy of not voting proxies and that 
did not vote during the reporting period to indicate this on the form 
without providing additional information about each voting matter 
individually. We are making a conforming change, based in part on a 
suggestion from a commenter, on the cover page to allow a manager to 
indicate that it is filing a notice report, and therefore not providing 
additional information about each voting matter individually, because 
it is relying on this reporting option; \158\
---------------------------------------------------------------------------

    \158\ See MFA Comment Letter.
---------------------------------------------------------------------------

     ``Institutional Manager Combination Report:'' to be used 
when the report contains some say-on-pay votes of the manager but 
additional votes are reported by other managers or funds under the 
joint reporting provisions. As proposed, this reporting type addresses 
situations in which the manager is reporting some say-on-pay votes and 
other votes are reported by other managers or by funds.
    Any ``notice'' or ``combination'' report will include on the cover 
page a list of the file numbers and names, as well as CRD numbers (if 
any), of any other managers and funds whose Form N-PX reports include 
say-on-pay votes of the reporting manager.\159\
---------------------------------------------------------------------------

    \159\ Special Instruction B.2 to amended Form N-PX.
---------------------------------------------------------------------------

    Commenters generally supported the proposed changes to the Form N-
PX cover page.\160\ However, in response to a request for comment 
regarding the inclusion of additional information on the cover page 
such as an LEI, some commenters suggested that we require certain 
reporting persons to list additional identifiers, including LEIs, on 
the Form N-PX cover page.\161\ This additional information will be 
helpful in identifying the reporting person, whether a fund or a 
manager. Therefore, in a change from the proposal, we will require that 
all reporting persons that have an LEI report that information on the 
Cover Page.\162\
---------------------------------------------------------------------------

    \160\ See Morningstar Comment Letter; MFA Comment Letter.
    \161\ See Morningstar Comment Letter; Bloomberg Comment Letter.
    \162\ While the request for comment, and commenters, only 
identified managers for this item, we do not see a reason to 
distinguish between funds and managers on this point. See infra 
footnotes 165-166 and accompanying paragraph.
---------------------------------------------------------------------------

F. The Summary Page

    We are adopting, largely as proposed, amendments to add a new 
summary page to Form N-PX to facilitate the joint reporting framework 
we are adopting and to enable investors to readily identify which fund 
series are intended to be covered by the report as well as any managers 
(besides the reporting person) (``included managers'') with say-on-pay 
votes included on the Form N-PX report. The summary page will be 
required on all Form N-PX reports by funds as well as manager 
``voting'' and ``combination'' filings.\163\
---------------------------------------------------------------------------

    \163\ See Special Instructions B.2.a-d to amended Form N-PX. The 
summary page would not be required in a ``notice'' report by 
managers because, since the notice report would not contain any say-
on-pay votes at all, it would not report any say-on-pay votes of 
other managers.
---------------------------------------------------------------------------

    Commenters who addressed this aspect of the proposal generally 
supported the new Form N-PX summary page as proposed.\164\ In addition, 
one commenter responded to a request for comment in the proposing 
release asking if the Commission should require other information, such 
as a series' LEI, that would enable investors to identify which funds a 
report covers more easily. The commenter suggested that we require that 
funds disclose the LEI for each series of the fund on the basis that it 
would assist investors in identifying and analyzing parent-subsidiary 
relationships.\165\ After considering this comment, we are amending the 
Form N-PX summary page to include a section that requires funds to 
identify the LEI for the fund series. The LEI would be in addition to 
the other information about the fund series in the proposal, including 
the series identification number and series name. We agree that the LEI 
would help investors identity the funds covered in the report, and 
funds already have LEIs because we currently require each series to 
report its LEI in other reports to the Commission.\166\ In light of 
this change with respect to funds, we are also

[[Page 78785]]

amending the Form N-PX summary page to require that included managers 
identify their LEI, if any. Although no commenter specifically 
suggested that LEIs of other managers whose information is included in 
the report under the joint reporting provisions be reported on the 
summary page, we solicited comment in the proposal as to whether there 
was any other information that additional managers should provide. In 
light of the comments related to the addition of LEI for fund series, 
we believe investors could similarly benefit if included managers 
provided their LEI, if any, as well.\167\
---------------------------------------------------------------------------

    \164\ See Morningstar Comment Letter; MFA Comment Letter.
    \165\ See Morningstar Comment Letter (suggesting the inclusion 
of a fund series' LEI on the summary page). Although another 
commenter advocated against including LEIs for funds' series because 
series LEIs do not exist, funds currently report series LEI in other 
Commission reports, including Form N-PORT. See Bloomberg Comment 
Letter.
    \166\ See Item A.2 of Form N-PORT.
    \167\ See Proposing Release, supra footnote 5, at section 
II.D.3.
---------------------------------------------------------------------------

    The required summary page information will assist investors in 
identifying on a Form N-PX report the relevant managers or series 
associated with the reported votes by providing a standardized approach 
to the reported data, making it easier to access and review, while at 
the same time permitting reporting persons to reduce their reporting 
burden and avail themselves of the joint-report framework. The summary 
page will require reporting persons to identify the names and total 
number of included managers with say-on-pay votes included in the 
report in list format. The instructions to Form N-PX specify the 
contents of this information, including the title, column headings, and 
format.
    If a Form N-PX report includes the say-on-pay votes of included 
managers, the summary page list would be required to include all such 
managers together with their respective Form 13F file numbers and, if 
they exist, any CRD numbers, LEI, and other SEC file numbers.\168\ In 
addition, and similar to Form 13F, reporting persons must assign a 
number (which need not be consecutive) for each such manager, and 
present the list in sequential order.\169\ These numbers will help 
identify the particular managers who exercised the power to vote the 
securities. While we anticipate that the sequential numbering 
requirement will make the list easier to use, the amendments permit 
non-consecutive numbering to allow managers to retain the same number 
across filings of different reporting persons and different time 
periods. If a Form N-PX filing does not disclose the proxy votes of an 
included manager, the reporting person would enter the word ``NONE'' 
under the title and would not include the column headings and list 
entries. To the extent a fund's report on Form N-PX includes the votes 
of multiple series, the summary page would require the name, the series 
identifier, and LEI of each series.
---------------------------------------------------------------------------

    \168\ The SEC file number would be any file number (e.g., 801-, 
8-, 866-, 802-) assigned by the Commission to the manager other than 
the manager's 13F file number. See Special Instruction B.3 to 
amended Form N-PX.
    \169\ See Special Instruction 8.b to Form 13F.
---------------------------------------------------------------------------

G. Form N-PX Reporting Data Language

    We are adopting, as proposed, amendments to require reporting 
persons to file reports on Form N-PX in a structured data 
language.\170\ The amendments require that Form N-PX reports be filed 
in a custom eXtensible Markup Language (``XML'') -based structured data 
language created specifically for reports on Form N-PX (``custom 
XML'').\171\ Reports on Form N-PX are currently required to be filed in 
HTML or ASCII.\172\ As stated in the proposal, use of a custom XML 
language will make it easier for reporting persons to prepare and 
submit the information required by Form N-PX accurately and, 
additionally, increase the utility of the information submitted. To 
further increase the accessibility of Form N-PX data, we are developing 
electronic ``style sheets'' that, when applied to the reported XML 
data, will present Form N-PX data in human-readable form.
---------------------------------------------------------------------------

    \170\ See General Instruction D.2. to amended Form N-PX 
(specifying that reporting persons must file reports on Form N-PX 
electronically on the Electronic Data Gathering, Analysis, and 
Retrieval system (``EDGAR''), except as provided by the form's 
confidential treatment instructions, and consult the EDGAR Filer 
Manual for EDGAR filing instructions). See also 17 CFR 232.301 
(requiring filers to prepare electronic filings in the manner 
prescribed by the EDGAR Filer Manual). We are also amending rule 
101(a)(1)(iii) of Regulation S-T to provide that reports filed 
pursuant to section 14A(d) of the Exchange Act must be submitted in 
electronic format. Reports filed pursuant to section 30 of the 
Investment Company Act are already subject to electronic filing. See 
rule 101(a)(1)(iv) of Regulation S-T.
    \171\ This would be consistent with the approach used for other 
XML-based structured data languages created by the Commission for 
certain EDGAR Forms, including the data languages used for reports 
on each of Form N-CEN, Form N-PORT, and Form 13F.
    \172\ See Regulation S-T, 17 CFR 232.101(a)(1)(iv); 17 CFR 
232.301; EDGAR Filer Manual (Volume II) version 62 (June 2022), at 
5-1 (requiring EDGAR filers generally to use ASCII or HTML for their 
document submissions, subject to certain exceptions).
---------------------------------------------------------------------------

    Many commenters supported the use of structured data for Form N-PX 
filings.\173\ Many commenters suggested that the unstructured data 
format of current Form N-PX disclosure is difficult to interpret and 
analyze.\174\ Some commenters suggested that structured data language 
would allow investors to search, aggregate, and analyze the reported 
data more easily.\175\ One commenter, however, generally opposed the 
proposal on the basis that the existing disclosure regime and the 
current ability of data aggregators to assess proxy voting information 
were sufficient.\176\
---------------------------------------------------------------------------

    \173\ See, e.g., Morningstar Comment Letter (``As demonstrated 
by other examples, such as Forms NFP, N-CEN, and N-Port, there is 
significant value in using a structured data language.''); ICI 
Comment Letter I; Blackrock Comment Letter; Bloomberg Comment 
Letter.
    \174\ See, e.g., Ceres Comment Letter; SCERS Comment Letter; 
Blackrock Comment Letter; Bloomberg Comment Letter; LTSE Comment 
Letter; CFA/CII Comment Letter; McRitchie Comment Letter III.
    \175\ See Morningstar Comment Letter; XBRL Comment Letter; 
Blackrock Comment Letter (``[U]se of an XML-based format would make 
the N-PX data more consistent, usable, and accessible.''); Bloomberg 
Comment Letter; CFA/CII Comment Letter.
    \176\ See MFDF Comment Letter.
---------------------------------------------------------------------------

    As stated in the Proposing Release, the use of structured data on 
Form N-PX should make it easier for reporting persons to prepare and 
submit information on the form accurately and increase the utility of 
the information submitted.\177\ Currently, reporting persons generally 
need to reformat required information prior to submission of Form N-PX, 
including stripping out incompatible metadata related to normal 
business uses. However, this process is not necessary when using an 
XML-based reporting data language. Further, using an XML-based 
reporting language permits the Commission to provide a web-based 
reporting application for Form N-PX, which would not be possible 
currently. The use of structured data should also result in reported 
data that is sufficiently standardized to make structured data useful 
for interested parties.\178\
---------------------------------------------------------------------------

    \177\ See Proposing Release, supra footnote 5, at the text 
following n.169.
    \178\ See Proposing Release, supra footnote 5, at the text 
accompanying n.175.
---------------------------------------------------------------------------

    In addition, the current requirement to file Form N-PX in HTML or 
ASCII is not suitable for automated validation or aggregation. In 
contrast, the custom XML data language will allow investors to 
aggregate and analyze reported data in a much less labor-intensive 
manner.\179\ Also, while certain Form N-PX data may be available 
commercially by third-parties, users of third-party data may also 
benefit if the costs associated with third-party data analysis--and the 
costs to users to access that data--fall as a result of the structured 
data requirement, or if this

[[Page 78786]]

requirement facilitates additional third-party data analyses for the 
benefit of investors. The structured data requirement would likely 
improve any third-party analyses of voting information and, in doing 
so, potentially benefit investors through reduced costs for accessing 
those third-party analyses.
---------------------------------------------------------------------------

    \179\ See id. at the text following n.177. Some investors review 
funds' voting practices by accessing Form N-PX reports directly on 
EDGAR, while others may obtain information about funds' voting 
practices through analysis or synthesis of Form N-PX reports by data 
aggregators or others. A variety of market participants and other 
stakeholders also use data reported on Form N-PX. See id. at n.10.
---------------------------------------------------------------------------

    Several commenters specifically supported requiring the use of 
custom XML language to file Form N-PX reports.\180\ These commenters 
generally agreed that use of an XML-based structured data language 
would make the Form N-PX information more accessible and useful to 
interested parties.\181\ Some other commenters suggested the use of 
other structured data languages besides XML. Two of these commenters 
suggested the use of JavaScript Object Notation (``JSON'') as the 
structured data language on the basis that XML is not frequently used 
and that JSON involves smaller file sizes, does not require specialized 
tools, and is more user-friendly.\182\ Other commenters suggested use 
of eXtensible Business Reporting Language (``XBRL'') language on the 
basis that XBRL could utilize various built-in taxonomies that include 
certain identifying information, would have smaller file sizes, and 
would be easier for other analytical applications and data collection 
systems to read.\183\ One commenter suggested use of XBRL-CSV on the 
basis that issuers could use the same applications they use today to 
prepare their financials and that end users of the data could leverage 
the same tools they currently use to extract financial statement data 
from SEC reporting entities.\184\ Some commenters also offered 
suggestions about ways to address the size of Form N-PX files, such as 
establishing a file size limit so that computer and software memory 
constraints do not impede data processing or accessibility, or that 
each series be required to file separately.\185\
---------------------------------------------------------------------------

    \180\ See, e.g., Morningstar Comment Letter; Federated Hermes 
Comment Letter; AIMA Comment Letter; Vanguard Comment Letter; 
Blackrock Comment Letter.
    \181\ See id.
    \182\ See Bloomberg Comment Letter; see also Morningstar Comment 
Letter.
    \183\ XBRL Comment Letter; GLEIF Comment Letter.
    \184\ See XBRL Comment Letter.
    \185\ See Morningstar Comment Letter; Bloomberg Comment Letter; 
Rhee Comment Letter.
---------------------------------------------------------------------------

    The use of a custom XML language for Form N-PX will minimize 
reporting costs while yielding reported data that would be more useful 
to investors.\186\ In our experience, we have found that XML-based 
structured data languages for EDGAR filings allow investors to 
aggregate and analyze reported data in a streamlined manner. Concerns 
related to file size issues and the related suggestion by some 
commenters to require each series to file separately will be addressed 
by our adoption of the custom XML language for Form N-PX because the 
XML-based structured data language substantially reduces the size of 
both the submitted forms and the human-readable information available 
to investors to review. In addition, the use of custom XML is 
consistent with other Commission forms, particularly Form 13F, Form N-
CEN, and Form N-PORT, such that it should be familiar both to reporting 
persons and investors. The Commission has also developed web-based 
reporting applications that allow persons without structured data 
expertise to file custom XML documents on EDGAR, while still permitting 
reporting persons with structured data expertise to submit filings 
directly to EDGAR in the applicable custom XML data language. By 
contrast, no EDGAR filings are currently filed using JSON or comma-
separated values format (``CSV''), and the EDGAR system currently does 
not accept these formats.\187\ Furthermore, with respect to XBRL-CSV, 
the Commission believes using the XBRL data model to define the 
elements and relationships featured in Form N-PX would add unnecessary 
complexity because Form N-PX consists of a relatively simple two-
dimensional set of rows and columns, and does not feature any complex 
interlinking relationship among different rows. In addition, XBRL-CSV 
is not likely to create significant efficiencies in preparing and using 
managers' Form N-PX data because only a small number of managers are 
subject to a reporting requirement to file XBRL disclosures with the 
Commission.\188\
---------------------------------------------------------------------------

    \186\ See Proposing Release, supra footnote 5, at section II.E.
    \187\ See supra footnote 172.
    \188\ See 17 CFR 232.405(b) (not applying the requirement to 
file an Interactive Data File consisting of financial statements to 
registered management investment companies). Based on structured 
data from EDGAR filings, less than 5% of Form 13F filers in the 
second quarter of 2022 also filed XBRL financial statements over the 
same period. See DERA Data Library, available at https://www.sec.gov/dera/data.
---------------------------------------------------------------------------

    Custom XML will not significantly impact either the filing process 
or the accessibility of the data. In addition to using structured data 
to allow investors to aggregate and analyze the reported data 
efficiently, the electronic ``style sheets'' we are developing will 
present Form N-PX data in a human-readable form for the benefit of 
investors who review Form N-PX reports on the Commission's EDGAR 
system. Commenters who discussed the proposed use of Commission-
developed style sheets supported them on the basis that style sheets 
would reduce the costs of filing reports on Form N-PX and make them 
more accessible and user-friendly.\189\
---------------------------------------------------------------------------

    \189\ See ICI Comment Letter I; Federated Hermes Comment Letter.
---------------------------------------------------------------------------

    Some commenters raised issues related to the timing for the 
implementation of the custom XML language. Some commenters suggested 
that the Commission provide the custom XML taxonomy in advance of the 
compliance date to provide reporting persons with time to implement the 
structured data language and that we offer a beta period so that 
reporting persons can test filings in advance of the compliance 
date.\190\ We agree that reporting persons could benefit from a testing 
period that allows advance access to the various technical 
specifications for the custom XML reporting language and permits test 
filings using the EDGAR system. Therefore, there will be an EDGAR pilot 
that will provide reporting persons the opportunity to test the custom 
XML filing process in advance of the effective date of the 
amendments.\191\
---------------------------------------------------------------------------

    \190\ See ICI Comment Letter I (stating that reporting persons 
need sufficient time to incorporate the custom XML taxonomy into 
their systems and perform test filings); XBRL Comment Letter.
    \191\ For additional information regarding the EDGAR filing 
process and the current technical specifications, see https://www.sec.gov/edgar/filer-information.
---------------------------------------------------------------------------

H. Time of Reporting

    As proposed, funds will continue to be required to report their 
proxy voting records, and managers will be required to report say-on-
pay votes, annually on Form N-PX no later than August 31 of each year 
for the most recent 12-month period ended June 30. This reporting 
timeframe for managers--and retaining the current reporting timeframe 
for funds--seeks to appropriately balance the benefits of prompt 
reporting and the burdens associated with that reporting.\192\
---------------------------------------------------------------------------

    \192\ See also Proposing Release, supra footnote 5, at section 
II.F.
---------------------------------------------------------------------------

    Comments were mixed as to whether we should retain the current 
reporting frequency for funds and apply it to managers. A number of 
commenters supported these time frames and opposed more frequent 
reporting.\193\ These commenters stated that more frequent reporting 
was unnecessary and would not provide meaningful information to 
investors because most

[[Page 78787]]

proxy votes occur during the second quarter of the calendar year 
(``Proxy Season'').\194\ One also stated that the information produced 
on Form N-PX can take a significant amount of time to process in 
highlighting the need for the 60-day period between the end of the 
reporting period and the deadline for filing the form.\195\
---------------------------------------------------------------------------

    \193\ See, e.g., ICI Comment Letter I, Federated Hermes Comment 
Letter, MFA Comment Letter.
    \194\ See Federated Hermes Comment Letter (``[m]ore frequent 
submissions of vote reporting would result in periods of relatively 
fewer votes reported followed by a surge in vote data relating to 
the peak voting period which for most markets occurs during the 
spring''); ICI Comment Letter I.
    \195\ See ICI Comment Letter I.
---------------------------------------------------------------------------

    Other commenters, however, urged that we require prompt or real-
time disclosure of votes.\196\ One commenter stated that accountability 
requires full and timely transparency of votes.\197\ Several suggested 
technological solutions that would automate the process of providing 
this information to avoid additional costs of this more frequent 
reporting.\198\
---------------------------------------------------------------------------

    \196\ See, e.g., Betterment Comment Letter; Comment Letter of 
the Board Director Training Institute of Japan (Dec. 14, 2021); 
Bloomberg Comment Letter; see also Morningstar Comment Letter 
(suggesting quarterly reporting).
    \197\ Shareholder Commons Letter; see also McRitchie Comment 
Letter (suggesting that current Form N-PX reporting frequency can 
produce data that is seen as out of date when filed).
    \198\ See Bloomberg Comment Letter; McRitchie Comment Letter.
---------------------------------------------------------------------------

    According to our analysis, over 60% of proxy votes conducted by 
Russell 3000 components in 2020 and 2021 happened during Proxy Season, 
whereas only 9% to 16% of votes occur in any other given calendar 
quarter.\199\ Proxy Season ends on the same day as the end of the 
reporting period covered by the form, June 30, and reporting persons 
will continue to have 60 days to compile and file the form from that 
date. As a result, annual reporting will timely capture a significant 
percentage of the votes cast by reporting persons.\200\ In addition, 
although not required, funds can choose to disclose their proxy votes 
more frequently than annually, for example on their websites, to 
provide enhanced transparency and facilitate greater insight into the 
fund's proxy voting activities. We also believe that the 60-day delay 
between the end of the reporting period and the deadline for filing the 
form continues to be appropriate and we are not adopting a shorter 
period to require more prompt reporting, particularly in light of the 
additional items that we are requiring on the amended form and for 
smaller funds or managers.
---------------------------------------------------------------------------

    \199\ Our analysis is based on shareholder meeting dates in 
calendar year 2020 and 2021 for the Russell 3000 Index. This index 
measures the performance of the largest 3,000 U.S. companies 
representing approximately 96% of the investable U.S. equity market, 
as of the most recent reconstitution. See The Russell 3000 Index 
Fact Sheet, available at https://www.ftserussell.com/products/indices/russell-us. This information is provided to the Commission 
staff by a third party that provides proxy voting services.
    \200\ Alignment with Proxy Season is also why we decline, as 
suggested by one commenter, to align the annual deadline for 
managers reporting say-on-pay votes with that for Form 13F (December 
31). See AIMA Comment Letter.
---------------------------------------------------------------------------

    Some commenters suggested that funds or managers also should be 
required to provide some pre-vote transparency to investors, or that 
funds be required to seek the views of their investors before voting 
proxies.\201\ These commenters suggested that this is necessary to 
provide accountability to these entities. We are not mandating that 
funds and managers disclose their intended votes on a prospective 
basis, nor are we requiring funds to seek the views of their investors 
before voting proxies, as both of these approaches raise questions that 
are distinct from those associated with reporting a fund or manager's 
voting record and that would benefit from further consideration. 
Moreover, reporting persons that are funds and registered investment 
advisers are currently required to describe their proxy voting policies 
and procedures.\202\ Investors also can use the other reforms that we 
are adopting to help provide accountability, for example, by using the 
structured data in Form N-PX to monitor voting trends over time.\203\ 
However, the adopted amendments will not restrict a manager's or fund's 
ability to voluntarily provide pre-vote transparency or survey 
investors.
---------------------------------------------------------------------------

    \201\ See, e.g., Reid Comment Letter; Mercatus Comment Letter; 
McRitchie Comment Letter.
    \202\ See, e.g., rule 206(4)-6(c); Item 17(f) of Form N-1A; Item 
18.16 of Form N-2.
    \203\ See, e.g., rule 206(4)-6(c); Item 17(f) of Form N-1A; Item 
18.16 of Form N-2.
---------------------------------------------------------------------------

I. Requests for Confidential Treatment

    We are adopting, substantially as proposed,\204\ instructions in 
Form N-PX that allow managers to request confidential treatment of 
proxy voting information consistent with rule 24b-2. The required 
content, procedures for filing both the request itself and information 
that is no longer entitled to confidential treatment, and the standard 
for approving such requests will be the same as for confidential 
treatment requests under section 13(f) of the Exchange Act.\205\
---------------------------------------------------------------------------

    \204\ We are making corresponding changes to paragraphs (a)(1) 
and (d) of Rule 101 of Regulation S-T and rule 24b-2 to effectuate 
the electronic submission of these requests as discussed below. See 
infra footnote 206 and accompanying text. We have also revised the 
final Form N-PX confidential treatment instructions in order to make 
them consistent with amendments to Form 13F that we have adopted 
since the proposal. See Electronic Submission of Applications for 
Orders Under the Advisers Act and the Investment Company Act, 
Confidential Treatment Requests for Filings on Form 13F, and Form 
ADV-NR; Amendments to Form 13F, Release No. 34-95148 (June 23, 2022) 
[87 FR 38943 (June 30, 2022)] (``E-Filings Release''). Also, 
consistent with Form 13F, we added a check-box to indicate when 
information has been omitted due to a request for confidential 
treatment. These changes are consistent with the Confidential 
Treatment Instructions to proposed Form N-PX that would have 
required a reporting person to file all requests for and information 
subject to the request in accordance with the instructions for 
information filed on Form 13F and are intended to provide an 
opportunity for managers to protect confidential information from 
being disclosed on Form N-PX in the same circumstances managers can 
make a confidential treatment request for information reported on 
Form 13F. See Confidential Treatment Instruction 3 of proposed Form 
N-PX; see also Proposing Release, supra footnote 5.
    \205\ Section 13(f)(4) of the Exchange Act provides that the 
Commission, as it determines to be necessary or appropriate in the 
public interest or for the protection of investors, may delay or 
prevent public disclosure of information filed on Form 13F in 
accordance with the Freedom of Information Act. Section 13(f)(4) 
also provides that any information filed on Form 13F that identifies 
the securities held by the account of a natural person or an estate 
or trust (other than a business trust or investment company) shall 
not be disclosed to the public. Section 13(f)(5) of the Exchange Act 
additionally provides that, in order to grant confidential treatment 
under section 13(f), the Commission must determine that such action 
is necessary or appropriate in the public interest and for the 
protection of investors or to maintain fair and orderly markets.
---------------------------------------------------------------------------

    In addition, and consistent with recent amendments to Form 13F, 
confidential treatment requests regarding Form N-PX will be required to 
be filed electronically via EDGAR.\206\ This is consistent with the 
Commission's statement in the proposing release that the instructions 
on Form N-PX provide that a reporting person requesting confidential 
treatment of information filed on Form N-PX should follow the same 
procedures set forth in Form 13F for filing confidential treatment 
requests.\207\ Managers seeking

[[Page 78788]]

confidential treatment with respect to information on Form N-PX already 
will be required to file any confidential treatment requests related to 
Form 13F on EDGAR. Also, any confidential treatment requests a manager 
files with respect to Form N-PX will be subject to the same standards 
in determining whether to approve the request, as discussed below in 
this section of the release. Requiring managers to file Form N-PX 
confidential treatment requests on EDGAR therefore provides a 
consistent process for a manager seeking confidential treatment, 
whether the information is reported on either or both of Form 13F and 
Form N-PX. As adopted, the confidential treatment instructions to Form 
N-PX only refer to managers.\208\ While the instructions in the 
Proposing Release referred to ``reporting persons,'' the Proposing 
Release also stated that the Commission was not aware of any situation 
in which confidential treatment would be justified under rule 24b-2 for 
information filed by funds on Form N-PX, as the form did not include 
any confidential treatment instructions prior to these amendments and, 
apart from Form N-PX, funds already disclose their portfolio 
holdings.\209\ We requested comment in the Proposing Release on whether 
we should allow funds to request confidential treatment under some 
circumstances and we received no comments on this subject.
---------------------------------------------------------------------------

    \206\ The Commission recently adopted amendments to require 
electronic filing of, among others, the confidential treatment 
requests made in conjunction with Form 13F. See E-Filings Release, 
supra footnote 204.
    \207\ The Commission stated in the Proposing Release that the 
Form N-PX confidential treatment instructions were ``designed to 
provide a similar opportunity to prevent confidential information 
that is protected from disclosure on Form 13F from being disclosed 
on Form N-PX'' and that [Form N-PX's] ``instructions provide that a 
person requesting confidential treatment of information filed on 
Form N-PX should follow the same procedures set forth in Form 13F 
for filing confidential treatment requests.'' See Proposing Release, 
supra footnote 5. The Commission also requested comment in the 
Proposing Release as to whether the Commission should ``require 
reporting persons to file confidential treatment requests for Form 
N-PX in the same manner as Form 13F requires.'' Id. While the 
Commission did not receive any comments relevant to this specific 
point, a commenter on the E-Filings Release urged ``the SEC to 
replace other outdated paper filing requirements with electronic 
filing,'' stating that doing so ``will reduce costs and burdens on 
filers and facilitate Commission staff review and processing.'' 
Comment Letter of the Investment Company Institute (Dec. 17, 2021) 
(regarding File Nos. S7-15-21 and S7-16-21).
    \208\ See Request for Confidential Treatment Instruction 1 to 
amended Form N-PX.
    \209\ See Proposing Release, supra footnote 5, at n.202 and 
accompanying text.
---------------------------------------------------------------------------

    One commenter suggested we automatically extend confidential 
treatment for a vote on Form N-PX if we have granted it for a position 
on Form 13F or, alternatively, develop a streamlined process that would 
allow for a combined confidential treatment request for both Forms 13F 
and N-PX.\210\ We do not believe this would be a practical approach 
because reports on Form 13F are filed quarterly while reports on Form 
N-PX are filed annually. For example, a manager may receive 
confidential treatment for a position in the first quarter of the year, 
but by the time filings are due for Form N-PX, the position may no 
longer meet the criteria for granting confidential treatment. In 
addition, the positions that managers are required to report on Form 
13F may not always be the same as the positions for which the manager 
is reporting proxy votes on Form N-PX.
---------------------------------------------------------------------------

    \210\ See MFA Comment Letter.
---------------------------------------------------------------------------

    We will apply the same standards in determining whether to approve 
a confidential treatment request in relation to Form N-PX as we do for 
requests for confidential treatment regarding Form 13F.\211\ For 
example, confidential treatment may be justified when a manager has 
filed a confidential treatment request for information reported on Form 
13F that is pending or has been granted and where confidential 
treatment of information filed on Form N-PX would be necessary in order 
to protect information that is the subject of such Form 13F 
confidential treatment request.\212\ As the Commission stated in the 
Proposing Release, confidential treatment would not be merited solely 
in order to prevent proxy voting information from being made public 
given the public disclosure intent of section 14A(d) and the 
confidential treatment requirements of rule 24b-2 under the Exchange 
Act.\213\ As a result, we are not expanding the standards for 
requesting and obtaining confidential treatment to cover situations in 
which a manager has a confidentiality agreement with a client regarding 
disclosure of portfolio information because it would not meet the 
standards for confidential treatment in connection with Form 13F.
---------------------------------------------------------------------------

    \211\ See 15 U.S.C. 78m(f)(4) and (5) and rule 24b-2; see also 
Request for Confidential Treatment Instruction 4 to amended Form N-
PX.
    \212\ A manager also may seek confidential treatment for 
information that is not reported on Form 13F but would have been the 
subject of a Form 13F confidential treatment request if it were 
required to be reported (for example, a de minimis position that is 
not required to be reported on Form 13F but would have been eligible 
for confidential treatment if it were required to be reported on the 
form).
    \213\ See Proposing Release, supra footnote 5, at nn. 200-201 
and accompanying text.
---------------------------------------------------------------------------

J. Website Availability of Fund Proxy Voting Records

    The Commission is adopting amendments to Forms N-1A, N-2, and N-3 
to require a fund to disclose that its proxy voting record is publicly 
available on (or through) its website and available upon request, free 
of charge in both cases. We are adopting these amendments as proposed, 
except that, in response to a comment, we are clarifying on the 
affected forms that a fund must make its proxy voting record available 
on its website only if it has a website.\214\ Accordingly, under the 
amendments a fund must file Form N-PX reports in a custom XML language, 
post the fund's proxy voting record on the fund's website if it has 
one, and provide the voting record upon request. We also are amending 
Form N-1A and Form N-3 to require that a fund provide the email 
address, if any, that an investor may use to request the proxy voting 
record. These amendments will make a fund's proxy voting record more 
accessible to investors.\215\
---------------------------------------------------------------------------

    \214\ See ICI Comment Letter I.
    \215\ See Proposing Release, supra footnote 5, at section II.H.
---------------------------------------------------------------------------

    Most commenters generally supported this aspect of the 
proposal.\216\ One commenter suggested that we should clarify in the 
forms that funds are, consistent with statements made in the Proposing 
Release, able to comply with the website disclosure requirement by 
providing a direct link on their website to the HTML-rendered Form N-PX 
report on EDGAR.\217\ We agree and we have amended Forms N-1A, N-2, and 
N-3 accordingly.\218\ One commenter suggested that funds should not be 
required to mail proxy voting records upon request.\219\ We understand, 
however, that most funds currently make their proxy voting records 
available to shareholders upon request and believe this practice should 
continue so that investors without website access are not 
disadvantaged.
---------------------------------------------------------------------------

    \216\ See, e.g., PRI Comment Letter; Public Citizen Comment 
Letter; McRitchie Comment Letter I; ICI Comment Letter I (noting 
their suggestions with respect to funds without websites and 
compliance with the amendments by linking to EDGAR); CFA/CII Comment 
Letter; Vanguard Comment Letter.
    \217\ See ICI Comment Letter I.
    \218\ See also Proposing Release, supra footnote 5, at section 
II.H (stating that a fund could comply with the requirement to 
disclose the proxy voting record in a human-readable format by, for 
example, ``providing a direct link on its website to the HTML-
rendered Form N-PX report on EDGAR'').
    \219\ See McRitchie Comment Letter I.
---------------------------------------------------------------------------

K. Effective Date

    As described above, funds will continue to be required to report 
their proxy votes, and managers will be required to report their say-
on-pay votes, annually on Form N-PX not later than August 31 of each 
year, for the most recent twelve-month period ended June 30. In order 
to provide time for reporting persons to prepare to comply with the 
amendments, we are delaying the effectiveness of the amendments until 
July 1, 2024. Managers and funds will therefore be required to file 
their first reports on amended Form N-PX by August 31, 2024, with these 
reports covering the period of July 1, 2023, to June 30, 2024. The 
period provided by the extended effective date is generally consistent 
with the length of the compliance period described in the Proposing 
Release, under which reporting persons would have likely been required 
to file their first reports on amended Form N-PX by August 31,

[[Page 78789]]

2024, and with the views of commenters that addressed this issue, who 
urged that the Commission provide at least a year or one full reporting 
period to allow reporting persons time to implement necessary 
changes.\220\ Thus, under the extended effective date, reporting 
persons and their third-party service providers will have at a minimum 
one full reporting period to prepare for the amended reporting 
requirements before any reporting person will file on amended Form N-
PX. Further, setting an effective date on July 1, 2024, will provide a 
uniform transition to the amended form beginning with the reporting 
period ended June 30, 2024. In addition, although the compliance period 
in the proposal would have required reporting persons to report votes 
in conformity with amended Form N-PX for votes occurring six months 
after the effective date, this could have created additional 
operational complexity to have different Form N-PX requirements that 
apply in the same reporting period, and we believe that providing 
reporting persons until July 1, 2024 to begin reporting under the 
amendments provides sufficient time for reporting persons to prepare to 
include all applicable votes on amended Form N-PX at that time. We also 
will provide an EDGAR pilot program before July 1, 2024, to allow 
reporting persons to test file the amended form.\221\
---------------------------------------------------------------------------

    \220\ See ICI Comment Letter I (suggesting that the first 
reports on amended Form N-PX be filed by the August 31st that is a 
minimum of 14 months from the effective date); IAA Comment Letter 
(suggesting the Commission extend the compliance date to allow for 
at least one full reporting period for reporting persons to file).
    \221\ See also supra section II.E discussing timing of technical 
specification releases and beta testing of Form N-PX's structured 
data format.
---------------------------------------------------------------------------

L. Transition Rules for Managers

    We are adopting as proposed transition rules that govern the timing 
of a manager's Form N-PX filing obligations for say-on-pay vote 
reporting whenever the manager enters and exits from the obligation to 
file Form 13F reports. We received no comments on this aspect of the 
proposal.
    In particular, rule 14Ad-1 will not require managers to file a Form 
N-PX report for the 12-month period ending June 30 of the calendar year 
in which the manager's initial filing on Form 13F is due.\222\ Instead, 
managers will be required to file a report on Form N-PX for the period 
ending June 30 for the calendar year following the manager's initial 
filing on Form 13F. For example, assume that a manager does not meet 
the $100 million threshold test on the last trading day of any month in 
2023 but does meet the $100 million threshold test on the last trading 
day of at least one month in 2024. As a result, under the rules that 
currently apply to Form 13F, the manager would be required to file a 
Form 13F report no later than February 15, 2025, for the period ending 
December 31, 2024.\223\ Additionally, under rule 14Ad-1(b) as adopted, 
the manager will be required to file a Form N-PX report no later than 
August 31, 2026, for the 12-month period from July 1, 2025, through 
June 30, 2026.\224\ The following chart illustrates the timing of the 
entrance of a manager to its obligation under the rule to file reports 
on Form N-PX.
---------------------------------------------------------------------------

    \222\ Rule 14Ad-1(b); General Instruction F to amended Form N-
PX. For this purpose, an ``initial filing'' on Form 13F means any 
quarterly filing on Form 13F if no filing on Form 13F was required 
for the immediately preceding calendar quarter. Id.
    \223\ Currently, under 17 CFR 240.13f-1 (``rule 13f-1''), the 
obligation to file Form 13F arises when a manager exercises 
investment discretion over accounts holding at least $100 million in 
section 13(f) securities as of the ``last trading day of any month 
of any calendar year.'' However, the manager's obligation to file 
Form 13F commences with the report for December 31 of that year, 
which is required to be filed within 45 days after December 31. Rule 
13f-1(a)(1); General Instruction 1 to Form 13F. See 17 CFR 240.0-3.
    \224\ Rule 14Ad-1(b); General Instruction F to amended Form N-
PX.

                                            Initial Form N-PX Filing
----------------------------------------------------------------------------------------------------------------
   Date manager exceeds  reporting      First Form 13F  filing   First proxy reporting
              threshold                          due                     period            First Form N-PX due
----------------------------------------------------------------------------------------------------------------
Mar. 31, 2023........................  Feb. 15, 2024..........  July 1, 2024-June 30,    Aug. 31, 2025
                                                                 2025.
Dec. 31, 2023........................  Feb. 15, 2024..........  July 1, 2024-June 30,    Aug. 31, 2025
                                                                 2025.
Jan. 31, 2024........................  Feb. 15, 2025..........  July 1, 2025-June 30,    Aug. 31, 2026
                                                                 2026.
----------------------------------------------------------------------------------------------------------------

    In addition, as proposed, we will not require a manager to file a 
report on Form N-PX with respect to any shareholder vote at a meeting 
that occurs after September 30 of the calendar year in which the 
manager's final filing on Form 13F is due.\225\ Instead, the manager 
will be required to file a report on Form N-PX for the period July 1 
through September 30 of the calendar year in which the manager's final 
filing on Form 13F is due. This short-period Form N-PX filing will be 
due no later than March 1 of the immediately following calendar 
year.\226\ A manager's obligation to file Form 13F reports always 
terminates with the September 30 report, and the transition rule we are 
adopting conforms the ending date for reporting say-on-pay votes with 
the ending date for Form 13F reporting.\227\ The March 1 due date would 
provide a two-month period for filing after December 31, when the 
manager's Form 13F filing status will be conclusively determined for 
the coming year.\228\
---------------------------------------------------------------------------

    \225\ Rule 14Ad-1(c); General Instruction F to amended Form N-
PX. For this purpose, a ``final filing'' on Form 13F means any 
quarterly filing on Form 13F if no filing on Form 13F is required 
for the immediately subsequent calendar quarter. Id.
    \226\ Rule 14Ad-1(c); General Instruction F to amended Form N-
PX.
    \227\ See rule 13f-1(a) (manager that meets $100 million 
threshold on last trading day of any month of any calendar year is 
required to file Form 13F for December 31 of that year and the first 
three calendar quarters of the subsequent calendar year).
    \228\ A manager is required to file a report on Form 13F in the 
coming year if it meets the $100 million threshold on the last 
trading day of any month of the current calendar year. As a result, 
in cases where the manager does not meet the threshold in January 
through November, its status will not be determined until December 
31.
---------------------------------------------------------------------------

    For example, assume that a manager ceases to meet the $100 million 
threshold in 2023. In other words, the manager meets the threshold on 
at least one of the last trading days of the months in 2022, but does 
not meet the threshold on any of the last trading days of the months in 
2023. The manager's final report on Form 13F would be filed for the 
quarter ended September 30, 2023. The manager's final report on Form N-
PX would include all say-on-pay votes cast during the period from July 
1, 2023, through September 30, 2023, and will be required to be filed 
no later than March 1, 2024. The following chart illustrates the timing 
of the exit of a manager from its obligation to file Form N-PX.

[[Page 78790]]



                                             Final Form N-PX Filing
----------------------------------------------------------------------------------------------------------------
                                        Final form 13f filing    Final proxy reporting
Date manager ceases to meet threshold            due                     period            Final form N-PX due
----------------------------------------------------------------------------------------------------------------
Mar. 30, 2023........................  Nov. 14, 2024..........  July 1, 2024-Sept. 30,   Mar. 1, 2025
                                                                 2024.
Dec. 30, 2023........................  Nov. 14, 2024..........  July 1, 2024-Sept. 30,   Mar. 1, 2025
                                                                 2024.
Feb. 1, 2024.........................  Nov. 14, 2025..........  July 1, 2025-Sept. 30,   Mar. 1, 2026
                                                                 2025.
----------------------------------------------------------------------------------------------------------------

M. Technical and Conforming Amendments

    We are adopting as proposed two technical and conforming 
amendments. First, we are amending the heading of subpart D of part 249 
of the Code of Federal Regulations to include new section 14A of the 
Exchange Act and to indicate that Exchange Act reports are filed by 
both issuers and other persons (e.g., managers). We are also adopting 
amendments to reflect the fact that Form N-PX will be an Exchange Act 
form, as well as an Investment Company Act form.\229\ We received no 
comments on this aspect of the proposal.
---------------------------------------------------------------------------

    \229\ Rule 30b1-4; 17 CFR 249.326 and 274.129.
---------------------------------------------------------------------------

N. Delegation of Commission Authority

    In order to facilitate the efficient consideration of requests for 
confidential treatment of information required pursuant to amended Form 
N-PX, the Commission is amending 17 CFR 200.30-5(c-1) to provide 
delegated authority to the Director of the Division of Investment 
Management (``Director'') to grant and deny these requests. Section 4A 
of the Exchange Act provides the Commission the authority to delegate, 
by published order or rule, any of its functions to a division of the 
Commission, subject to certain limitations.\230\ The authority to grant 
and deny applications for confidential treatment and revoke a grant of 
confidential treatment is delegated to several members of our staff. We 
believe that it is appropriate for the Director to exercise such 
functions and that delegating this authority will conserve our 
resources and improve efficiency. Specifically, we are amending rule 
30-5(c-1)(1) to authorize the Director to grant and deny applications 
filed pursuant to section 24(b) of the Exchange Act and rule 24b-2 
thereunder for confidential treatment of information filed pursuant to 
section 14A(d) of the Exchange Act and rule 14Ad-1 thereunder. The 
Commission finds, in accordance with section 553(b)(3)(A) of the 
Administrative Procedure Act (``APA''), that the amendment to rule 30-
5(c-1)(1) relates solely to agency organization, procedures, or 
practices.\231\ Accordingly, the APA's provisions regarding notice of 
rulemaking and opportunity for public comment are not applicable.\232\
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    \230\ 15 U.S.C. 78d-1.
    \231\ 5 U.S.C. 553(b)(3)(A).
    \232\ For the same reason, and because the amendment to rule 30-
5(c-1)(1) does not substantively affect the rights or obligations of 
non-agency parties, the provisions of the Small Business Regulatory 
Enforcement Fairness Act are not applicable to this amendment. 
Additionally, the provisions of the Regulatory Flexibility Act, 
which apply only when notice and comment are required by the APA or 
other law, are not applicable to this amendment. Section 23(a)(2) of 
the Exchange Act requires the Commission, in adopting rules under 
that Act, to consider the anticompetitive effects of any rules it 
adopts. The Commission does not believe that this amendment will 
have any impact on competition. Finally, this amendment does not 
contain any collection of information requirements as defined by the 
Paperwork Reduction Act of 1995. See 5 U.S.C. 804(3)(C); 5 U.S.C. 
603; 15 U.S.C. 78w(a)(2).
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III. Other Matters

    Pursuant to the Congressional Review Act, the Office of Information 
and Regulatory Affairs has designated these rules as a ``major rule'' 
as defined by 5 U.S.C. 804(2). If any of the provisions of these rules, 
or the application thereof to any person or circumstance, is held to be 
invalid, such invalidity shall not affect other provisions or 
application of such provisions to other persons or circumstances that 
can be given effect without the invalid provision or application.

IV. Economic Analysis

A. Introduction

    The Commission is adopting amendments to Form N-PX to enhance the 
information funds currently report annually about their proxy votes on 
both executive compensation and other matters to make these reports 
more informative and easier to analyze. The amendments to Form N-PX 
will require the categorization of votes, structuring and tagging the 
data reported, and, if the form of proxy in connection with a matter 
reported on the form is subject to rule 14a-4 of the Exchange Act, 
require that the reporting person use the same language used on the 
form of proxy to identify the matter, identify all matters in the same 
order as on the form of proxy, and, for election of directors, identify 
each director separately in the same order as on the form of proxy. The 
amendments will also provide investors with additional information 
about the extent to which a reporting person votes or loans its shares.
    The Commission is also adopting rule and form amendments that will 
complete the implementation of section 951 of the Dodd-Frank Act by 
requiring a manager to report how it voted proxies relating to 
executive compensation matters. Specifically, the rule and form 
amendments will require managers to report their say-on-pay votes 
annually on Form N-PX. For managers that have a disclosed policy of not 
voting proxies and that did not vote during the reporting period, the 
rule and form amendments will allow them to indicate this on Form N-PX 
without providing additional information about each voting matter 
individually. Funds that did not hold any securities entitled to vote 
during the reporting period would also be permitted to make a similar 
short-form filing.
    The Commission is sensitive to the economic effects, including the 
costs and benefits, imposed by the final rule and form amendments.\233\ 
Where practicable, we have attempted to quantify the costs, benefits, 
and effects on efficiency, competition, and capital formation expected 
to result from the final rule and form amendments. In some cases, 
however, data needed to quantify these economic effects are not 
currently available to the Commission or otherwise publicly available. 
For example, we are unable to quantify the degree to which funds and 
managers may choose to forego income from securities lending as a 
result of any

[[Page 78791]]

incentive effects associated with the disclosure of the number of 
shares loaned but not recalled. While we provide a qualitative 
discussion of the potential effect, we are unable to estimate its 
magnitude because we do not have data to predict how funds and managers 
would trade off any perceived benefits from recalling shares on loan 
with the anticipated loss in securities lending income.\234\
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    \233\ Section 3(f) of the Exchange Act, section 2(b) of the 
Securities Act, and section 2(c) of the Investment Company Act 
require the Commission, whenever it engages in rulemaking and is 
required to consider or determine whether an action is necessary or 
appropriate in (or, with respect to the Investment Company Act, 
consistent with the public interest), to consider, in addition to 
the protection of investors, whether the action would promote 
efficiency, competition, and capital formation. Additionally, 
Section 23(a)(2) of the Exchange Act requires the Commission, when 
making rules under the Exchange Act, to consider the impact such 
rules would have on competition. Exchange Act Section 23(a)(2) 
prohibits the Commission from adopting any rule that would impose a 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Exchange Act.
    \234\ We do not anticipate any significant economic effects 
associated with the technical and conforming amendments discussed in 
supra section II.M.
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B. Economic Baseline

    The economic baseline against which we measure the economic effects 
of this final rule, including its potential effects on efficiency, 
competition, and capital formation, is the state of the world as it 
currently exists.
1. Funds' Reporting of Proxy Voting Records
    Since 2003, funds have been required to file Form N-PX to report 
their proxy voting records annually for each matter relating to a 
portfolio security considered at any shareholder meeting held during 
the reporting period and with respect to which the fund was entitled to 
vote. In May 2022, we estimate that there were approximately 12,492 
funds and series of management investment companies with average total 
net assets of $35.1 trillion that were required to file reports on Form 
N-PX.\235\ As of year-end 2021, assets held in mutual funds and other 
registered investment companies account for approximately 32% of the 
market capitalization of all U.S.-issued equities outstanding.\236\
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    \235\ These estimates are based on Form N-CEN filings of 
management investment companies registered with the Commission as of 
May 2022.
    \236\ This figure has ranged between 30 and 34 percent over the 
past four years. ICI 2022 Fact Book, supra footnote 2, at Figure 
2.7. See also supra section I.
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    On the current Form N-PX, among other things, a fund discloses 
whether it cast its votes on each proposal, how it voted (e.g., for or 
against the proposal, or abstained), and whether any votes cast were 
for or against management. Although the form specifies the information 
that each fund must provide, it does not specify the format of the 
disclosure or how funds present or organize the information. Reports on 
Form N-PX also are not currently filed in a machine-readable, or 
``structured,'' data language. Investors can access a fund's Form N-PX 
filings online through the EDGAR website. Funds also must disclose that 
their proxy voting records are available to investors either upon 
request or on (or through) their websites, with most funds disclosing 
that this information is available upon request.
    We understand that many funds currently use vendors to prepare 
their Form N-PX filings.\237\ These vendors typically provide a summary 
of the ballot description and may also provide a link to the issuer's 
proxy statement. Vendors may also list ballot items in an order that 
deviates from that on the proxy statement. According to some 
commenters, larger funds are more likely to use a vendor to prepare 
their Form N-PX than smaller funds.\238\
---------------------------------------------------------------------------

    \237\ See, e.g., ICI Comment Letter I.
    \238\ See ICI Comment Letter I, Ultimus Comment Letter.
---------------------------------------------------------------------------

    Current Form N-PX reports have improved transparency into fund 
voting. However, these reports can be difficult for investors to read 
and analyze. For example, under the current rules, Form N-PX is 
routinely filed as a large HTML or plain[hyphen]text (ASCII) file. Many 
funds use automated systems to produce their Form N-PX records, which 
is often a simple output from a database maintained by the reporting 
person that covers meetings, proposals, and votes over a given 
period.\239\ A fund may own hundreds of different securities each of 
which may have ten or more proposals each year. As a result, Form N-PX 
reports disclosing proxy voting records for all securities and 
proposals can be overwhelmingly long.\240\ Investors also may have 
difficulty finding a particular fund's voting history within a single 
Form N-PX filing because many fund complexes include information about 
several different funds in a single Form N-PX report, given the 
structure of many funds as series of a trust.
---------------------------------------------------------------------------

    \239\ See Chong Shu, The Proxy Advisory Industry: Influencing 
and Being Influenced, U.S.C. Marshall School of Business Research 
Paper (May 23, 2022), at 28), available at https://ssrn.com/abstract=3614314 (retrieved from SSRN Elsevier database) (observing 
widespread use of voting platforms to report votes on Form N-PX, 
including the use of three voting platforms by approximately 90% of 
mutual funds from 2007 to 2017).
    \240\ Based on reports on Form N-PX, larger funds can have 
filings in excess of 1,000 pages. See also supra footnote 14.
---------------------------------------------------------------------------

    Funds also often use their own descriptions and abbreviations when 
describing a particular voting matter, which can differ from the 
descriptions on an issuer's form of proxy. This can make it difficult 
for investors to identify a particular voting matter or category of 
similar voting matters, and to compare funds' voting records.
    In addition to difficulties collecting and analyzing data provided 
on current Form N-PX, certain gaps in the current required disclosures 
may provide an incomplete picture of a fund's proxy voting practices. 
For example, current Form N-PX does not require funds to provide 
information about the potential effects of a fund's securities lending 
activities on its proxy voting. A fund's securities lending activities 
can generate additional income for the fund and its shareholders. 
However, when a fund lends its portfolio securities, it transfers 
incidents of ownership, including proxy voting rights, for the duration 
of the loan. As a result, the fund loses its ability to vote the 
proxies of such securities, unless the securities are recalled, the 
loan is terminated, and the securities are returned to the fund before 
the record date for the vote.
2. Managers' Reporting of Say-on-Pay Votes
    Section 951 of the Dodd-Frank Act added new section 14A to the 
Exchange Act requiring issuers to provide shareholders with a vote on 
say-on-pay matters, and requires managers to report how they voted on 
those matters. Section 14A generally requires public companies to hold 
non-binding say-on-pay shareholder advisory votes to: (1) approve the 
compensation of its named executive officers; (2) determine the 
frequency of such votes; and (3) approve ``golden parachute'' 
compensation in connection with a merger or acquisition. Section 14A(d) 
requires that every manager report at least annually how it voted on 
say-on-pay votes,\241\ unless such vote is otherwise required to be 
reported publicly. However, until these amendments, there have been no 
rules or forms governing how managers comply with their reporting 
obligation under section 14A(d).\242\ Some managers, such as public 
pension funds, disclose their proxy voting records on their websites, 
although we understand that their disclosures generally do not contain 
quantitative information and presentation practices of website
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    \241\ Based on Form 13F filings covering the first quarter of 
2022, as of March 31, 2022, there were 8,147 managers with 
investment discretion over approximately $44.4 trillion in section 
13(f) securities.
    \242\ Although managers as a whole have not been required to 
file reports on Form N-PX, a subset of managers advise funds and 
each of these funds has been and is required to report its own proxy 
voting record, including say-on-pay votes, annually on Form N-PX.

---------------------------------------------------------------------------

[[Page 78792]]

reporting vary across managers.\243\ Registered investment advisers 
also are required to disclose to clients, upon the client's request, 
how the adviser voted the client's securities.\244\ Unlike publicly 
available reports on Form N-PX, however, this information is only 
required to be made available to a single client, related solely to 
that client's securities, and only upon the client's request. The 
adoption of say-on-pay vote reporting requirements for managers 
completes the implementation of section 951.
---------------------------------------------------------------------------

    \243\ Some pension funds publish some or all of their proxy 
votes. See, e.g., Office of N.Y. State Comptroller, N.Y. State 
Common Retirement Fund Proxy Voting (2021), available at https://www.osc.state.ny.us/files/common-retirement-fund/corporate-governance/pdf/proxy-voting-2021.pdf; CalPERS Global Proxy Voting 
Decisions, available at https://viewpoint.glasslewis.com/WD/?siteId=CalPERS; CPP Investments, Proxy Voting, available at https://www.cppinvestments.com/the-fund/sustainable-investing/proxy-voting.
    \244\ Rule 206(4)-6(b).
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3. Other Affected Parties
(a) Users of Proxy Voting Data
    Form N-PX information is used by fund investors, other market 
participants, corporate issuers, and regulators such as the Commission. 
In addition, there are service providers that help collect and analyze 
proxy voting information or that provide advice based on information 
contained in Form N-PX disclosures. Such service providers include 
proxy voting advisers, proxy data providers and analysts, and equity 
analysts.
    According to an association representing regulated funds, as of 
December 2021, 62.2 million (47.9%) U.S. households and 108.1 million 
individuals owned U.S. registered investment companies.\245\ Median 
mutual fund assets of mutual fund-owning households were $200,000 with 
the median number of mutual funds held being four.\246\ Moreover, 
registered funds play an important role in individuals' retirement 
savings. 63% of households had tax-advantaged retirement savings with 
$12.6 trillion invested in mutual funds either through defined 
contribution plans or IRAs.\247\
---------------------------------------------------------------------------

    \245\ See ICI 2022 FactBook, supra footnote 2, at ``2021 Facts 
at a Glance'' Table.
    \246\ Id.
    \247\ Id.
---------------------------------------------------------------------------

(b) Custodians and Securities Lending Agents
    Funds and managers typically hold client securities with a 
custodian, who safeguards these assets. The custody service industry 
has been characterized as dominated by a small number of large market 
share participants; as of 2018, ``[n]early half of the total assets 
[were] under the custody of the four largest [firms], which are all 
from the US.'' \248\ The vast majority of custodians also provide a 
range of related services, which may include acting as a securities 
lending agent to administer a fund's or manager's securities lending 
program.\249\ A commenter stated that custodians are a primary source 
of data on which fund shares are on loan over a record date and another 
commenter similarly stated that for funds and managers to collect 
information on shares on loan, custodians and securities lending agents 
would be expected to be involved in the process.\250\
---------------------------------------------------------------------------

    \248\ Deloitte [Luxembourg], The evolution of core financial 
service. Custodian & Depository Banks, (2019), at 10 (``Deloitte 
White Paper''), available at https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/financial-services/lu-the-evolution-of-a-core-financial-service.pdf.
    \249\ See Deloitte White Paper, supra footnote 249, at 13.
    \250\ See Blackrock Comment Letter; Glass Lewis Comment Letter.
---------------------------------------------------------------------------

C. Benefits and Costs

1. Amendments to Funds' Reporting of Proxy Votes
(a) Benefits
    The fund-related amendments to Form N-PX will benefit fund 
investors, other market participants, and other proxy voting data 
users,\251\ by enhancing the information funds currently report about 
their proxy votes and making that information easier to collect and 
analyze. The amendments include the following principal elements: (1) 
requiring the disclosure of information about the number of shares that 
were voted (or instructed to be voted) and the number of shares that a 
fund loaned and did not recall before the record date for the vote; 
\252\ (2) if a form of proxy in connection with a voting matter is 
subject to rule 14a-4 under the Exchange Act, requiring that funds 
describe the matter using the same language, and in the same order, as 
found in the issuer's form of proxy; \253\ (3) requiring funds to 
categorize voting matters by type; (4) requiring funds to provide 
disclosure separately by series of shares; (5) requiring the reporting 
of information on Form N-PX in a custom XML language; and (6) requiring 
funds to disclose that their proxy voting records are publicly 
available on (or through) their websites and available upon request, 
free of charge in both cases.
---------------------------------------------------------------------------

    \251\ See supra section IV.B.3.a.
    \252\ Funds that did not hold any securities entitled to vote 
during the reporting period can indicate this on the form without 
providing additional information about each voting matter 
individually.
    \253\ In a change from the proposal, when reporting proxy votes 
in all other cases, reporting persons will remain subject to the 
current requirements regarding the language used for identifying 
proxy matters, with the modification that these reports will be 
required to limit the use of abbreviations.
---------------------------------------------------------------------------

    The amendments are designed to broaden the scope of the benefits 
that the Commission originally identified when adopting Form N-PX 
namely: (1) to provide better information to investors who wish to 
determine to which fund managers they should allocate their capital, 
and whether their existing fund managers are adequately maximizing the 
value of their shares; (2) to deter fund voting decisions that are 
motivated by considerations of the interests of a fund's adviser rather 
than the interests of the fund's investors; and (3) to provide stronger 
incentives for fund managers to vote their proxies carefully.\254\
---------------------------------------------------------------------------

    \254\ 2003 Adopting Release, supra footnote 4. The discussion of 
the interests of funds' investors is not intended to describe the 
interests of any particular investor or investors, but instead 
refers to the funds' investors, considered as a whole.
---------------------------------------------------------------------------

    We expect that the amendments to the Form N-PX format and content 
will help investors and other data users more easily collect and 
analyze proxy voting information, resulting in lower costs of gathering 
and understanding this information.\255\ As a result, we expect these 
amendments will facilitate comparisons of voting patterns across a wide 
range of funds or within an individual fund over time. To the extent 
that investors choose among funds based on their proxy voting policies 
and records, in addition to other factors such as expenses, 
performance, and investment policies, we expect that investors will be 
able to select funds that suit their preferences more efficiently.\256\
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    \255\ Many commenters agreed that the proposed amendments will 
facilitate investors' acquisition and use of information about proxy 
votes that funds disclose. See, e.g., CFA/CII Comment Letter; 
Morningstar Comment Letter; LTSE Comment Letter.
    \256\ For example many commenters agreed that the proposed 
amendments can help increase transparency regarding proxy voting on 
ESG matters. See, e.g., The Shareholder Commons Comment Letter; LTSE 
Comment Letter; PRI Comment Letter.
---------------------------------------------------------------------------

    Some commenters stated that the proposed amendments would 
facilitate investors' acquisition and use of information about proxy 
votes that funds disclose.\257\ Specifically, a number of commenters 
supported the view that the structured data language requirement in the 
proposed

[[Page 78793]]

amendments would make Form N-PX easier to use, would facilitate 
investors' comparison of funds' voting information, and would make Form 
N-PX more informative for investors and other users of proxy voting 
information.\258\ Some commenters also stated that the website 
disclosure requirement would make proxy voting information more 
accessible, and the requirement would make it easier and less costly 
for investors to compile information on funds' voting history.\259\
---------------------------------------------------------------------------

    \257\ See, e.g., CFA/CII Comment Letter; Morningstar Comment 
Letter; LTSE Comment Letter; ASBC Comment Letter; Ratcliff Comment 
Letter. See also infra footnote 258 and footnote 259.
    \258\ See, e.g., Morningstar Comment Letter; ICI Comment Letter 
I; Vanguard Comment Letter; Blackrock Comment Letter; Bloomberg 
Comment Letter; PRI Comment Letter; US Chamber of Commerce Comment 
Letter.
    \259\ See, e.g., Vanguard Comment Letter; CFA/CII Comment 
Letter.
---------------------------------------------------------------------------

    While some commenters agreed that the requirement for funds to 
characterize voting matters by type would facilitate the comparison of 
voting patterns across funds,\260\ other commenters stated that the 
proposed requirement would not provide useful information to investors, 
for example because of the potential for a lack of consistency of 
classifications by funds or in light of the information that is already 
disclosed on Form N-PX.\261\ In a change from the proposal, under the 
amendments we are adopting reporting persons will select from a 
streamlined and consolidated list of categories and will not be 
required to select from a list of subcategories. As discussed above, 
and in light of the comments we received, these changes should increase 
the usefulness of the categories.\262\ As a result, we anticipate that 
this change may enhance the benefits to investors and other data users 
compared to the proposal and ultimately enable investors to have more 
information about reporting persons' proxy voting records which may aid 
them in their investment decisions. In a change from the proposal, the 
amendments will permit reporting persons to include certain additional 
identifiers, such as LEIs and FIGIs, when identifying themselves, other 
reporting persons reporting on their behalf, which series are included 
in a fund's reporting, or which portfolio security the reporting person 
is reporting votes for.\263\ The inclusion of these additional 
identifiers should benefit users of Form N-PX data by providing 
additional identifying information methods to supplement the existing 
identifying information provided on Form N-PX (for example, the CUSIP 
number). Form N-PX data users could benefit from certain features from 
this other identifying information, including the ability to use a 
security identifier without fees or charges.
---------------------------------------------------------------------------

    \260\ See, e.g., Morningstar Comment Letter; CFA/CII Comment 
Letter.
    \261\ See, e.g., ICI Comment Letter I.; Utah Comment Letter.
    \262\ See supra section II.C.1 for a discussion of the comments 
we received on this aspect of the proposal.
    \263\ As proposed, we are also including ISINs as an additional 
identifier for portfolio securities the reporting person is 
reporting votes for.
---------------------------------------------------------------------------

    Also, a commenter expressed the view that the proposed amendments 
are not likely to change retail investors' tendency to not use Form N-
PX but instead rely on fund websites for information about proxy 
voting.\264\ While many retail investors may not make direct use of 
Form N-PX as noted by other commenters, retail investors that rely on 
third parties such as research analysts to access and evaluate proxy 
voting information will benefit indirectly because those third parties 
will face lower costs in accessing information from Form N-PX as a 
result of the structured data language component of the 
amendments.\265\ As a result of making funds' proxy voting information 
easier to collect and analyze, the amendments may lead some investors 
to change how they allocate capital across funds to better match their 
preferences. While some commenters questioned the importance of proxy 
voting information for investors' decisions,\266\ we anticipate that 
some investors will find this information valuable in making their 
investment decisions.\267\ Another commenter expressed the view that 
the ability to switch funds may be limited by potential taxes on gains 
associated with changing funds and, in the case of participants in 
employer-sponsored retirement plans, investors' inability to change 
asset managers without changing their employer, which may hamper the 
degree to which investors could realize this benefit.\268\ This 
commenter also stated that the usefulness of past proxy voting 
information for investors in selecting funds is limited to the extent 
that funds deviate from their past voting behavior in the future.\269\ 
While we agree that for some investors there may be meaningful 
impediments to switching funds, and that for certain participants in 
employer-sponsored retirement plans those impediments may be 
prohibitively large, for other investors it may still be worthwhile to 
change funds if information on funds' past proxy voting practices 
significantly conflicts with the preferences of these investors.
---------------------------------------------------------------------------

    \264\ See Blackrock Comment Letter.
    \265\ See supra footnote 258 and accompanying text.
    \266\ See, e.g., Chamber of Commerce Comment Letter; MFDF 
Comment Letter.
    \267\ See supra footnote 257 and accompanying text.
    \268\ See Mercatus Center Comment Letter.
    \269\ To the extent that a fund follows its proxy voting 
policies and procedures, however, reported votes may be more likely 
to have predictive value. In addition, the amendments may lead funds 
to vote more consistently on similar issues over time, including at 
multiple portfolio companies, as a result of making funds' proxy 
voting information easier to collect and analyze. Specifically, if 
fund managers know that investors are able to track their voting 
behavior at low cost, then this may increase funds' incentives to 
vote consistently on similar issues in order to align with the 
preferences of their investors.
---------------------------------------------------------------------------

    We expect additional benefits to investors and other proxy voting 
data users from the new quantitative disclosure on amended Form N-PX 
regarding the number of shares voted and the number of shares loaned 
but not recalled. This additional information will benefit investors 
and other data users by providing more information about the scope of a 
fund's participation in proxy voting activities, the fund's voting 
preferences, the magnitude of the reporting fund's voting power, and 
whether funds have recalled securities on loan to vote proxies.
    A number of commenters agreed that the disclosure of the number of 
shares voted and the number of shares lent but not recalled would 
benefit investors and other proxy voting data users by providing useful 
information on the fund's proxy voting record, the fund's decision not 
to vote, and whether the fund has recalled shares lent to vote 
proxies.\270\ For example, some commenters expressed the view that the 
disclosure of shares lent but not recalled would enable investors to 
better understand the scope of funds' proxy voting activities, 
including (1) funds' voting preferences; (2) the extent of funds' 
voting for or against a certain ballot measure; (3) the influence funds 
have on the outcome of shareholder votes and their influence on issuer 
firms' corporate governance; and (4) funds' decision not to vote their 
shares.\271\ However, other commenters expressed the view that benefits 
from this disclosure may be limited to the extent that other 
quantitative or qualitative information such as financial benefits from 
share lending, operational constraints to recalling shares, the size of 
the fund's position, and the ability to influence voting outcome, would 
not be

[[Page 78794]]

disclosed and would be needed to contextualize the information to be 
disclosed.\272\
---------------------------------------------------------------------------

    \270\ See, e.g., Bloomberg Comment Letter; LTSE Comment Letter; 
Alliance Bernstein Comment Letter.
    \271\ See, e.g., Better Markets Comment Letter; PRI Comment 
Letter; LTSE Comment Letter. Also see supra footnotes 89-93 and 
accompanying text for a discussion of comments we received on the 
disclosure requirement of the number of shares voted.
    \272\ See, e.g., Pickard Comment Letter; Federated Hermes 
Comment Letter; RMA Comment Letter; MFDF Comment Letter; MFA Comment 
Letter; Blackrock Comment Letter; Alliance Bernstein Comment Letter. 
See also supra section II.C.3.(b) for a discussion of comments 
received on this aspect of the proposal.
---------------------------------------------------------------------------

    While we agree with commenters' view that disclosure of lent shares 
alone may not provide comprehensive information on the funds' decision 
to recall or not recall shares, we believe that disclosure of a fund's 
shares that were lent but not recalled will still facilitate investors' 
understanding on funds' securities lending activities, particularly as 
funds may provide additional voluntary disclosures on their securities 
lending activities if they believe such disclosures are helpful.
    The amendments to Form N-1A, Form N-2, and Form N-3 may help some 
investors and other users of the form access the information on Form N-
PX, which is also publicly available on EDGAR, more easily. Under the 
baseline, most funds make information regarding how the fund voted 
proxies relating to portfolio securities available upon request, while 
other funds provide this information on (or through) their websites. 
The amendments would allow investors to choose between accessing a 
fund's proxy voting information via the fund's website and requesting 
the information from the fund.\273\ Thus, the amendments would benefit 
those investors that prefer a delivery method that their fund does not 
offer currently. For example, some investors in the majority of funds 
that currently make a fund's voting record available upon request only 
may prefer to access this information on the fund's website directly 
rather than place a request and wait for the fund to deliver the voting 
record.
---------------------------------------------------------------------------

    \273\ See supra section II.J for a complete description of the 
requirements.
---------------------------------------------------------------------------

    In light of the increased transparency the amendments will provide 
on fund voting, the final rule may also provide an incentive for fund 
managers to devote additional time and resources to their participation 
in voting proxies, which can lead to an improvement in the performance 
of corporate issuers and enhance shareholder wealth.\274\ Assets held 
in funds account for approximately 32% of the market capitalization of 
all publicly traded U.S. corporations as of year-end 2021,\275\ and 
therefore funds have the ability to exercise a considerable amount of 
influence in proxy votes which can affect the value of these 
corporations.\276\ Academic research provides some evidence that 
actively voting funds may help sway shareholder votes toward value-
maximizing outcomes when voting on matters such as CEO turnover, 
executive compensation, anti-takeover provisions, and mergers.\277\ 
These potential corporate governance improvements resulting from more 
active participation in proxy voting by funds can have a positive 
externality effect, as the benefits will be accessible to all holders 
of the fund's underlying equity securities, and not limited to fund 
investors. A commenter provided the view that the increase in 
transparency resulting from the proposed amendments will emphasize the 
effort made by institutional investors in the proxy voting process, 
which may incentivize reporting persons to put more effort into 
participating in proxy voting.\278\ However, other commenters expressed 
the view that increases in disclosure from the proposed amendments is 
unlikely to change funds' proxy voting behavior.\279\ While there is 
likely to be variability in how the amendments influence behavior at 
different funds, to the extent that the proposed amendments increase 
fund managers' efforts put into proxy voting, this will provide more 
information about proxy voting to fund investors and other owners of 
funds' underlying equity securities. These benefits may be reduced for 
smaller funds who are less able to devote additional time and resources 
to their participation in voting proxies, and may also be mitigated to 
the extent that additional time and resources devoted to fund 
participation in voting proxies raises costs to investors.\280\
---------------------------------------------------------------------------

    \274\ See Peter Iliev & Michelle Lowry, Are Mutual Funds Active 
Voters, 28 Rev. Fin. Studies 446 (2015), available at https://academic.oup.com/rfs/article/28/2/446/1599644; Vincente Cunat, 
Mireia Gine, & Maria Guadalupe, The Vote is Cast: The Effect of 
Corporate Governance On Shareholder Value, 67 J. Fin. 1943 (2012), 
available at https://onlinelibrary.wiley.com/doi/full/10.1111/j.1540-6261.2012.01776.x (finding that passing a governance 
provision is associated with an increase in shareholder value, and 
more so when proposals are sponsored by institutional investors).
    \275\ See supra footnote 2.
    \276\ See supra section I.
    \277\ See, e.g., Angela Morgan, Annette Poulsen, Jack Wolf, and 
Tina Yang, Mutual Funds as Monitors: Evidence from Mutual Fund 
Voting, 17 J. Corp. Fin. 914 (2011) (finding that, ``in general, 
mutual funds vote more affirmatively for potentially wealth-
increasing proposals and funds' voting approval rates for these 
beneficial resolutions are significantly higher than those of other 
investors''). See also Jean Helwege, Vincent Intintoli, and Andrew 
Zhang, Voting with Their Feet or Activism? Institutional Investors' 
Impact on CEO Turnover, 18 J. Corp. Fin. 22 (2012), for a review of 
the literature. But, see also infra footnotes 282-284 and 
accompanying text. A number of commenters expressed the view that 
the proposed amendments' enhanced proxy voting disclosure 
requirement will be beneficial in light of funds' significant role 
in proxy voting on corporate governance at issuer firms. See, e.g., 
The Shareholder Commons Comment Letter I; Ratcliff Comment Letter; 
Friess Comment Letter.
    \278\ See Glass Lewis Comment Letter.
    \279\ See MFDF Comment Letter; Mercatus Center Comment Letter
    \280\ See infra section IV.C.1.(b).
---------------------------------------------------------------------------

    In addition, the amendments to the format and content of Form N-PX 
may also help deter fund voting decisions motivated by conflicts of 
interest.\281\ For example, some academic research observes that mutual 
funds' proxy voting may be affected by business ties such as those 
where a fund's adviser also manages the firm's pension plan, as well as 
through personal connections between fund managers and corporate 
executives.\282\ More generally, although fund managers are fiduciaries 
that owe duties of care and loyalty to each client, their proxy voting 
decisions may be driven by their economic interest in attracting more 
investments into the fund or more investment opportunities.\283\ A 
fund's proxy voting

[[Page 78795]]

also may be affected by the fund manager's personal preferences that 
may not align with the best interests of the fund's investors.\284\
---------------------------------------------------------------------------

    \281\ See, e.g., Gerald Davis & Han Kim, Business Ties and Proxy 
Voting by Mutual Funds, 85 J Fin. Econ. 552 (2007) (``To the extent 
that good corporate governance leads to higher valuations, fund 
managers have incentives to use their voting power to demand good 
corporate governance and accept (reject) proposals that may benefit 
(harm) investors. However, such fiduciary responsibilities may be 
compromised if mutual funds' corporate parents manage employee 
benefit plans (such as 401(k) plans) for their portfolio firms at 
the behest of management.''). According to the article, on average, 
earnings from 401(k)-related business equal 14% of the revenues that 
mutual fund families earn from their equity funds, and such income 
can represent as much as 25% of fund family revenues. A commenter 
agreed with our view that there may be conflicts of interests 
arising from proxy voting by funds and fund advisers. See Mercatus 
Center Comment Letter.
    \282\ See, e.g., Rasha Ashraf, Narayanan Jayaraman, and Harley 
Ryan, Do Pension-Related Business Ties Influence Mutual Fund Proxy 
Voting? Evidence from Shareholder Proposals on Executive 
Compensation, 47 J. Fin. Quant. Anal. 567 (2012) (find that ``fund 
families support management when they have pension ties to the 
firm''); Dragana Cvijanovic, Amil Dasgupta, & Konstantinos 
Zachariadis, Ties That Bind: How Business Connections Affect Mutual 
Fund Activism, 71 J. Fin. 2933 (2016) (find that ``business ties 
significantly influence pro-management voting at the level of 
individual pairs of fund families and firms.''); Gerald Davis & Han 
Kim, Business Ties and Proxy Voting by Mutual Funds, 85 J. Fin. 
Econ. 552 (2007); and Alexander Butler & Umit Gurun, Educational 
Networks, Mutual Fund Voting Patterns, and CEO Compensation, 25 Rev. 
Fin. Studies 2533 (2012) (observe that ``mutual funds whose managers 
are in the same educational network as the firm's CEO are more 
likely to vote against shareholder-initiated proposals to limit 
executive compensation than out-of-network funds are.'').
    \283\ See, e.g., Lucian Bebchuk, Alma Cohen, and Scott Hirst, 
The Agency Problems of Institutional Investors, 31 J. Econ. 
Perspectives 89 (2017) (discussing that fund managers' proxy voting 
decisions may be driven by their economic interest in attracting 
more business for the fund rather than engaging in generating 
governance gains at portfolio companies). The Commission has brought 
at least one enforcement action against a registered investment 
adviser for having proxy voting policies that did not address 
material potential conflicts when the adviser selected voting 
guidelines explicitly favored by certain clients to vote all its 
clients' securities, in order to improve the adviser's ranking in a 
third-party proxy voting survey. See In the Matter of INTECH 
Investment Management LLC, Investment Advisers Act Release No. 2872 
(May 7, 2009) (settled order).
    \284\ See, e.g., Paul Mahoney & Julia Mahoney, The New 
Separation of Ownership and Control: Institutional Investors and 
ESG, 2 Colum. Bus. L. Rev. 840 (2021). See also infra footnote 332 
and accompanying text.
---------------------------------------------------------------------------

    While advisers have a fiduciary duty to make voting determinations 
in the best interests of their clients, and cannot place their own 
interests ahead of the interests of clients, commenters offered 
differing views as to the likely effectiveness of the proposed 
amendments at deterring votes from being driven by a conflict of 
interest. One commenter expressed the view that inconsistencies in 
proxy votes by different fund advisers for large index funds and 
socially responsible investing funds \285\ suggest that the best 
interest of investors standard has not ensured that proxy voting 
decisions are not motived by conflicts of interest and that, as a 
result, a disclosure-based approach is not adequate to cause fund 
advisers to vote in the best interest of investors.\286\ This commenter 
also stated that disclosure of proxy votes will not capture the 
influence of funds' engagement with corporate issuers outside of the 
proxy voting process. Conversely, statements from a number of 
commenters support the view that that the proposed amendments will help 
deter fund votes motivated by conflicts of interest. Specifically, 
these commenters expressed the view that the transparency provided by 
the proposed amendments will provide investors with information to help 
align funds' voting decisions with investors' expectations and improve 
investors' oversight over funds' proxy voting.\287\ Aligning funds' 
voting decisions with investors' expectations and improving investors' 
oversight over voting by definition mitigates risks of conflicts of 
interest, in which investors (the principals) and fund managers (the 
agents) have different preferences and goals.
---------------------------------------------------------------------------

    \285\ See Caleb N. Griffin, Environmental and Social Voting at 
Index Funds, 44 Del. J. Corp. L. 167, 171 (2020) (comparing proxy 
voting decisions in 2018-2019 of the largest funds and designated 
socially responsible investing funds at the three largest fund 
complexes with competitor index funds and concluding that data from 
inconsistent voting decisions implies ``that index fund investors' 
interests likely do not determine voting decisions for the [largest 
index funds].'').
    \286\ See, e.g., Mercatus Center Comment Letter (also stating 
that a disclosure rule puts the burden on fund investors to evaluate 
whether a fund and adviser vote proxies in the best interest of the 
investors.)
    \287\ See, e.g., PRI Comment Letter; SCERS Comment Letter.
---------------------------------------------------------------------------

    Finally, we considered whether the additional transparency the 
final amendments will provide regarding the number of shares on loan 
but not recalled may also help assess concerns regarding the extent to 
which borrowed shares could be used to affect a proxy vote towards an 
outcome that enhances a borrower's benefits instead of an outcome 
beneficial for a fund's shareholders.\288\ We believe that the final 
amendments are unlikely to provide information that is meaningful in 
assessing these concerns as the information required to be disclosed 
would not allow an inference as to whether shares that were not 
recalled were used for such a purpose.
---------------------------------------------------------------------------

    \288\ See also Henry Hu & Bernard Black, Equity and Debt 
Decoupling and Empty Voting: II Importance and Extensions, 156 U. 
Penn. L. Rev. 625 (2008). The authors describe an empty voting 
strategy that involves borrowing shares in the stock loan market 
just before the record date and returning the shares immediately 
afterwards, which under standard borrowing agreements leaves the 
borrower holding votes without economic ownership. The authors 
provide examples of situations when such decoupling of voting rights 
from economic ownership can affect the control of corporations. 
However, to date, we are not aware of evidence on whether such 
voting with borrowed shares occurs on a regular basis or whether it 
has a significant effect on proxy voting outcomes. Commenters also 
did not provide such evidence.
---------------------------------------------------------------------------

(b) Costs
    The amendments to Form N-PX, Form N-1A, Form N-2, and Form N-3, 
will lead to some additional costs for funds. Any portion of these 
costs that is not borne by a fund's adviser or other sponsor will 
ultimately be borne by the fund's shareholders. Direct costs for funds 
will consist of both internal costs (for compliance attorneys and 
other, non-legal staff of a fund, such as computer programmers, to 
prepare and review the required disclosure and to update systems \289\) 
and external costs (such as any costs associated with third-party 
service providers to collect and report the information disclosed in 
Form N-PX).\290\ The costs borne by funds will be borne equally by all 
of their investors. But to the extent that the required additional 
reporting is important to only certain fund investors or other 
interested parties, the proposed requirements subsidize some fund 
investors and other interested parties relative to other fund 
investors.
---------------------------------------------------------------------------

    \289\ Several commenters pointed out that reporting persons may 
need to update existing systems. See, e.g., ICI Comment Letter I, 
Ultimus Comment Letter.
    \290\ Based on the results of the Paperwork Reduction Act 
(``PRA'') analysis provided in Table 2, we estimate that the annual 
direct costs attributable to information collection requirements in 
the amendments for funds that hold equity securities will be 
approximately $10,012 per fund, which consists of $8,512 in internal 
costs and $1,500 in external costs. For funds not holding equity 
securities, the direct costs are not expected to change. For funds 
of funds, the annual direct costs attributable to information 
collection requirements in the amendments will comprise internal and 
external costs and are estimated at $436 per fund. Our annual direct 
cost estimates include both initial and ongoing costs with the 
former being amortized over three years.
---------------------------------------------------------------------------

    A commenter expressed the view that our analysis assumes the 
process of complying with the proposed amendments to Form N-PX will be 
automated but that automation may be logistically challenging given 
that the reporting process happens only annually.\291\ Another 
commenter expressed the view that describing ballot items using the 
issuer's language and presenting them in the same order as in the 
issuer's form of proxy presents operational challenges and additional 
costs for funds and their shareholders.\292\
---------------------------------------------------------------------------

    \291\ See Bloomberg Comment Letter.
    \292\ See ICI Comment Letter I.
---------------------------------------------------------------------------

    In a change from the proposal, however, the voting matter 
identification requirements will be limited to situations where a form 
of proxy in connection with a voting matter is subject to rule 14a-4 
under the Exchange Act. Because this requirement would have extended to 
other situations under the proposal, this change will reduce the 
compliance costs associated with the requirement.\293\ Similarly, the 
use of a streamlined and consolidated list of categories, and the 
omission of subcategories from which reporting persons would have been 
required to select, will reduce costs compared to the proposal.\294\
---------------------------------------------------------------------------

    \293\ Commenters stated that the reporting of proxy votes by 
foreign issuers, which are not subject to rule 14a-4, would have 
involved more operational challenges and higher costs relative to 
the costs for proxy votes cast on domestic issuers. This is because, 
according to these commenters, a foreign issuer's form of proxy may 
not be in English and formatting of the issuer's proxy in foreign 
markets may have more variation across vendors. See ICI Comment 
Letter I; MFDF Comment Letter. Conversely, we anticipate that the 
costs for reporting persons to limit the use of abbreviations when 
reporting proxy votes in other circumstances will be minimal because 
we anticipate that reporting persons will choose not to use 
abbreviations (other than those used by the issuer on the card of 
proxy) unless an abbreviation is clearly a commonly understood term.
    \294\ See supra sections II.C.1 and 2 for or a discussion of the 
comments we received on this aspect of the proposal.

---------------------------------------------------------------------------

[[Page 78796]]

    Several commenters discussed the direct cost of disclosing the 
number of shares the fund loaned and did not recall for voting and 
stated that obtaining this information may be costly for funds.\295\ 
One commenter stated that it would be costly for funds to obtain 
information from shareholder meetings while a share is on loan (because 
in many cases the lending fund would not receive a ballot or meeting 
information for the position on loan) and to combine this data with 
securities lending information.\296\ Another commenter stated that 
obtaining the required data would be costly for funds, particularly 
smaller firms, absent the data being provided by the fund's custodian, 
and stated that not all custodians currently provide this data.\297\ We 
therefore anticipate that funds that currently do not have access to 
this data will engage their custodians or securities lending agents to 
obtain it. These service providers may then increase the fees they 
charge to funds to compensate for any costs of providing this 
information.
---------------------------------------------------------------------------

    \295\ See, e.g., BlackRock Comment Letter. Commenters did not 
provide estimates of the size of the associated costs.
    \296\ See ISS Comment Letter.
    \297\ See BlackRock Comment Letter.
---------------------------------------------------------------------------

    By contrast, we anticipate that any additional direct costs 
associated with certain other aspects of the amendments will be 
relatively low. Specifically, we believe that the costs of the 
amendments' requirements to use a custom XML language and to publish 
proxy voting records on the fund's website will be relatively low given 
that funds already accommodate similar requirements in their other 
reporting, and can utilize their existing capabilities for preparing 
and publishing an updated Form N-PX.\298\ Similarly, a commenter 
expressed the view that the use of structured data language will 
facilitate reporting persons' preparation and submission of the 
information required by Form N-PX.\299\
---------------------------------------------------------------------------

    \298\ In addition, the custom XML requirement will allow 
reporting persons to forgo the step of stripping out incompatible 
HTML metadata from their Form N-PX before filing it on EDGAR, 
further mitigating compliance costs. See infra section II.G.
    \299\ See Morningstar Comment Letter.
---------------------------------------------------------------------------

    We do not expect the LEI disclosure requirements for reporting 
persons and fund series under the amendments to result in significant 
compliance costs. Both the reporting person LEI disclosure requirement 
and the fund series LEI disclosure requirement will apply only to 
entities that already have an LEI, so the costs associated with 
obtaining and renewing an LEI will not be applicable. Furthermore, 
funds are already subject to fund series LEI disclosure obligations in 
Form N-PORT reports, so compliance costs associated with retrieving and 
retaining LEIs for each fund series are already reflected in the 
baseline.\300\ We also do not expect the new FIGI disclosure on Form N-
PX to result in additional compliance costs, because the disclosure of 
FIGIs is optional rather than mandatory, nor do we expect the new 
requirement to report ISINs rather than CUSIP numbers, where CUSIP 
numbers are not available through reasonably practicable means, to 
create significant compliance costs due to substantially similar 
existing disclosure requirements.\301\
---------------------------------------------------------------------------

    \300\ See supra footnote 166.
    \301\ Funds that hold securities for which CUSIP numbers are not 
available must report their ISINs on Form N-PORT. See Item C.1 of 
Form N-PORT.
---------------------------------------------------------------------------

    We expect that the costs of complying with the amendments to Form 
N-1A, Form N-2, and N-3, will be small, as most funds already provide 
their proxy voting information upon request and the requirement to add 
this information to the fund's website that applies to funds with an 
existing website can be satisfied cost-effectively by including a link 
to the Form N-PX filing on EDGAR. In addition, funds that already 
provide their proxy voting information on their website are unlikely to 
incur significant cost as a result of also making this information 
available upon request, as we understand that funds who provide the 
option today rarely receive such requests from their investors.\302\
---------------------------------------------------------------------------

    \302\ See supra section II.J for a discussion of comment letters 
received on this aspect of the proposal. Commenters did not provide 
estimates of costs for these requirements.
---------------------------------------------------------------------------

    Some commenters expressed views about the costs borne by smaller 
funds. A commenter expressed a concern about relatively greater costs 
and burdens borne by smaller funds due to lack of economies of scale. 
For example, according to this commenter, many smaller funds do not 
currently use a vendor to prepare Form N-PX. To comply with the 
proposed amendments, these smaller funds may hire a vendor and incur 
the associated costs.\303\ One commenter stated that the minimum charge 
for a proxy service provider is several thousand dollars, which would 
not be insubstantial for a smaller fund.\304\ One commenters also 
suggested that the proposed amendments would result in an increase in 
their filling costs, and the cumulative regulatory burden on small 
funds as a result of the proposed amendments would be larger in 
relative terms because of the fixed nature of these costs and the 
funds' inability to achieve economies of scale that larger funds can 
realize.\305\ However, another commenter expressed that while smaller 
funds may incur new costs, the fact that they are likely to already 
have information that they need to report will likely mitigate these 
costs. The commenter stated a view that, because the new costs are 
likely to be mitigated, the benefit of increased transparency outweighs 
any incremental cost incurred.\306\ To account for these costs, we have 
increased our burden estimates to account for these costs.\307\
---------------------------------------------------------------------------

    \303\ See ICI Comment Letter I. See generally MFDF Comment 
Letter.
    \304\ See Ultimus Comment Letter.
    \305\ See ICI Comment Letter I.
    \306\ See CFA/CII Comment Letter (``We wish to address the 
concern that the proposed amendments to form N-PX will place a 
burden in costs and resources on investors in tracking, gathering 
and disclosing this information. We understand that this cost will 
be borne most by smaller funds and managers who must meet any N-PX 
related obligations. We sympathize with this view and acknowledge 
that there will be some incremental costs with the proposed changes 
to N-PX. However, many smaller funds and managers may already track 
or report this information. Thus, we are of the view that the 
benefit of increased transparency for investor clients outweighs any 
incremental costs incurred.'').
    \307\ See infra section V for the revised PRA analysis. See also 
infra section VI.B.2 for a detailed discussion of the comments 
received regarding the burden on small funds.
---------------------------------------------------------------------------

    Indirect costs for funds will include the costs associated with 
additional actions that funds may decide to undertake in light of the 
increased transparency of their voting records and practices. To the 
extent that the amendments provide an incentive for fund managers to 
devote additional time and resources to voting proxies, this may result 
in additional expenses for funds, some of which may be passed on to 
funds' shareholders. Also, as a result of increased scrutiny by 
investors, a fund manager may be incentivized to vote against an issuer 
firm's management with whom the fund has business ties. This could 
jeopardize the fund manager's relationship with the client firm and 
result in lost revenue if, for example, a client firm were to decide to 
relocate its employee benefit accounts elsewhere.\308\
---------------------------------------------------------------------------

    \308\ A commenter agreed that disclosing proxy votes may result 
in conflict with clients if clients disagree with how the vote was 
cast by the manager. See, e.g., SCERS Comment Letter.
---------------------------------------------------------------------------

    In addition, some fund advisers may decide to voluntarily incur the 
cost of providing additional information on Form N-PX to provide 
context for the disclosure of the number of shares the fund loaned and 
did not recall for voting, some of which may be passed on to funds' 
shareholders.\309\
---------------------------------------------------------------------------

    \309\ See also supra footnote 123. We anticipate that this cost 
is likely to be relatively small, as those funds would likely 
provide the same or similar disclosure on subsequent filings of Form 
N-PX. We estimate that a fund that chooses to provide this voluntary 
disclosure may incur a cost of between $250 to $750 for the initial 
disclosure but no material cost for each subsequent disclosure.

---------------------------------------------------------------------------

[[Page 78797]]

    The requirement for funds to disclose the number of shares a fund 
voted and the number of shares the fund loaned and did not recall for 
voting may reduce funds' securities lending activity and the associated 
revenue for the fund and ultimately its shareholders.\310\ 
Specifically, in light of the increased transparency the amendments 
will provide on funds' securities lending activities, some funds may 
decide to recall their loaned securities to be able to vote the proxies 
of these securities.\311\ A commenter expressed the view that the 
proposed amendments' requirement to disclose loaned shares that are not 
recalled may have negative effects on funds' ESG rankings, since 
forgoing proxy voting may be perceived negatively by investors.\312\ 
One commenter also stated that an additional reason for funds to recall 
loaned shares may be external pressures to support political or social 
causes.\313\ Such incentive effects could be present for funds that 
currently do not have a disclosed policy of recalling all shares ahead 
of proxy voting.\314\ Any change in the fund's lending activity can 
also affect the fund's adviser and its affiliates. For example, some 
funds use securities lending agents that are affiliated with the fund's 
adviser and that are compensated in their role as agent with a share of 
the proceeds generated by the lending program.
---------------------------------------------------------------------------

    \310\ Based on Form N-CEN filings received through May 2022, 
63.9% of funds were authorized to engage and 38.8% participated in 
lending their securities. Funds that lent their securities reported 
aggregate net income from securities lending in the last year of 
$1.9 billion, representing an average of 0.021% of average total net 
assets in the last year. A number of commenters agreed that the 
proposed amendments requiring disclosure of loaned shares may 
incentivize funds to recall their loaned shares (or not to loan 
shares in the first place), which could result in decrease in 
revenues from securities lending for funds and their shareholders. 
See, e.g., Pickard Comment Letter; Federated Hermes Comment Letter; 
RMA Comment Letter; MFDF Comment Letter. A commenter agreed that 
funds' changes in securities lending activity as a result of the 
proposed amendments could impose other costs on funds. See IAA 
Comment Letter.
    \311\ See also Federated Hermes Comment Letter; RMA Comment 
Letter; Utah Comment Letter.
    \312\ See RMA Comment Letter.
    \313\ See Utah Comment Letter.
    \314\ See, e.g., Reena Aggarwal, Pedro A. C. Saffi, & Jason 
Sturgess., The Role of Institutional Investors in Voting: Evidence 
from the Securities Lending Market, 70 J. Fin. 2309, 2314 (2015) 
(``Aggarwal, Saffi, & Sturges''), available at https://onlinelibrary.wiley.com/doi/10.1111/jofi.12284 (referencing a survey 
of institutional investors in which 37.9% of the respondents stated 
that a formal policy on securities lending is part of their proxy 
voting policy, with some institutional investors requiring a total 
recall of shares ahead of proxy voting, while others weigh the lost 
income from securities lending against the benefits of voting on a 
specific proposal).
---------------------------------------------------------------------------

    Funds that decide to recall loaned securities ahead of proxy voting 
would likely seek to lend their shares again immediately after the vote 
record date in order to minimize lost revenues from security lending. 
This is consistent with findings in academic research showing that the 
supply of shares available to lend starts to decrease about 20 days 
before the vote record date and reverts to its pre-event levels 
immediately after the vote record date.\315\ However, as pointed out by 
some commenters, funds that decide to recall shares to vote proxies may 
not immediately be able to place the recalled shares back on loan after 
the vote and their opportunities for participating in the securities 
lending market may be diminished.\316\
---------------------------------------------------------------------------

    \315\ See id., at 2316.
    \316\ See, e.g., RMA Comment Letter; BlackRock Comment Letter.
---------------------------------------------------------------------------

    We expect that funds will factor income from securities lending, 
among other considerations, into their lending decision and recall 
loaned securities when they expect the value of their voting rights 
will exceed lost income from securities lending. This is consistent 
with findings in academic research showing that the recall of shares 
ahead of the voting record date is sensitive to the borrowing fee and 
that recall is lower if the fee paid by borrowers is higher.\317\ Many 
commenters agreed that the decision to recall loaned shares for proxy 
voting is based on informed decisions by funds after factoring into 
consideration costs and benefits of such decisions.\318\ While we 
cannot predict the degree to which funds will recall loaned shares, and 
the new amendments represent new potential costs and benefits for funds 
to take into consideration (such as negative attention from activists), 
one commenter stated that the proposed amendments would not likely 
change funds' securities lending activities.\319\
---------------------------------------------------------------------------

    \317\ See Aggarwal, Saffi, & Sturges, supra footnote 314, at 
2328.
    \318\ See, e.g., RMA Comment Letter; Federated Hermes Comment 
Letter; Vanguard Comment Letter; Blackrock Comment Letter.
    \319\ See Blackrock Comment Letter.
---------------------------------------------------------------------------

    Since stock loans can be used for many different purposes, 
including short selling, arbitrage, and hedge trading strategies, 
changes in funds' securities lending practices can have an impact on 
these activities, which may impose additional costs on market 
participants. A number of commenters expressed the opinion that for 
securities lending activity with high demand or low supply, recalls 
from funds to cast proxy votes may decrease market liquidity, which 
could increase trading costs in the given security, and may negatively 
impact fund investors.\320\ For most securities, we expect that the 
market for securities lending has sufficient depth to withstand these 
short-term recalls by some funds ahead of the voting record date 
without experiencing significant changes. One academic study estimated 
that the equity lending market has a slack in supply with approximately 
a quarter of a corporate issuer's market capitalization typically 
available for lending and less than one-fifth of these shares being on 
loan.\321\ Therefore, if some funds decided to recall their securities 
to participate in proxy voting, other lenders may step in to supply 
shares for loan on similar terms.\322\ This is consistent with findings 
in some academic research noting that changes in borrowing fees during 
the recall period tend to be economically small or insignificant.\323\ 
However, one commenter stated that funds will not be able to easily re-
lend their shares after voting, or may not be able to easily re-lend 
them for the same rates as prior to voting, due to the readily 
available supply of certain securities where lending supply is 
significantly greater than borrower demand.\324\ While this could lead 
to a loss of income for funds, because lending rates for readily 
available securities are low (because the supply of such securities is 
high, and the demand is low), this loss of income is likely to be 
small.
---------------------------------------------------------------------------

    \320\ See, e.g., RMA Comment Letter; Blackrock Comment Letter.
    \321\ See Aggarwal, Saffi, & Sturges, supra footnote 314, at 
2315.
    \322\ A commenter agreed and stated that the vast majority of 
lending activity (approximately 90% of outstanding loan balances) 
will be a segment of the lending market with greater lending supply 
compared to borrower demand. See RMA Comment Letter.
    \323\ See Aggarwal, Saffi, & Sturges, supra footnote 314, at 
2327. See also Susan Christoffersen, Christopher Geczy, David Musto, 
& Adam Reed, Vote Trading and Information Aggregation, 62 J. Fin. 
2897, 2912 (2007), available at https://www.jstor.org/stable/4622357.
    \324\ See RMA Comment Letter.
---------------------------------------------------------------------------

    Conversely, the impact on borrowing fees can be more pronounced for 
hard-to-borrow stocks such as stocks with low lendable supply and/or 
high borrowing demand, also known as ``special.'' \325\ If funds 
recalled a significant number of shares of such stocks ahead of the 
vote record date, this

[[Page 78798]]

would have the potential to impact the price \326\ or liquidity \327\ 
of stocks. In addition, a reduction in the ability to short shares may 
negatively affect price discovery.\328\ However, ``special'' stocks are 
typically associated with higher borrowing fees \329\ and, therefore, 
as discussed above in this section, we would expect funds to be 
reluctant to recall these shares from loan if the income from lending 
them exceeds the benefits of participating in proxy voting. Consistent 
with this, one academic study shows that the lendable supply of 
``special'' stocks changes by less than that of the non-special stocks 
prior to the vote record date.\330\ As a result, we expect the 
amendments could have a more limited effect on securities lending 
activities for special stocks relative to non-special stocks, which may 
limit adverse effects on liquidity and price discovery.
---------------------------------------------------------------------------

    \325\ The Aggarwal, Saffi, & Sturges study, supra footnote 314, 
estimated that such special stocks represented about 9% of their 
considered equity lending sample, which covers more than 85% of the 
securities lending market. The study finds that ``special'' stocks 
have a higher average annualized borrowing fee of 429 basis points, 
compared with a fee of 9.3 basis points for the non-special stocks.
    \326\ See, e.g. Jesse Blocher, Adam Reed, & Edward Van Wesep, 
Connecting Two Markets: An Equilibrium Framework for Shorts, Longs, 
and Stock Loans, 108 J. Fin. Econ. 302 (2013), available at https://doi.org/10.1016/j.jfineco.2012.12.006 (finding that when share loan 
supply is ``reduced around dividend record dates, prices of hard-to-
borrow stocks increase 1.1% while prices of easy-to-borrow stocks 
are unaffected''). While the study looked at the effect around the 
dividend record date, it is possible that similar results could hold 
around vote record dates.
    \327\ See also supra footnote 320.
    \328\ See, e.g., Ekkehart Boehmer & Juan Wu, Short Selling and 
the Price Discovery Process, 26 Rev. Fin. Studies 2 (2013), 
available at https://www.jstor.org/stable/23356856 (finding that 
stock prices are more accurate when short sellers are more active).
    \329\ See supra footnote 325.
    \330\ See Aggarwal, Saffi, & Sturges, supra footnote 314, at 
2323.
---------------------------------------------------------------------------

    One commenter stated that activists would seek to use the 
proposal's required categorization of voting matters to sway funds 
towards voting outcomes that are not for the benefit of fund 
shareholders.\331\ To the extent that the concern is harm to fund 
shareholders from a vote, we believe this is less likely if a fund's 
adviser follows its fiduciary duty obligations. Specifically, 
investment advisers are fiduciaries that owe duties of care and loyalty 
to each client.\332\ To satisfy its fiduciary duty in making any voting 
determination on behalf of a fund, an investment adviser must make 
determinations in the best interest of its client. Further, an 
investment adviser cannot place its own interests ahead of the 
interests of its client.\333\
---------------------------------------------------------------------------

    \331\ See Utah Comment Letter.
    \332\ Commission Interpretation Regarding Standard of Conduct 
for Investment Advisers, Investment Advisers Act Release No. 5248 
(June 5, 2019) [84 FR 33669 (July 12, 2019)].
    \333\ Proxy Voting Guidance, supra footnote 122.
---------------------------------------------------------------------------

    Finally, the amendments could affect service providers used by 
funds to report information on Form N-PX. Some commenters stated that 
the proposed amendments could necessitate reconfiguration of their 
processes.\334\ We agree that service providers that currently do not 
provide the information with the same degree of uniformity that will be 
required under the final rule will have to update their processes to 
help funds meet the new requirements. These service providers may pass 
on the costs of updating their processes to funds, and those costs may 
therefore be borne in part by investors. Larger service providers may 
be able to update or reform their operations with greater economies of 
scale than smaller service providers. To the extent that this results 
in consolidation of service providers, service provider prices may 
increase more broadly, representing an additional potential cost to 
funds and investors.
---------------------------------------------------------------------------

    \334\ See ICI Comment Letter I; ISS Comment Letter.
---------------------------------------------------------------------------

    Conversely, because the amendments require that funds identify a 
voting matter using the exact same language and order found in a form 
of proxy subject to rule 14a-4 under the Exchange Act, service 
providers would save the cost currently associated with producing a 
summary of the voting matter in these circumstances. Service providers 
may pass some or all of the increased costs to fund advisers, who may 
ultimately pass these costs on to fund investors.
2. Amendments To Require Manager Reporting of Say-on-Pay Votes
(a) Benefits
    Under the amendments, managers will publicly disclose annually on 
Form N-PX information about their proxy votes relating to say-on-pay 
matters. The information will include: (1) if the form of proxy in 
connection with a say-on-pay matter reported on the form is subject to 
rule 14a-4 of the Exchange Act, a description and ordering of say-on-
pay matters using the same language that is on an issuer's form of 
proxy, (2) a standardized classification, (3) the number of shares 
voted and number of shares loaned and not recalled, and (4) how shares 
were voted by the manager. Managers will be required to provide this 
information in a custom XML language. However, managers are permitted 
to file a notice report that omits voting information where either (1) 
all proxy votes for which the manager exercised voting power are 
reported by other reporting persons; (2) the manager did not exercise 
voting power for any reportable voting matter and therefore does not 
have any proxy votes to report; or (3) the manager has a clearly 
disclosed policy of not voting, and did not vote, on any proxy voting 
matter. Managers will be allowed to request confidential treatment of 
proxy voting information electronically consistent with rule 24b-2.
    The final rule may benefit the securities markets by providing 
investors with access to information about how managers vote on 
issuers' say-on-pay recommendations. As of March 31, 2022, managers 
that file reports on Form 13F exercised investment discretion over 
approximately $44.4 trillion in section 13(f) equity securities. In 
many cases, managers also exercise voting power for proxies relating to 
these equity securities. This voting power means that managers, 
although making decisions only for the securities they manage, have the 
ability to affect significantly the outcomes of shareholder votes and 
influence the governance of corporations.
    Recent academic literature shows that the requirement of holding 
say-on-pay votes can have an impact on executive compensation and other 
corporate governance practices for corporate issuers.\335\ The final 
rule will enable investors to observe how managers exercised their 
proxy votes regarding such matters.\336\ To the extent the information 
contained in say-on-pay votes is understood and valued by 
investors,\337\ investors can benefit from using this additional 
information in selecting managers that vote say-on-pay matters 
according to investor preferences.\338\
---------------------------------------------------------------------------

    \335\ See Peter Iliev & Svetla Vitanova, The Effect of the Say-
on-Pay Vote in the United States, 65 Management Science 4451 (2019), 
available at https://doi.org/10.1287/mnsc.2018.3062; James Cotter, 
Alan Palmiter & Randall Thomas, The First Year of Say-on-Pay under 
Dodd-Frank: An Empirical Analysis and Look Forward, 81 Geo. Wash. L. 
Rev. 967 (2013), available at http://www.gwlr.org/wp-content/uploads/2013/04/Thomas.pdf.
    \336\ A number of commenters agreed that the proposed amendments 
will provide information about managers' proxy voting information in 
an accessible form to the beneficiaries of managers. See, e.g., 
Morningstar Comment Letter. Some commenters also expressed the 
opinion that the proposed amendments will help ensure that managers 
follow stated policies on executive compensation. See, e.g., SCERS 
Comment Letter.
    \337\ See, e.g., David Larcker, Ronald Schneider, Brian Tayan, 
and Aaron Boyd, 2015 Investor Survey Deconstructing Proxy 
Statements--What Matters to Investors, Stanford University, RR 
Donnelley, and Equilar Report (Feb. 2015), available at https://www.gsb.stanford.edu/faculty-research/publications/2015-investor-survey-deconstructing-proxy-statements-what-matters (finding that 58 
percent of shareholders believe that say-on-pay is effective in 
influencing or modifying pay practices).
    \338\ Several commenters stated that the transparency provided 
by the proposed amendments will help align managers' voting 
decisions with clients' expectations and improve clients' oversight 
over managers' proxy voting. See infra footnote 287. See, e.g., 
SCERS Comment Letter; The Shareholder Commons Comment Letter; PRI 
Comment Letter.

---------------------------------------------------------------------------

[[Page 78799]]

    This information may also help deter votes motivated by conflicts 
of interest and promote accountability of executives who often are in a 
position to shape their own pay arrangements. To the extent that 
executives are sensitive to approval from their institutional 
shareholder base, the adoption of the final rule should help align the 
incentives of executives and investors, which will result in better 
corporate governance practices at corporate issuers.\339\
---------------------------------------------------------------------------

    \339\ A number of commenters expressed the view that the 
proposed amendments will help investors and other users or proxy 
voting information to evaluate managers and their influence over 
corporate governance of issuer firms, See, e.g., Corporate 
Governance Comment Letter; SCERS Comment Letter; Friess Comment 
Letter.
---------------------------------------------------------------------------

    Public companies currently subject to the Dodd-Frank Act's say-on-
pay vote requirements may also benefit from the transparency provided 
by this rule. Knowing how managers have voted on executive compensation 
matters in the past, and knowing how they voted on say-on-pay matters 
at similar firms or other firms in the same industry, can be useful for 
the companies as they consider their own executive compensation 
practices and policies.
    However, there may be cases where the information required to be 
reported on Form N-PX may not provide the entire context of a manager's 
proxy voting decision. For example, a commenter expressed the view that 
disclosure of proxy voting may be difficult to interpret when managers 
manage a range of different accounts with different policies and 
guidelines for proxy voting.\340\ The commenter also stated that 
ambiguity in the definition of when a manager exercised voting power 
could lead to a situation where a manager may be required to report a 
vote they did not agree with in cases where multiple managers provide 
input on applying a client's voting policies but they ultimately 
disagree on a voting decision.\341\
---------------------------------------------------------------------------

    \340\ See Pickard Comment Letter.
    \341\ See, e.g., Pickard Comment Letter. See also supra section 
II.B.2 for a detailed discussion of comments we received on this 
aspect of the proposal.
---------------------------------------------------------------------------

    Section IV.C.1.a discusses additional aspects of the proposal and 
the associated comments we received in the context of funds. Our 
analysis of the following aspects of the amendments in that context 
also applies to these requirements in the context of reporting by 
managers: i) the quantitative disclosures of the number of shares voted 
and the number of shares loaned but not recalled, ii) the structured 
disclosure requirement, and iii) the optional use of certain additional 
identifiers such as LEIs and FIGIs. Our analysis of both aspects of the 
amendments in the context of reporting by funds also applies to these 
requirements in the context of reporting by managers.
(b) Costs
    The final rule will lead to some additional direct and indirect 
costs for managers associated with disclosing required information 
about their say-on-pay votes annually on Form N-PX. A manager may incur 
additional direct compliance costs associated with a filing if the 
manager seeks confidential treatment for the filing by making, via 
EDGAR, a confidential treatment request. Any portion of these costs 
that is not borne by the manager will ultimately be borne by the 
manager's clients. Some of these costs are a direct result of section 
14A(d)'s statutory mandate for managers to report annually how they 
have voted.
    Direct costs to each manager will include both internal costs (for 
compliance attorneys and other, non-legal staff, such as computer 
programmers, to prepare and review the required disclosure and to 
update systems) \342\ and external costs (such as any costs associated 
with third-party service providers to collect and report the 
information disclosed in Form N-PX).\343\ Direct costs also include the 
cost associated with determining whether a manager has exercised voting 
power and therefore must report a say-on-pay vote on Form N-PX. As 
discussed above, this determination may require subjective 
determinations by managers, and so there may be marginal cases where 
managers must undertake additional costly internal assessments to 
determine if they must report a say-on-pay vote.\344\ Managers may also 
face additional costs to the extent they conservatively evaluate their 
voting power, and ultimately conduct the required reporting in cases 
where they may not have been required to report a say-on-pay voting of 
a security. For example, as observed above, one commenter stated that 
ambiguity in the definition of when a manager exercised voting power 
could lead to a situation where a manager may be required to report a 
vote in cases where multiple managers provide input on applying a 
client's voting policies, even if they ultimately disagree on the 
voting decision.\345\
---------------------------------------------------------------------------

    \342\ Several commenters pointed out that reporting persons may 
need to update existing systems. See, e.g., ICI Comment Letter I, 
Ultimus Comment Letter.
    \343\ Based on the results of the PRA analysis provided in Table 
2, the Commission estimates that the annual direct costs 
attributable to information collection requirements in the 
amendments for managers will be approximately $10,308 per manager, 
consisting of $7,808 in internal costs and $2,500 in external costs. 
These annual direct costs include initial as well as ongoing costs, 
with the former amortized over three years. For purposes of this 
estimate, we are assuming that every manager will file its full 
record of say-on-pay votes on ``voting'' report, and not file a 
``notice'' report.
    \344\ See also supra footnote 41 and accompanying text, 
discussing that the framework for determining voting power could 
result in some subjectivity and the comments we received on this 
aspect of the proposal.
    \345\ See, e.g., Pickard Comment Letter. See also supra section 
II.B.2 for a detailed discussion of comments we received on this 
aspect of the proposal.
---------------------------------------------------------------------------

    We anticipate that costs for managers associated with obtaining the 
information required to be reported by the final rule will be limited 
to the extent that many managers may already track most of the 
necessary data.\346\
---------------------------------------------------------------------------

    \346\ See, e.g., CFA/CII Comment Letter (stating that the cost 
of complying with the proposed amendments ``will be borne most by 
smaller funds and managers'' but that ``many smaller funds and 
managers may already track or report this information.'').
---------------------------------------------------------------------------

    As discussed in section IV.C.1.b in the context of funds, 
commenters have observed that not all custodians currently provide 
their customers with the information that managers will need to report 
the number of shares the manager loaned but did not recall. We 
therefore anticipate that managers that currently do not have access to 
this data will engage their custodians or securities lending agents to 
obtain it. These service providers may then increase the fees they 
charge to compensate for any costs of providing this information, which 
may be passed down to investors.
    In a departure from the proposal, managers that have a disclosed 
policy of not voting proxies and that did not vote during the reporting 
period, will be permitted to indicate as such, and will therefore incur 
lower costs compared to the proposal, which would have required them to 
report information on a security-by-security basis.
    Some commenters expressed concerns about the costs and burdens 
borne by smaller managers. For example, according to these commenters, 
to comply with the proposed amendments, these smaller managers may hire 
a vendor which they currently do not use.\347\ However, other 
commenters expressed a different view. According to these other 
commenters, while smaller managers may incur new costs, they are likely 
to have the information that they

[[Page 78800]]

need to report already. Therefore, these commenters anticipate that 
incremental costs may not be unduly burdensome for most of the smaller 
managers.\348\ Nevertheless, we have increased our burden estimates to 
account for these costs.\349\
---------------------------------------------------------------------------

    \347\ See ICI Comment Letter I; Ultimus Comment Letter.
    \348\ See, e.g., CFA Comment Letter.
    \349\ See infra section V for the revised PRA analysis.
---------------------------------------------------------------------------

    The costs arising from the final rule to use Form N-PX to implement 
section 14A's say-on-pay vote reporting requirements will be mitigated 
for managers that are advisers to funds and that therefore already have 
experience with filing Form N-PX reports on behalf of funds. In 
addition, the use of a custom XML data language for Form N-PX is not 
expected to impose significant costs on managers subject to say-on-pay 
voting requirements, as managers have experience filing other EDGAR 
forms that use similar custom XML data languages, such as Form 13F. The 
Commission believes that managers will incur an estimated cost of $540 
per filing to file Form N-PX in a custom XML data language.\350\
---------------------------------------------------------------------------

    \350\ See Short Position and Short Activity Reporting by 
Institutional Investment Managers, Exchange Act Release No. 94313 
(Feb. 25, 2022) [87 FR 14950, 14973 (Mar. 16, 2022)].
---------------------------------------------------------------------------

    With respect to the LEI reporting requirement on Form N-PX, some 
managers may be subject to LEI reporting requirements pursuant to 
Commission rules. For example, managers that are registered investment 
advisers provide their LEI on Form ADV if they have one.\351\ For these 
managers, compliance costs associated with retrieving and retaining 
LEIs are similarly reflected in the baseline.
---------------------------------------------------------------------------

    \351\ See Item 1.P of Form ADV.
---------------------------------------------------------------------------

    We also do not expect the FIGI disclosure on Form N-PX to result in 
significant additional compliance costs for managers, because the 
disclosure of FIGIs is optional rather than mandatory. We likewise do 
not expect the requirement to report ISINs rather than CUSIP numbers, 
where CUSIP numbers are not available through reasonably practicable 
means, to impose significant additional compliance costs on managers. 
Managers that report securities other than 13(f) securities and that do 
not already store ISINs for those securities would incur additional 
costs as a result of this requirement, because they would need to pay 
fees to license the storing of ISINs for those securities. By contrast, 
the requirement to report ISINs would not affect managers that report 
only 13(f) securities, because all 13(f) securities have CUSIP numbers 
and do not have ISINs. We do not have data on which to estimate the 
number of managers that could be affected or the extent to which such 
managers hold non-section 13(f) securities.
    The electronic submission of confidential treatment requests via 
EDGAR obviates the need for filers to incur printing and mailing costs 
associated with paper submissions. In addition, managers are 
experienced in using the EDGAR system, which further mitigates the 
costs of filing these requests electronically. The Commission believes 
that managers will not incur an additional cost for submitting 
confidential treatment requests via EDGAR as compared to filing these 
requests in paper form.\352\
---------------------------------------------------------------------------

    \352\ See E-Filings Release, supra footnote 204, at section V.D.
---------------------------------------------------------------------------

    The costs associated with the final rule may vary depending on 
existing levels of voluntary disclosure, organizational structure, and 
investment objectives of each manager. For example, the cost of 
compliance with the final rule is likely to be lower for managers that 
exercise voting power on behalf of funds because such votes are already 
reported on Form N-PX, and the amendments will not require managers to 
separately report say-on-pay votes cast on behalf of funds in 
compliance with the joint reporting provisions. Also, the costs are 
likely to be lower for managers who already voluntarily track and 
disclose some of the data the final rule would require.
    Some of the indirect costs to managers associated with the 
amendments will be the same as those discussed in the context of funds 
in section IV.C.1.b. Specifically, to the extent that the amendments 
may provide an incentive for managers to devote additional time and 
resources to proxy voting, this may result in additional expenses for 
managers, some of which may be passed on to their clients. Also, an 
increase in scrutiny by investors as a result of increased transparency 
under the amendments may incentivize managers to vote against the 
management of an issuer with which the manager may have a business 
relationship, which could weaken the manager's relationship with the 
issuer firm and result in lost revenue.
    Similarly, the disclosure requirements for managers can create 
incentives for them to recall their loaned securities to cast proxy 
votes on say-on-pay matters for these securities. This can reduce these 
managers' and their clients' revenues and may have a short-term impact 
on the securities lending and underlying stock markets.\353\ In 
addition, some managers may decide to voluntarily incur the cost for 
providing additional information on Form N-PX to provide context for 
the disclosure of the number of shares the manager loaned and did not 
recall for voting, some of which may be passed on to their 
clients.\354\
---------------------------------------------------------------------------

    \353\ See supra footnotes 253--258 and accompanying text for the 
discussion related to the effect on securities lending for funds and 
the potential effects on underlying markets, which would also apply 
to changes in managers' securities lending activities.
    \354\ See also supra footnote 123. As discussed in the context 
of funds, we anticipate that this cost is likely to be relatively 
small, as those managers (like funds) would likely provide the same 
or similar disclosure on subsequent filings of Form N-PX. We 
estimate that a fund that chooses to provide this voluntary 
disclosure may incur a cost of between $250 to $750 for the initial 
disclosure but no material cost for each subsequent disclosure.
---------------------------------------------------------------------------

    Finally, the amendments could affect service providers used by 
managers to report information on Form N-PX. Specifically, service 
providers that currently do not provide the information with the same 
degree of uniformity that will be required under the final rule will 
have to update their processes to help managers meet the new 
requirements. Service providers may pass some or all of the changes in 
costs they will incur to their manager customers, who may ultimately 
pass these costs on to their clients.\355\
---------------------------------------------------------------------------

    \355\ See supra footnote 334 and accompanying text for a 
discussion of the comments received on this aspect of the proposal.
---------------------------------------------------------------------------

D. Effects on Efficiency, Competition, and Capital Formation

    In this section we consider whether the final rule and form 
amendments will promote efficiency, competition, and capital formation.
1. Amendments to Funds' Reporting of Proxy Votes
    The amendments to Form N-PX will provide investors with greater 
access to information regarding the proxy voting decisions of the funds 
they invest in. This can help investors make better informed investment 
decisions if they want to take into account funds' voting records, and 
thus more efficiently express their voting preferences. To the degree 
that some investors face meaningful impediments to switching funds, for 
example as a result of possible tax implications or because of the 
selection of asset managers by their current employer, this may in 
those cases limit the improvement in allocative efficiency.\356\ 
Conversely, to the extent that the additional information disclosed on 
Form N-PX leads some investors to accept lower returns (for a given 
level of risk) in exchange for investing in funds that

[[Page 78801]]

better align with their political, social, or other preferences, this 
could reduce the overall allocative efficiency of capital in the 
economy.
---------------------------------------------------------------------------

    \356\ Cf. supra footnote 268 and accompanying text.
---------------------------------------------------------------------------

    The amendments will also make it easier for investors and other 
proxy voting data users to compare and evaluate proxy voting records 
across a wide variety of funds. This may improve competition among 
funds, to the extent that funds seek to differentiate themselves based 
on their voting records.\357\ For example, a fund that follows a 
strategy designed to provide good governance to its portfolio companies 
may be able to show a track record of more effective proxy voting 
patterns relative to their peers that follow similar strategies but 
less effectively. This can further promote a more efficient allocation 
of capital by investors among competing funds. Further, as proxy voting 
information becomes easier to gather and analyze, data-collecting 
service providers can face an increased competitive pressure to improve 
and develop new tools and methodologies and/or reduce their service 
fees.
---------------------------------------------------------------------------

    \357\ Some commenters expressed the view that enhanced proxy 
voting disclosure from the proposed amendments will help investors 
and regulators become more informed, which can promote competition 
among funds and protect investors and general public from the 
concentration of power in the asset management industry. See, e.g., 
Friess Comment Letter; Corporate Governance Comment Letter.
---------------------------------------------------------------------------

    Finally, the increased transparency with regard to funds' proxy 
voting may encourage more investors to invest in funds, which may 
increase capital formation.\358\ In addition, to the extent that the 
final rule leads funds to make voting decisions that positively affect 
corporate issuers' productive use of capital, this could also enhance 
capital formation.\359\
---------------------------------------------------------------------------

    \358\ See, e.g., Flores Comment Letter.
    \359\ Cf. supra footnote 274 and accompanying text.
---------------------------------------------------------------------------

2. Amendments To Require Manager Reporting of Say-on-Pay Votes
    The amendments to require manager reporting of say-on-pay votes can 
promote more efficient allocation of capital to managers. The 
amendments will enable investors, including investors who are not 
currently advisory clients of any given manager, to obtain managers' 
proxy voting information which, to the extent that investors review the 
disclosures, can help investors allocate assets to managers who cast 
proxy votes that are consistent with investors' preference for voting 
on executive compensation matters.\360\
---------------------------------------------------------------------------

    \360\ Many commenters agreed that enhanced proxy voting 
disclosure from the proposed amendments can help investors to align 
their interests on important topics (e.g., ESG) with those of 
managers. See, e.g., SCERS Comment Letter; LTSE Comment Letter; The 
Shareholder Commons Comment Letter; Corporate Governance Comment 
Letter.
---------------------------------------------------------------------------

    Because the final rule applies equally to all managers that are 
required to file reports under section 13(f) of the Exchange Act, we do 
not anticipate that any competitive disadvantages will be created. To 
the contrary, we anticipate that the final rule may encourage 
competition by raising awareness about manager voting on say-on-pay 
matters and may facilitate differentiation among managers.
    Finally, we do not anticipate any significant effects of the 
amendments on capital formation.

E. Reasonable Alternatives

1. Scope of Managers' Say-on-Pay Reporting Obligations
    We considered several alternatives that would limit the scope of 
managers' say-on-pay reporting obligations by more closely aligning 
managers' reporting requirements on Form N-PX with their reporting 
requirements on Form 13F.\361\
---------------------------------------------------------------------------

    \361\ We also considered alternatives to the definition of the 
exercise of voting power. See supra section II.B.2 for a discussion 
of these alternatives and the comment letters we received on this 
aspect of the proposal.
---------------------------------------------------------------------------

    One alternative we considered was to add a de minimis exception. 
Reporting persons on Form 13F are permitted to exclude positions when 
the positions have a dollar value of less than $200,000 and consist of 
fewer than 10,000 shares. Several commenters suggested that we include 
such a de minimis exception.\362\ We also considered other alternatives 
suggested by commenters. Specifically, we considered limiting the 
reporting obligation to (i) votes on section 13(f) securities,\363\ 
(ii) votes on securities held at the end of a calendar quarter,\364\ 
and (iii) exclude short-term positions such as those held for fewer 
than 30 days.\365\
---------------------------------------------------------------------------

    \362\ See Pickard Comment Letter; MFA Comment Letter; AIMA 
Comment Letter.
    \363\ See supra footnote 48 and accompanying text.
    \364\ See supra footnote 52 and accompanying text.
    \365\ See supra footnote 53 and accompanying text.
---------------------------------------------------------------------------

    The benefits of say-on-pay vote reporting to managers' clients and 
to other investors, as discussed above, do not appear to be limited to 
votes of a certain size, to section 13(f) securities, or securities 
held at the end of a calendar quarter or those held for longer periods 
of time. Investors should benefit from a manager's full voting record, 
and a more limited reporting obligation would reduce the usefulness of 
the say-on-pay disclosure. We also believe that the cost savings of 
limiting the scope of the reporting requirement in any of these 
alternative ways would be minimal, because many reporting entities may 
already track or report this information.\366\ To the extent that a 
filing could reveal information about a reporting person's trading 
strategy that would permit it to be front-run, we believe that the 
instructions for requesting confidential treatment will adequately 
address this concern.
---------------------------------------------------------------------------

    \366\ See supra footnote 306.
---------------------------------------------------------------------------

    We also considered as an alternative allowing managers to not file 
on Form N-PX when they did not exercise voting power over securities 
that held say-on-pay votes during the reporting period. We do not 
believe this alternative would substantially reduce costs for relevant 
managers relative to the final rule because the final rule only 
requires these managers to file a notice report indicating that they 
have no votes to report. Moreover, we believe that requiring all 
managers to make a filing will permit Commission staff to identify more 
easily managers who may have missed a filing obligation. Not requiring 
all managers to make a filing would reduce the usefulness of Form N-PX 
filings because investors will not necessarily understand whether a 
manager did not make a filing because it did not exercise voting power 
or because it simply neglected to file the form. In addition, we 
believe that other means for managers to disclose that they have no 
votes to report, such as by publishing that information on a website, 
would not be substantially less costly than filing a notice report as 
required by the final rule and would be less useful for Commission 
oversight.
2. Amendments to Proxy Voting Information Reported on Form N-PX
    We are adopting changes to Form N-PX that will require disclosure 
of information about the number of shares that were voted (or, if not 
known, the number of shares that were instructed to be cast), as well 
as disclosure of the number of shares the reporting person loaned and 
did not recall.
    We considered adopting a requirement to disclose the number of 
shares voted (or instructed to be cast) while not requiring disclosure 
of the number of shares the reporting person loaned but did not recall. 
This approach would have provided information to understand split 
votes, but would have limited utility otherwise. Specifically, this 
approach would not provide information to help investors understand the 
full extent to which a reporting person is voting shares. While the 
alternative approach would reduce reporting burdens for some funds and

[[Page 78802]]

managers, it would also have fewer benefits for investors such as 
transparency into how a reporting person's securities lending affects 
its proxy voting.\367\
---------------------------------------------------------------------------

    \367\ See supra section II.C.3.b for detailed discussion.
---------------------------------------------------------------------------

3. Amendments to the Time of Reporting on Form N-PX or Placement of 
Funds' Voting Records
    As an alternative to maintaining the current timeline for filing 
reports on Form N-PX, we considered requiring funds or managers to 
report relevant proxy votes more frequently, such as on a semiannual, 
quarterly, or monthly basis, or shortly after a given vote is held. We 
also considered maintaining the current annual reporting requirement 
but requiring reporting persons to file their reports more quickly 
(e.g., by the end of July, rather than by the end of August). In 
general, these alternatives would provide investors and other data 
users with more timely information about how a fund or manager votes.
    A semiannual reporting requirement could have been incorporated 
into funds' current reporting of annual and semiannual shareholder 
reports on Form N-CSR. The Commission proposed a similar approach to 
requiring disclosure of funds' proxy voting records in 2002.\368\ At 
that time, some commenters raised concern about the burdens of such an 
approach for fund complexes with staggered fiscal year ends, as these 
fund complexes could be required to file reports on Form N-CSR with 
complete proxy voting records as many as twelve times per year.\369\ An 
approach to requiring more frequent reporting of proxy voting records 
that is tied to funds' fiscal year ends would likely create 
administrative complexity for many fund complexes and increase costs 
associated with filing proxy voting information more frequently.
---------------------------------------------------------------------------

    \368\ See Disclosure of Proxy Voting Policies and Proxy Voting 
Records by Registered Management Investment Companies, Investment 
Company Act Release No. 25739 (Sept. 20, 2002) [67 FR 60828 (Sept. 
26, 2002)].
    \369\ See 2003 Adopting Release, supra footnote 4. We did not 
receive comments on this alternative.
---------------------------------------------------------------------------

    As for a semiannual or quarterly reporting requirement on Form N-PX 
that is based on the calendar year, either of these approaches may not 
significantly enhance the timeliness of voting information in many 
cases because most corporate issuers hold proxy votes within the few 
months leading up to June 30, which is the end of the current Form N-PX 
annual reporting period. As a result, if we required semiannual or 
quarterly reporting of Form N-PX, most votes would likely be in the 
reporting person's report for the first half of the year (for 
semiannual reports) or for the second calendar quarter (for quarterly 
reports). A semiannual or quarterly reporting requirement would also 
increase reporting costs, as reporting persons would be required to 
file either two or four Form N-PX reports per year rather than one 
report per year.
    A requirement to report monthly or shortly after each proxy vote is 
held would have provided voting information much more quickly to 
investors and this could have provided certain benefits. For example, 
timelier public reporting of funds' proxy votes has the potential to 
facilitate fund shareholders' ability to monitor their funds' 
involvement in the governance activities of portfolio companies, 
including within a single proxy season. Annual reporting will timely 
capture a significant percentage of the votes cast by reporting persons 
because most votes occur during Proxy Season. As discussed above in 
section II.H, while some commenters supported more frequent reporting, 
for example suggesting that reporting persons be required to provide 
prompt or real-time disclosure of votes, this frequency of reporting 
may make it difficult for investors reading a reporting person's Form 
N-PX reports to evaluate overall patterns in the reporting person's 
voting behavior.
    Also, these alternative approaches would require reporting persons 
to disclose a position in a security before disclosure of the position 
is required on Form 13F or Form N-PORT, increasing the potential for 
disclosure of sensitive information that competitors can use to front-
run or reverse engineer investing strategies. In addition, we expect 
that both alternative approaches would increase costs associated with 
reporting proxy voting information because reporting would take place 
more frequently.
    Shortening the timeline for filing annual Form N-PX reports, which 
is currently approximately two months after the end of the reporting 
period, would marginally improve the timeliness of the reported 
information. However, shortening the filing timeline by more than a few 
weeks would also increase the possibility of a reporting person being 
required to disclose a vote on a security before otherwise being 
required to disclose a position in that security on Form 13F or Form N-
PORT. As a result, this approach could to some extent increase the 
potential for disclosure of sensitive information that competitors 
could potentially use to front-run or reverse engineer investing 
strategies.

V. Paperwork Reduction Act Analysis

    Certain provisions of the final rules and form amendments contain 
``collection of information'' requirements within the meaning of the 
Paperwork Reduction Act of 1995 (``PRA'').\370\ The Commission 
published a notice requesting comment on changes to these collection of 
information requirements in the Proposing Release and submitted these 
requirements to the Office of Management and Budget (``OMB'') for 
review in accordance with the PRA.\371\ The title for the collection of 
information is: ``Form N-PX--Annual Report of Proxy Voting Record'' 
(OMB Control No. 3235-0582).\372\ An agency may not conduct or sponsor, 
and a person is not required to respond to, a collection of information 
unless it displays a currently valid OMB control number.
---------------------------------------------------------------------------

    \370\ 44 U.S.C. 3501 et seq.
    \371\ 44 U.S.C. 3507(d); 5 CFR 1320.11.
    \372\ The title for the collection of information relating to 
Form N-PX will be renamed from ``Form N-PX--Annual Report of Proxy 
Voting Record of Registered Management Investment Companies.''
---------------------------------------------------------------------------

    Section 14A(d) of the Exchange Act requires that every manager 
subject to section 13(f) of the Exchange Act report at least annually 
how it voted on say-on-pay votes, unless such vote is otherwise 
required to be reported publicly by rule or regulation of the 
Commission. To implement section 14A(d), we are adopting new rule 14Ad-
1 under the Exchange Act, which will require managers to file their 
record of say-on-pay votes with the Commission annually on Form N-
PX.\373\ We are also adopting amendments to Form N-PX, which was 
adopted pursuant to section 30 of the Investment Company Act and is 
currently used by funds to file their complete proxy voting records 
with the Commission, to accommodate the new filings by managers and to 
enhance the information funds provide on their proxy votes. In 
addition, we are adopting amendments Forms N-1A, N-2, and N-3 to 
require funds to disclose that their proxy voting records are available 
on (or through) their websites. Although the website availability 
requirement will be located in the relevant registration form, we are 
reflecting the burden for these requirements in the burden estimate for 
Form N-PX--Annual Report of Proxy

[[Page 78803]]

Voting Record, and not in the burden for Forms N-1A, N-2, or N-3.
---------------------------------------------------------------------------

    \373\ For purposes of the PRA analysis, the burden associated 
with the requirements of rule 14Ad-1 is included in the collection 
of information requirements of Form N-PX.
---------------------------------------------------------------------------

    Form N-PX, including the amendments, contains collection of 
information requirements. Compliance with the disclosure requirements 
of the form is mandatory. Responses to the disclosure requirements will 
not be kept confidential unless granted confidential treatment as 
discussed above.
    Approximately 12,492 funds and series (each a ``portfolio'') file 
on Form N-PX.\374\ We estimate that the 12,492 portfolios are composed 
of approximately 5,496 portfolios that do or may hold equity 
securities, 2,339 portfolios holding no equity securities, and 1,619 
portfolios holding fund securities (i.e., funds of funds).\375\ In 
addition, the Commission estimates that there are approximately 8,147 
managers required to file Form 13F reports with the Commission, which 
will be required to file Form N-PX reports under the amendments.\376\
---------------------------------------------------------------------------

    \374\ See supra footnote 235 and accompanying text.
    \375\ Based on Commission data as of December 31, 2021, of 
these, approximately 1,619 are funds of funds. Of the remaining 
10,873, we estimate that 49% (5,332) are funds or series that invest 
primarily in equity securities, 6% (614) are ``hybrid'' funds or 
series that may hold some equity securities (5,332 + 614 = 5,496), 
22% (2,339) are bond funds or series that hold no equity securities 
and 2% (250) are money market fund portfolios that hold no equity 
securities (2,339 + 250 = 2,588). See ICI 2022 Fact Book, supra 
footnote 2, at 170-214.
    \376\ See supra footnote 241. We assume, for purposes of our PRA 
analysis, that all of these filers are filing a complete Form N-PX. 
Because some managers will not make a full report but instead will 
file notice reports, for example those that have a clearly disclosed 
policy of not voting, and did not vote, on any proxy matters during 
the reporting period, the burden estimates may be overstated. We 
lack the data, however, to estimate the number of managers who will 
file notice reports. Form 13F-NT filers report their holdings on the 
Form 13F-HR of a different filer; while certain of those filers may 
be eligible to use the joint reporting provisions of Form N-PX, we 
have assumed for the purpose of this analysis that they will file 
their own reports on Form N-PX.
---------------------------------------------------------------------------

    We also estimate that managers will file approximately 234 
amendments to Form N-PX reports as a result of the final adverse 
disposition of a request for confidential treatment or upon expiration 
of confidential treatment.\377\ For purposes of this estimate, we are 
assuming that every manager will file its full record of say-on-pay 
votes on ``voting'' report, and not file a ``notice'' report. In 
practice, because certain managers exercise voting power over the same 
securities as other managers, or exercise voting power over say-on-pay 
votes that funds already report, the number of parties who need to 
separately maintain records and prepare filings may be lower.
---------------------------------------------------------------------------

    \377\ This is based on the number of Form 13F filers as of the 
first quarter of 2022. In addition to these 8,147 filers, we also 
received 936 amendments to filings covering one of the four quarters 
in 2021; consistent with the proposal, for purposes of this 
analysis, we have included these amendment filings in our analysis 
divided by four. Consistent with the proposal, for purposes of this 
estimate, we are conservatively assuming that all amendments filed 
are related to the adverse disposition of a request for confidential 
treatment or the expiration of confidential treatment, and that this 
results in the full burden of a new Form N-PX filing being borne by 
the manager. We do so even though we recognize that Form 13F 
amendments also are filed to correct errors or omissions in a filing 
that does not relate to a request for confidential treatment. 
Consistent with the proposal, our estimate does not allocate a 
separate burden to amendments that merely correct errors or 
omissions in a separate filing. For that reason, and because we 
assume funds will not file confidential treatment-related 
amendments, we are not including a burden estimate for amendments 
filed by funds. See Proposing Release, supra footnote 5, at n.270 
and accompanying text.
---------------------------------------------------------------------------

    While several commenters provided comments on the potential costs 
of the proposed amendments, no commenters specifically addressed our 
PRA analysis.\378\ Two commenters stated that some reporting persons 
use service providers in the reporting process and that the proposed 
amendments could necessitate reconfiguration of the processes those 
service providers use.\379\ One commenter suggested that proxy voting 
advisory firms will undertake much of the work of vote categorization, 
which will result in costs for funds for their services.\380\ The 
commenter also stated that smaller funds that do not currently use an 
outside vendor to file Form N-PX may engage one as a result of the 
rule. On the other hand, a commenter stated that, while certain funds 
may bear new costs, funds may already track much of the information 
they will be required to report; the increased costs would thus only be 
due to transferring existing data onto a new form, rather than 
designing a new process to track the information in the first 
place.\381\ In addition, several commenters stated that lent share 
disclosure may be burdensome to implement.\382\
---------------------------------------------------------------------------

    \378\ See supra section II.
    \379\ See ICI Comment Letter I; ISS Comment Letter.
    \380\ See ICI Comment Letter I.
    \381\ See CFA Institute/CII Comment Letter.
    \382\ See, e.g., Blackrock Comment Letter.
---------------------------------------------------------------------------

    Conversely, as discussed above, the amendments as adopted have been 
modified in some respects from the proposal. While we recognize that 
some of these changes may increase the burdens on respondents from what 
was proposed, for example, by necessitating that reporting persons 
ensure that LEI information is included on Form N-PX where applicable, 
the balance of these changes should reduce burdens on respondents. For 
example, the change that consolidates the proposed categories and 
removes the proposed subcategories as part of the categorization 
requirement should lower burdens on respondents by simplifying the 
categorization process resulting in less time taken in completing the 
form as compared to the proposal. As a result, while the amendments as 
adopted address many of the cost concerns suggested by commenters we 
are nonetheless increasing our burden estimates to account for the 
costs of the amendments as suggested by commenters. Regarding service 
providers, because not all filers use service providers, for PRA 
purposes, we have assumed that all burdens associated with the 
modifications will be incurred by filers, even if in certain cases it 
would be incurred by the service provider and passed on to the filer in 
the form of added costs.
    The tables below summarize the proposed and final Form N-PX 
estimates of the initial and ongoing annual burden associated with the 
amendments.

                                                            Table 2--Form N-PX PRA Estimates
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Internal        Internal                                                          Annual
                                                         initial burden   annual burden                    Wage rate \2\   Internal time   external cost
                                                              hours         hours \1\                                          costs          burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Proposed Estimates
--------------------------------------------------------------------------------------------------------------------------------------------------------
            Funds Holding Equity Securities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated annual burden of current Form N-PX per         ..............             7.2               x         \3\ $373          $2,686          $1,000
 response..............................................
Estimated initial burden to accommodate new reporting                24               8               x          \4\ 325           2,600  ..............
 requirements..........................................
Additional estimated annual burden associated with       ..............              10               x          \5\ 335           3,350             500
 amendments to Form N-PX...............................
Proposed website availability requirement \6\..........  ..............             0.5               x          \6\ 254             127  ..............

[[Page 78804]]

 
Estimated number of annual responses \8\...............  ..............         x 7,064  ...............  ..............         x 7,064         x 7,064
                                                        ------------------------------------------------------------------------------------------------
    Total annual burden................................  ..............         181,545  ...............  ..............      61,901,832      10,596,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Funds Not Holding Equity Securities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated annual burden of current Form N-PX per         ..............            0.17               x          \3\ 373              63  ..............
 response..............................................
Additional estimated annual burden associated with       ..............  ..............  ...............  ..............  ..............  ..............
 amendments to Form N-PX...............................
Estimated number of annual responses \8\...............  ..............         x 3,188  ...............  ..............         x 3,188
                                                        ------------------------------------------------------------------------------------------------
    Total annual burden................................  ..............             542  ...............  ..............         200,844
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Funds of Funds
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated annual burden of current Form N-PX per         ..............               1               x          \3\ 373             373             100
 response..............................................
Additional estimated annual burden associated with       ..............             0.5               x          \3\ 373             187             100
 amendments to Form N-PX...............................
Proposed website availability requirement \6\..........  ..............             0.5               x          \6\ 254             127  ..............
Estimated number of annual responses \8\...............  ..............         x 1,367  ...............  ..............         x 1,367         x 1,367
                                                        ------------------------------------------------------------------------------------------------
    Total annual burden................................  ..............           2,734  ...............  ..............         939,129         273,400
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Institutional Investment Managers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes to systems to accommodate new reporting                      30              10               x          \9\ 325           3,250  ..............
 requirements..........................................
Estimated annual burden associated with Form N-PX        ..............               5               x         \10\ 335           1,675           1,000
 filing requirement....................................
Estimated number of annual responses \11\..............  ..............         x 7,744  ...............  ..............         x 7,744         x 7,744
                                                        ------------------------------------------------------------------------------------------------
    Total annual burden................................  ..............         116,160  ...............  ..............      38,139,200       7,744,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Final Estimates
--------------------------------------------------------------------------------------------------------------------------------------------------------
            Funds Holding Equity Securities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated annual burden of current Form N-PX per         ..............             7.2               x          \3\ 400           2,880           1,000
 response..............................................
Estimated initial burden to accommodate new reporting                36              12               x          \4\ 349           4,188        \13\ 500
 requirements \12\.....................................
Additional estimated annual burden associated with       ..............              12               x          \5\ 349           4,188      \13\ 1,000
 amendments to Form N-PX \12\..........................
Website availability requirement \6\...................  ..............             0.5               x          \6\ 272             136  ..............
Estimated number of annual responses \8\...............  ..............         x 5,496  ...............  ..............         x 5,496  ..............
                                                        ------------------------------------------------------------------------------------------------
    Total annual burden................................  ..............         188,490  ...............  ..............      67,737,479      14,865,142
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Funds Not Holding Equity Securities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated annual burden of current Form N-PX per         ..............            0.17               x          \3\ 400              68  ..............
 response..............................................
Additional estimated annual burden associated with       ..............  ..............  ...............  ..............  ..............  ..............
 amendments to Form N-PX...............................
Estimated number of annual responses \8\...............  ..............         x 2,588  ...............  ..............         x 2,588  ..............
                                                        ------------------------------------------------------------------------------------------------
    Total annual burden................................  ..............             440  ...............  ..............         176,005  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Funds of Funds
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated annual burden of current Form N-PX per         ..............               1               x          \3\ 400             400             100
 response..............................................
Additional estimated annual burden associated with       ..............             0.5               x          \3\ 400             200             100
 amendments to Form N-PX...............................
Website availability requirement \6\...................  ..............             0.5               x          \6\ 272            $136  ..............
Estimated number of annual responses \8\...............  ..............         x 1,619  ...............  ..............         x 1,619         x 1,619
                                                        ------------------------------------------------------------------------------------------------
    Total annual burden................................  ..............           3,238  ...............  ..............       1,191,584         323,800
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Institutional Investment Managers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes to systems to accommodate new reporting                      45              15               x          \9\ 349           5,235        \13\ 500
 requirements \12\.....................................
Estimated annual burden associated with Form N[dash]PX   ..............             7.5               x         \10\ 343           2,573      \13\ 2,000
 filing requirement\12\................................
Estimated number of annual responses \11\..............  ..............         x 8,381  ...............  ..............         x 8,381         x 8,381
                                                        ------------------------------------------------------------------------------------------------
    Total annual burden................................  ..............         188,572  ...............  ..............      65,438,848      20,952,500
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Total Burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
Currently Approved Burden..............................  ..............          47,984  ...............  ..............  ..............      17,657,958
Additional Burden Associated with Amendments...........  ..............         332,757  ...............  ..............  ..............      18,483,484
                                                        ------------------------------------------------------------------------------------------------

[[Page 78805]]

 
    Total Burden.......................................  ..............         380,741  ...............  ..............  ..............      36,141,445
--------------------------------------------------------------------------------------------------------------------------------------------------------
Certain products and sums do not tie due to rounding.
\1\ Includes initial burden estimates amortized over a three-year period.
\2\ The Commission's estimates of the relevant wage rates are based on salary information for the securities industry compiled by the Securities
  Industry and Financial Markets Association's Office Salaries in the Securities Industry 2013. The estimated figures are modified by firm size,
  employee benefits, overhead, and adjusted annually to account for the effects of inflation, with the last adjustment occurring in early 2022 (or 2021
  in the case of estimates from the proposal). See Securities Industry and Financial Markets Association, Report on Management & Professional Earnings
  in the Securities Industry 2013.
\3\ Represents the estimated hourly wage rate of a compliance attorney.
\4\ Represents the blended estimated hourly wage rates of a programmer and a compliance attorney and includes, inter alia, the costs of obtaining from
  service providers data on the number of shares on loan but not recalled. In the case of the final estimates, the blended hourly rate is based on 18
  hours for a programmer at $297 per hour and 18 hours for a compliance attorney at $400 per hour.
\5\ Represents the blended estimated hourly wage rates of a programmer and a compliance attorney. In the case of the final estimates, the blended hourly
  rate is based on 6 hours for a programmer at $297 per hour and 6 hours for a compliance attorney at $400 per hour.
\6\ While the amendments will require funds to disclose that their proxy voting records both are available on fund websites and will be delivered to
  investors upon request, the Form N-PX PRA estimates includes only the burdens associated with website posting. Funds' registration forms currently
  require them to disclose that they either make their proxy voting records available on their websites or deliver them upon request. We understand most
  funds deliver proxy voting records upon request and, therefore, the burdens of delivery upon request are already included in the information
  collection burdens of each relevant registration form.
\7\ Represents the estimated hourly wage rate of a webmaster.
\8\ These estimates are conducted for each fund portfolio, not for each filing, and are an average estimate across all Form N-PX reporting persons. In
  certain cases, a single Form N-PX filing will report the proxy voting records of multiple fund portfolios. In those circumstances, the reporting
  person will bear the burden associated with each fund portfolio it reported. This average estimate takes into account higher costs for funds filing
  reports for multiple portfolios without assuming any economies of scale that multiple-portfolio fund complexes may be able to achieve.
\9\ Represents the blended estimated hourly wage rates of a programmer and a compliance attorney. In the case of the final estimates, the blended hourly
  rate is based on 22.5 hours for a programmer at $297 per hour and 22.5 hours for a compliance attorney at $400 per hour.
\10\ Represents the blended estimated hourly wage rates of a programmer and a compliance attorney. In the case of the final estimates, the blended
  hourly rate is based on 3 hours for a programmer at $297 per hour and 4.5 hours for a compliance attorney at $400 per hour.
\11\ At proposal, included 7,550 initial filings and assumed an additional 194 filings as a result of the final adverse disposition of a request for
  confidential treatment or upon expiration of confidential treatment. Now includes 8,147 initial filings and estimates an additional 234 filings.
\12\ The Commission's estimates of the internal initial and annual time burdens associated with the amendments have been increased by 50% compared to
  the proposal.
\13\ In light of comments and modifications to the proposal, the Commission's estimates of the external ongoing costs associated with the amendments
  have been doubled compared to the proposal, and the Commission has additionally included estimated initial costs of compliance. While the specific
  external costs will vary depending on the reporting person, this could include the costs of external reporting vendors or external counsel or of
  reporting in a custom XML data language. See footnote 343. Costs are estimated on a per-portfolio (not per-fund complex) basis, and as noted by a
  commenter, larger fund complexes may be able to achieve greater economies of scale. The same may also be true of managers.

VI. Regulatory Flexibility Act Certification for Managers and Final 
Regulatory Flexibility Analysis for Funds

A. Regulatory Flexibility Act Certification for Managers

    Pursuant to section 605(b) of the Regulatory Flexibility Act 
(``RFA''), the Commission certified that, if adopted, new rule 14Ad-1 
and the amendments to Form N-PX relating to managers (``final manager 
rules'') would not have a significant economic impact on a substantial 
number of small entities.\383\ As discussed in more detail in the 
Proposing Release, for purposes of this rulemaking and the RFA, a 
manager is a small entity if it: (i) has assets under management having 
a total value of less than $25 million; (ii) did not have total assets 
of $5 million or more on the last day of its most recent fiscal year; 
and (iii) does not control, is not controlled by, and is not under 
common control with another investment adviser that has assets under 
management of $25 million or more, or any person (other than a natural 
person) that had total assets of $5 million or more on the last day of 
its most recent fiscal year. The Commission therefore stated in the 
Proposing Release that no small entities for purposes of 17 CFR 240.0-
10 (``rule 0-10 under the Exchange Act'') would be affected by proposed 
rule 14Ad-1 and the amendments to Form N-PX relating to managers. This 
is because a manager would only be required to comply with those 
requirements if the manager exercises investment discretion with 
respect to accounts holding section 13(f) securities having an 
aggregate fair market value on the last trading day of any month of any 
calendar year of at least $100 million. The Commission requested 
comment on both the use of this small entity definition and the 
Commission's certification in section VI of the Proposing Release. No 
commenters responded to these requests request. For the same reasons as 
stated in the proposing release, we again certify that the final 
manager rules will not have a significant economic impact on a 
substantial number of small entities.
---------------------------------------------------------------------------

    \383\ 5 U.S.C. 605(b).
---------------------------------------------------------------------------

B. Final Regulatory Flexibility Act Analysis for Funds

    The Commission has prepared the following Final Regulatory 
Flexibility Analysis (``FRFA'') in accordance with section 604 of the 
RFA.\384\ It relates to amendments to Form N-PX relating to funds, as 
well as amendments to Forms N-1A, N-2, and N-3 (``final fund rules''). 
The Proposing Release included an Initial Regulatory Flexibility Act 
Analysis (``IRFA'') with regard to funds that solicited comment and was 
prepared in accordance with the RFA.\385\
---------------------------------------------------------------------------

    \384\ 5 U.S.C. 604.
    \385\ See Proposing Release, supra footnote 5, at section VI.
---------------------------------------------------------------------------

1. Need for and Objectives of the Final Fund Rules
    The Commission is amending Form N-PX under Investment Company Act 
to enhance the information mutual funds, ETFs, and certain other funds 
currently report annually about their proxy votes and to make that 
information easier to analyze. The amendments to Form N-PX will 
standardize the order in which reporting persons disclose information, 
categorize votes, structure and tag the data reported, and, require 
reporting persons to identify proxy voting matters using the same 
language as disclosed in the issuer's form of proxy, presented in the 
same order as the matters appear in the form of proxy, and separate 
directors for director election matters only if a form of proxy in 
connection with a matter is subject to rule 14a-4 of the Exchange Act. 
In all other cases, reporting persons will instead remain subject to 
the current requirement to provide a brief identification of the 
matters voted on. In a change from current practice, however reporting 
persons will be required to limit use of abbreviations, which should 
not be used other than for commonly

[[Page 78806]]

understood terms or for terms that the issuer abbreviated in its 
description of the matters regarding the language used for identifying 
proxy matters. The final fund rules will also provide additional 
information about the extent to which a fund votes or loans its shares. 
In addition, we are amending Forms N-1A, N-2, and N-3 to require these 
funds to disclose that their proxy voting records are publicly 
available on (or through) their websites and available upon request, 
free of charge in both cases to make this information easier for 
investors to access.
    All of these requirements are discussed in detail in section II of 
this release. The costs and burdens of these requirements on small 
funds are discussed below as well as above in our Economic Analysis and 
Paperwork Reduction Act Analysis, which discuss the applicable costs 
and burdens on all funds.\386\
---------------------------------------------------------------------------

    \386\ See supra sections IV and V. Section V also discusses the 
professional skills that we believe compliance with the rules will 
entail.
---------------------------------------------------------------------------

2. Significant Issues Raised by Public Comment
    In the Proposing Release, we requested comment on the IRFA, 
including a request for comment on the number of small entities that 
may be affected by our proposed rules and guidelines and whether the 
proposed rules and guidelines would have any effects not considered in 
our analysis. We also requested that commenters describe the nature of 
any effects on small entities subject to the rules and forms and 
provide empirical data to support the nature and extent of such 
effects. We also requested comment on the proposed compliance burdens 
and the effect those burdens would have on smaller entities.
    Some commenters highlighted some of the concerns specific to small 
funds relative to the proposal, such as needing to hire a third party 
vendor to prepare Form N-PX as a result of the amendments, resulting in 
increased costs.\387\ One of these commenters also suggested that the 
proposed amendments would result in an increase in their filing costs, 
and the cumulative regulatory burden on small funds as a result of the 
proposed amendments would be larger in relative terms because of the 
fixed nature of these costs and the funds' inability to achieve 
economies of scale that larger funds can realize.\388\ One commenter 
stated that the proposed amendments may be less beneficial to investors 
because of the lessened impact of their holdings on voting outcomes and 
suggested that we exempt small funds from the categorization 
requirements in particular.\389\ Another commenter made a similar 
suggestion about the quantitative data disclosures.\390\ A different 
commenter, however, suggested that the additional costs and resources 
required for compliance with the Form N-PX amendments would impact 
smaller funds, but that many small funds may already have in place 
systems to track and report the information and that the benefits of 
the increased transparency stemming from the amendments outweigh the 
incremental costs that would be incurred.\391\ One other commenter 
stated that, to ensure the availability of the full dataset, all 
reporting persons, irrespective of size, should be required to file 
Form N-PX reports in a structured data language.\392\
---------------------------------------------------------------------------

    \387\ ICI Comment Letter I; Ultimus Comment Letter.
    \388\ See ICI Comment Letter I.
    \389\ See Ultimus Comment Letter.
    \390\ See ICI Comment Letter I. This commenter also suggested 
that smaller funds in particular would benefit from being permitted 
to comply with the website disclosure requirement by providing a 
direct link on their website to the HTML-rendered Form N-PX report 
on EDGAR, but, as discussed above, all funds, including smaller 
funds, will be permitted to do this. See supra footnote 218 and 
accompanying text.
    \391\ See CFA/CII Comment Letter.
    \392\ See XBRL Comment Letter.
---------------------------------------------------------------------------

    It is important to establish a consistent framework for proxy 
information provided by funds to enhance the consistency and 
availability of this information to investors, and investors in funds 
of all sizes will benefit from the enhancements to Form N-PX we are 
adopting in this release. Therefore, the final fund rules establish 
requirements for reporting proxy information that are broadly 
applicable to all funds, including small funds. We have, however, made 
certain modifications to the proposed requirement regarding 
categorization that may have the effect of easing unnecessary burdens 
for all funds, including smaller funds. In particular, we have 
streamlined the list of categories from which reporting persons will be 
required to choose in order to reduce overlap between the categories 
and eliminated the proposed requirement to select from a list of 
subcategories in addition to the categories. Thus, while we acknowledge 
that the final fund rules will impose costs on smaller funds, the final 
fund rules are tailored to accomplish our goals while minimizing those 
costs.
3. Small Entities Subject to the New Rule and Amendments
    The amendments will affect funds that are small entities. For 
purposes of Commission rulemaking in connection with the RFA, an 
investment company is a small entity if, together with other investment 
companies in the same group of related investment companies, it has net 
assets of $50 million or less as of the end of its most recent fiscal 
year.\393\ Commission staff estimates that, as of June 2022, 
approximately 35 registered mutual funds, 11 registered open-end ETFs, 
and 31 registered closed-end funds (collectively, 77 funds) are small 
entities.
---------------------------------------------------------------------------

    \393\ See 17 CFR 270.0-10(a).
---------------------------------------------------------------------------

4. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
    We are amending Form N-PX, which funds currently use to file their 
complete proxy voting records with the Commission, to require reporting 
in a custom XML language, to require other formatting and presentation 
changes, and to add certain new or modified disclosure items.
    The amendments to Form N-PX will affect funds that are currently 
required to report on the form, including those that are small 
entities. For instance, the amendments require funds to tie the 
description of the voting matter to the issuer's form of proxy under 
certain circumstances and to categorize voting matters by type. In 
addition, the amendments require information about the number of shares 
that were voted (or, if not known, the number of shares that were 
instructed to be cast), as well as the number of shares the fund loaned 
and did not recall. The amendments also require reporting of 
information on Form N-PX in a structured data language.
    We are adding a new section on the cover page of Form N-PX where 
the reporting person would provide information in cases where the form 
is filed as an amendment to a previously filed Form N-PX report. We are 
also requiring that the cover page include information to help users 
identify whether the reporting person is a fund or a manager. We are 
also adding a new summary page to Form N-PX on which a fund is required 
to provide information about series or managers whose votes are 
included in the report, if applicable.
    The amendments are discussed in detail in sections I and II above. 
We discuss the specifics of these burdens in the Economic Analysis and 
Paperwork Reduction Act sections above. For

[[Page 78807]]

purposes of the PRA analysis, we have estimated that the aggregate 
annual reporting, administrative, and paperwork costs imposed by the 
form amendments on funds will be approximately $56 million.\394\ We 
also estimate aggregate one-time reporting, administrative, and 
paperwork costs of approximately $26 million for funds that hold equity 
securities.\395\
---------------------------------------------------------------------------

    \394\ See supra section V, Table 2.
    \395\ Id.
---------------------------------------------------------------------------

5. Agency Action To Minimize Effect on Small Entities
    The RFA directs us to consider alternatives that would accomplish 
our stated objectives, while minimizing any significant adverse effect 
on small entities. Accordingly, we considered the following 
alternatives: (i) the establishment of differing compliance or 
reporting requirements or timetables that take into account the 
resources available to small entities; (ii) the clarification, 
consolidation, or simplification of compliance and reporting 
requirements under the amendments for small entities; (iii) the use of 
performance rather than design standards; and (iv) an exemption from 
coverage of the amendments, or any part thereof, for small entities.
    The Commission does not presently believe that the amendments would 
require the establishment of special compliance requirements, 
timetables, or exceptions for small entities. The amendments are 
designed to increase transparency about how funds vote. As discussed 
above in response to comments, different disclosure requirements for 
small entities, such as reducing the level of proxy voting disclosure 
for small entities, would prevent investors in small funds from 
benefitting from the information provided by the amendments. Small 
funds currently must follow the same proxy voting reporting 
requirements as large funds in light of these concerns.
    We have endeavored through the proposed amendments to Form N-PX to 
minimize the regulatory burden, including on small entities, while 
meeting our regulatory objectives. To this end, we made adjustments to 
the proposed amendments in the final fund rules as discussed in more 
detail above. Further, the proposed amendments took into account 
comments on the 2010 proposal, which resulted in retention of key 
disclosures to help investors understand how a fund votes, while 
reducing the burdens on funds.
    We have endeavored to clarify, consolidate, and simplify the 
requirements applicable to funds, including those that are small 
entities. Finally, we do not consider the use of performance rather 
than design standards to be consistent with our statutory mandate of 
investor protection with respect to reporting of proxy voting records.

Statutory Authority

    The Commission is adopting new rule 14Ad-1 and amendments to the 
rules and forms discussed above pursuant to the authority set forth in 
sections 5, 6, 7, 10, 19(a), and 28 of the Securities Act [15 U.S.C. 
77e, 77f, 77g, 77j, 77s(a), and 77z-3]; sections 4A, 4B, 10(b), 13, 
14A, 15(d), 23, 24, 35A, and 36 of the Exchange Act [15 U.S.C. 78d-1, 
78d-2, 78j(b), 78m, 78n-1, 78o(d), 78w, 78x, 78ll, and 78mm]; sections 
6(c), 8, 24(a), 30, 31, 38, and 45 of the Investment Company Act [15 
U.S.C. 80a-6(c), 80a-8, 80a-24(a), 80a-29, 80a-30, 80a-37, and 80a-44]; 
and section 204 of the Investment Advisers Act [15 U.S.C. 80b-4].

List of Subjects

17 CFR Part 200

    Administrative practice and procedure, Authority delegations 
(Government agencies).

17 CFR Part 232

    Administrative practice and procedure, Reporting and recordkeeping 
requirements, Securities.

17 CFR Parts 240 and 249

    Reporting and recordkeeping requirements, Securities.

17 CFR Parts 270 and 274

    Investment companies, Reporting and recordkeeping requirements, 
Securities.

Text of Rule and Form Amendments

    For the reasons set out in the preamble, the Commission is amending 
title 17, chapter II, of the Code of Federal Regulations as follows:

PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND 
REQUESTS

0
1. The authority citation for part 200 continues to read as follows:

    Authority:  5 U.S.C. 552, 552a, 552b, and 557; 11 U.S.C. 901 and 
1109(a); 15 U.S.C. 77c, 77e, 77f, 77g, 77h, 77j, 77o, 77q, 77s, 77u, 
77z-3, 77ggg(a), 77hhh, 77sss, 77uuu, 78b, 78c(b), 78d, 78d-1, 78d-
2, 78e, 78f, 78g, 78h, 78i, 78k, 78k-1, 78l, 78m, 78n, 78o, 78o-4, 
78q, 78q-1, 78w, 78t-1, 78u, 78w, 78ll(d), 78mm, 78eee, 80a-8, 80a-
20, 80a-24, 80a-29, 80a-37, 80a-41, 80a-44(a), 80a-44(b), 80b-3, 
80b-4, 80b-5, 80b-9, 80b-10(a), 80b-11, 7202, and 7211 et seq.; 29 
U.S.C. 794; 44 U.S.C. 3506 and 3507; Reorganization Plan No. 10 of 
1950 (15 U.S.C. 78d nt); sec. 8G, Pub. L. 95-452, 92 Stat. 1101 (5 
U.S.C. App.); sec. 913, Pub. L. 111-203, 124 Stat. 1376, 1827; sec. 
3(a), Pub. L. 114-185, 130 Stat. 538; E.O. 11222, 30 FR 6469, 3 CFR, 
1964-1965 Comp., p. 36; E.O. 12356, 47 FR 14874, 3 CFR, 1982 Comp., 
p. 166; E.O. 12600, 52 FR 23781, 3 CFR, 1987 Comp., p. 235; 
Information Security Oversight Office Directive No. 1, 47 FR 27836; 
and 5 CFR 735.104 and 5 CFR parts 2634 and 2635, unless otherwise 
noted.

Subpart A--Organization and Program Management

0
2. Section 200.30-5 is amended by revising paragraphs (c-1) 
introductory text and (c-1)(1) to read as follows:


Sec.  200.30-5  Delegation of authority to Director of Division of 
Investment Management.

* * * * *
    (c-1) With respect to the Securities Exchange Act of 1934:
    (1) To grant and deny applications filed pursuant to section 24(b) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78x(b)) and Sec.  
240.24b-2 of this chapter (Rule 24b-2) for confidential treatment of 
information filed pursuant to section 13(f) of that Act (15 U.S.C. 
78m(f)) and Sec.  240.13f-1 of this chapter (Rule 13f-1) and the 
instructions to Form N-PX (Sec. Sec.  249.326 and 274.129 of this 
chapter).
* * * * *

PART 232--REGULATION S-T--GENERAL RULES AND REGULATIONS FOR 
ELECTRONIC FILINGS

0
3. The general authority citation for part 232 is revised to read as 
follows:

    Authority:  15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s(a), 77z-3, 
77sss(a), 78c(b), 78l, 78m, 78n, 78n-1, 78o(d), 78w(a), 78ll, 80a-
6(c), 80a-8, 80a-29, 80a-30, 80a-37, 7201 et seq.; and 18 U.S.C. 
1350, unless otherwise noted.
* * * * *

0
4. Section 232.101 is amended by revising paragraphs (a)(1)(iii) and 
(xxii) and (d) to read as follows:


Sec.  232.101  Mandated electronic submissions and exceptions.

    (a) * * *
    (1) * * *
    (iii) Statements, reports, and schedules filed with the Commission 
pursuant to sections 13, 14, 14A(d), 15(d), or 16(a) of the Exchange 
Act (15 U.S.C. 78m, 78n, 78n-1(d), 78o(d), and 78p(a)), and proxy 
materials required to be furnished for the information of the 
Commission pursuant to Sec. Sec.  240.14a-3 and 240.14c-3 of this 
chapter (Rules 14a-3 and 14c-3) or in connection with annual reports on 
Form 10-K (Sec.  249.310

[[Page 78808]]

of this chapter) filed pursuant to section 15(d) of the Exchange Act;

    Note 1 to paragraph (a)(1)(iii). Electronic filers filing 
Schedules 13D and 13G with respect to foreign private issuers should 
include in the submission header all zeroes (i.e., 00-0000000) for 
the Internal Revenue Service (IRS) tax identification number because 
the EDGAR system requires an IRS number tag to be inserted for the 
subject company as a prerequisite to acceptance of the filing.


    Note 2 to paragraph (a)(1)(iii). Foreign private issuers must 
file or submit their Form 6-K reports (Sec.  249.306 of this 
chapter) in electronic format.

* * * * *
    (xxii) Confidential treatment requests filed with the Commission 
pursuant to section 13(f) of the Exchange Act (15 U.S.C. 78m(f)) and 
the rules and regulations in this chapter, including Form 13F (Sec.  
249.325 of this chapter), or pursuant to the instructions to Form N-PX 
(Sec. Sec.  249.326 and 274.129 of this chapter). The filings must be 
made on EDGAR in the format required by the EDGAR Filer Manual, as 
defined in Sec.  232.11 (Rule 11 of Regulation S-T). Notwithstanding 
Sec.  232.104 (Rule 104 of Regulation S-T), the documents filed or 
furnished under this paragraph (a)(1)(xxii) will be considered as 
officially filed with or furnished to, as applicable, the Commission; 
and
* * * * *
    (d) All documents, including any information with respect to which 
confidential treatment is requested, filed pursuant to section 13(n) 
(15 U.S.C. 78m(n)) and section 13(f) (15 U.S.C. 78m(f)) of the Exchange 
Act and the rules and regulations in this chapter and the instructions 
to Form N-PX (Sec. Sec.  249.326 and 274.129 of this chapter) shall be 
filed in electronic format.

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 
1934

0
5. The general authority citation for part 240 continues to read as 
follows:

    Authority:  15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 
78g, 78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4, 
78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78dd, 78ll, 78mm, 
80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, and 7201 et 
seq., and 8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 
1350; Pub. L. 111-203, 939A, 124 Stat. 1376 (2010); and Pub. L. 112-
106, sec. 503 and 602, 126 Stat. 326 (2012), unless otherwise noted.
* * * * *

0
6. Add Sec.  240.14Ad-1 to read as follows:


Sec.  240.14Ad-1  Report of proxy voting record.

    (a) Subject to paragraphs (b) and (c) of this section, every 
institutional investment manager (as that term is defined in section 
13(f)(6)(A) of the Act (15 U.S.C. 78m(f)(6)(A))) that is required to 
file reports under section 13(f) of the Act (15 U.S.C. 78m(f)) must 
file an annual report on Form N-PX (Sec. Sec.  249.326 and 274.129 of 
this chapter) not later than August 31 of each year, for the most 
recent 12-month period ended June 30, containing the institutional 
investment manager's proxy voting record for each shareholder vote 
pursuant to sections 14A(a) and (b) of the Act (15 U.S.C. 78n-1(a) and 
(b)) with respect to each security over which the manager exercised 
voting power (as defined in paragraph (d) of this section).
    (b) An institutional investment manager is not required to file a 
report on Form N-PX (Sec. Sec.  249.326 and 274.129 of this chapter) 
for the 12-month period ending June 30 of the calendar year in which 
the manager's initial filing on Form 13F (Sec.  249.325 of this 
chapter) is due pursuant to Sec.  240.13f-1. For purposes of this 
paragraph (b), ``initial filing'' on Form 13F means any quarterly 
filing on Form 13F if no filing on Form 13F was required for the 
immediately preceding calendar quarter.
    (c) An institutional investment manager is not required to file a 
report on Form N-PX (Sec. Sec.  249.326 and 274.129 of this chapter) 
with respect to any shareholder vote at a meeting that occurs after 
September 30 of the calendar year in which the manager's final filing 
on Form 13F (Sec.  249.325 of this chapter) is due pursuant to Sec.  
240.13f-1. An institutional investment manager is required to file a 
Form N-PX for the period July 1 through September 30 of the calendar 
year in which the manager's final filing on Form 13F is due pursuant to 
Sec.  240.13f-1; this filing is required to be made not later than 
March 1 of the immediately following calendar year. For purposes of 
this paragraph (c), ``final filing'' on Form 13F means any quarterly 
filing on Form 13F if no filing on Form 13F is required for the 
immediately subsequent calendar quarter.
    (d) For purposes of this section:
    (1) Voting power means the ability, through any contract, 
arrangement, understanding, or relationship, to vote a security or 
direct the voting of a security, including the ability to determine 
whether to vote a security or to recall a loaned security.
    (2) Exercise of voting power means using voting power to influence 
a voting decision with respect to a security.

0
7. Amend Sec.  240.24b-2 by revising paragraph (i) to read as follows:


Sec.  240.24b-2  Nondisclosure of information filed with the Commission 
and with any exchange.

* * * * *
    (i) An institutional investment manager shall omit the confidential 
portion from the material publicly filed in electronic format pursuant 
to section 13(f) of the Act (15 U.S.C. 78m(f)) and the rules and 
regulations in this part and the instructions to Form N-PX (Sec. Sec.  
249.326 and 274.129 of this chapter). The institutional investment 
manager shall indicate in the appropriate place in the material 
publicly filed that the confidential portion has been so omitted and 
filed separately with the Commission. In lieu of the procedures 
described in paragraph (b) of this section, an institutional investment 
manager shall request confidential treatment electronically pursuant to 
section 13(f) (15 U.S.C. 78m(f)), the rules and regulations in this 
part, and the instructions to Form N-PX (Sec. Sec.  249.326 and 274.129 
of this chapter).

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

0
8. The general authority citation for part 249 continues to read as 
follows:

    Authority: 15 U.S.C. 78a et seq. and 7201 et seq.; 12 U.S.C. 
5461 et seq.; 18 U.S.C. 1350; Sec. 953(b) Pub. L. 111-203, 124 Stat. 
1904; Sec. 102(a)(3) Pub. L. 112-106, 126 Stat. 309 (2012), Sec. 107 
Pub. L. 112-106, 126 Stat. 313 (2012), Sec. 72001 Pub. L. 114-94, 
129 Stat. 1312 (2015), and secs. 2 and 3 Pub. L. 116-222, 134 Stat. 
1063 (2020), unless otherwise noted.
* * * * *

0
9. Revise the heading for subpart D to read as follows:

Subpart D--Forms for Annual and Other Reports of Issuers and Other 
Persons Required Under Sections 13, 14A, and 15(d) of the 
Securities Exchange Act of 1934

0
10. Add Sec.  249.326 to read as follows:


Sec.  249.326   Form N-PX, annual report of proxy voting record.

    This form shall be used by institutional investment managers to 
file an annual report pursuant to Sec.  240.14Ad-1 of this chapter 
containing the manager's proxy voting record.

PART 270--RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940

0
11. The general authority citation for part 270 continues to read as 
follows:


[[Page 78809]]


    Authority: 15 U.S.C. 80a-1 et seq., 80a-34(d), 80a-37, 80a-39, 
and Pub. L. 111-203, sec. 939A, 124 Stat. 1376 (2010), unless 
otherwise noted.
* * * * *


Sec.  270.30b1-4  [Amended]

0
12. Amend Sec.  270.30b1-4 by removing the phrase ``Form N-PX (Sec.  
274.129 of this chapter)'' and adding in its place ``Form N-PX 
(Sec. Sec.  249.326 and 274.129 of this chapter)''.

PART 274--FORMS PRESCRIBED UNDER THE INVESTMENT COMPANY ACT OF 1940

0
13. The authority citation for part 274 is revised to read as follows:

    Authority:  15 U.S.C. 77f, 77g, 77h, 77j, 77s, 78c(b), 78l, 78m, 
78n, 78n-1, 78o(d), 80a-8, 80a-24, 80a-26, 80a-29, and sec. 939A, 
Pub. L. 111-203, 124 Stat. 1376, unless otherwise noted.


0
14. Amend Form N-1A (referenced in Sec. Sec.  239.15A and 274.11A) by 
revising Item 17(f) and Item 27(d)(5) to read as follows:

    Note: The text of Form N-1A does not, and these amendments will 
not, appear in the Code of Federal Regulations.

Form N-1A

* * * * *

Item 17. Management of the Fund

* * * * *
    (f) Proxy Voting Policies. Unless the Fund invests exclusively in 
non-voting securities, describe the policies and procedures that the 
Fund uses to determine how to vote proxies relating to portfolio 
securities, including the procedures that the Fund uses when a vote 
presents a conflict between the interests of Fund shareholders, on the 
one hand, and those of the Fund's investment adviser; principal 
underwriter; or any affiliated person of the Fund, its investment 
adviser, or its principal underwriter, on the other. Include any 
policies and procedures of the Fund's investment adviser, or any other 
third party, that the Fund uses, or that are used on the Fund's behalf, 
to determine how to vote proxies relating to portfolio securities. 
Also, state that information regarding how the Fund voted proxies 
relating to portfolio securities during the most recent 12-month period 
ended June 30 is available (1) without charge, upon request, by calling 
a specified toll-free telephone number and, if any, contacting a 
specified email address; (2) on or through the Fund's website, if it 
has one, at a specified internet address; and (3) on the Commission's 
website at http://www.sec.gov.

Instructions

    1. A Fund may satisfy the requirement to provide a description of 
the policies and procedures that it uses to determine how to vote 
proxies relating to portfolio securities by including a copy of the 
policies and procedures themselves.
    2. If a Fund (or financial intermediary through which shares of the 
Fund may be purchased or sold) receives a request for the Fund's proxy 
voting record by phone or email, the Fund (or financial intermediary) 
must send the information disclosed in the Fund's most recently filed 
report on Form N-PX in a human-readable format, within three business 
days of receipt of the request, by first-class mail or other means 
designed to ensure equally prompt delivery.
    3. If a Fund has a website, it must make publicly available free of 
charge the information disclosed in the Fund's most recently filed 
report on Form N-PX on or through its website as soon as reasonably 
practicable after filing the report with the Commission. The 
information disclosed in the Fund's most recently filed report on Form 
N-PX must be in a human-readable format and remain available on or 
through the Fund's website for as long as the Fund remains subject to 
the requirements of Rule 30b1-4 (17 CFR 270.30b1-4). A Fund may satisfy 
the requirement to provide this information in a human-readable format 
by providing a direct link to the relevant HTML-rendered Form N-PX 
report on EDGAR.
* * * * *

Item 27. Financial Statements

* * * * *
    (d) Annual and Semiannual Reports. Every annual and semiannual 
report to shareholders required by rule 30e-1 must contain the 
following:
* * * * *
    (5) Statement Regarding Availability of Proxy Voting Record. A 
statement that information regarding how the Fund voted proxies 
relating to portfolio securities during the most recent 12-month period 
ended June 30 is available (i) without charge, upon request, by calling 
a specified toll-free telephone number and, if any, contacting a 
specified email address; (ii) on or through the Fund's website, if it 
has one, at a specified internet address; and (iii) on the Commission's 
website at http://www.sec.gov.

Instructions

    1. If a Fund (or financial intermediary through which shares of the 
Fund may be purchased or sold) receives a request for the Fund's proxy 
voting record by phone or email, the Fund (or financial intermediary) 
must send the information disclosed in the Fund's most recently filed 
report on Form N-PX in a human-readable format, within three business 
days of receipt of the request, by first-class mail or other means 
designed to ensure equally prompt delivery.
    2. If a Fund has a website, it must make publicly available free of 
charge the information disclosed in the Fund's most recently filed 
report on Form N-PX on or through its website as soon as reasonably 
practicable after filing the report with the Commission. The 
information disclosed in the Fund's most recently filed report on Form 
N-PX must be in a human-readable format and remain available on or 
through the Fund's website for as long as the Fund remains subject to 
the requirements of rule 30b1-4 (17 CFR 270.30b1-4). A Fund may satisfy 
the requirement to provide this information in a human-readable format 
by providing a direct link to the relevant HTML-rendered Form N-PX 
report on EDGAR.
* * * * *

0
15. Amend Form N-2 (referenced in Sec. Sec.  239.14 and 274.11a-1) by 
revising Item 18.16, Item 24.6.d, and Item 24.8 to read as follows:

    Note: The text of Form N-2 does not, and these amendments will 
not, appear in the Code of Federal Regulations.

Form N-2

* * * * *

Item 18. Management

* * * * *
    16. Unless the Registrant invests exclusively in non-voting 
securities, describe the policies and procedures that the Registrant 
uses to determine how to vote proxies relating to portfolio securities, 
including the procedures that the Registrant uses when a vote presents 
a conflict between the interests of the Registrant's shareholders, on 
the one hand, and those of the Registrant's investment adviser; 
principal underwriter; or any affiliated person (as defined in Section 
2(a)(3) of the Investment Company Act and the rules thereunder) of the 
Registrant, its investment adviser, or its principal underwriter, on 
the other. Include any policies and procedures of the Registrant's 
investment adviser, or any other third party, that the Registrant uses, 
or that are used on the Registrant's behalf, to determine how to vote 
proxies relating to portfolio securities. Also, state that information 
regarding how the Registrant voted proxies relating to portfolio 
securities during the most

[[Page 78810]]

recent 12-month period ended June 30 is available (i) without charge, 
upon request, by calling a specified toll-free telephone number and, if 
any, contacting a specified email address; (ii) on or through the 
Registrant's website, if it has one, at a specified internet address; 
and (iii) on the Commission's website at http://www.sec.gov.

Instructions

    1. A Registrant may satisfy the requirement to provide a 
description of the policies and procedures that it uses to determine 
how to vote proxies relating to portfolio securities by including a 
copy of the policies and procedures themselves.
    2. If a Registrant (or financial intermediary through which shares 
of the Registrant may be purchased or sold) receives a request for the 
Registrant's proxy voting record by phone or email, the Registrant (or 
financial intermediary) must send the information disclosed in the 
Registrant's most recently filed report on Form N-PX [17 CFR 274.129] 
in a human-readable format, within 3 business days of receipt of the 
request, by first-class mail or other means designed to ensure equally 
prompt delivery.
    3. If a Registrant has a website, it must make publicly available 
free of charge the information disclosed in the Registrant's most 
recently filed report on Form N-PX on or through its website as soon as 
reasonably practicable after filing the report with the Commission. The 
information disclosed in the Registrant's most recently filed report on 
Form N-PX must be in a human-readable format and remain available on or 
through the Registrant's website for as long as the Registrant remains 
subject to the requirements of Rule 30b1-4 under the Investment Company 
Act [17 CFR 270.30b1-4]. A Registrant may satisfy the requirement to 
provide this information in a human-readable format by providing a 
direct link to the relevant HTML-rendered Form N-PX report on EDGAR.
* * * * *

Item 24. Financial Statements

* * * * *
    6. Every annual and semiannual report to shareholders required by 
Section 30(e) of the Investment Company Act and Rule 30e-1 thereunder 
shall contain the following information:
* * * * *
    d. A statement that information regarding how the Registrant voted 
proxies relating to portfolio securities during the most recent 12-
month period ended June 30 is available (1) without charge, upon 
request, by calling a specified toll-free telephone number and, if any, 
contacting a specified email address; (2) on or through the 
Registrant's website, if it has one, at a specified internet address; 
and (3) on the Commission's website at http://www.sec.gov.
* * * * *
    8. a. When a Registrant (or financial intermediary through which 
shares of the Registrant may be purchased or sold) receives a request 
for a description of the policies and procedures that the Registrant 
uses to determine how to vote proxies, the Registrant (or financial 
intermediary) must send the information most recently disclosed in 
response to Item 18.16 of this Form or Item 7 of Form N-CSR within 3 
business days of receipt of the request, by first-class mail or other 
means designed to ensure equally prompt delivery.
    b. If a Registrant (or financial intermediary through which shares 
of the Registrant may be purchased or sold) receives a request for the 
Registrant's proxy voting record by phone or email, the Registrant (or 
financial intermediary) must send the information disclosed in the 
Registrant's most recently filed report on Form N-PX in a human-
readable format, within 3 business days of receipt of the request, by 
first-class mail or other means designed to ensure equally prompt 
delivery.
    c. If a Registrant has a website, it must make publicly available 
free of charge the information disclosed in the Registrant's most 
recently filed report on Form N-PX on or through its website as soon as 
reasonably practicable after filing the report with the Commission. The 
information disclosed in the Registrant's most recently filed report on 
Form N-PX must be in a human-readable format and remain available on or 
through the Registrant's website for as long as the Registrant remains 
subject to the requirements of Rule 30b1-4 under the Investment Company 
Act. A Registrant may satisfy the requirement to provide this 
information in a human-readable format by providing a direct link to 
the relevant HTML-rendered Form N-PX report on EDGAR.
* * * * *

0
16. Amend Form N-3 (referenced in Sec. Sec.  239.17a and 274.11b) by 
revising Item 23(f), Item 31.4(d), and Item 31.6 to read as follows:

    Note:  The text of Form N-3 does not, and these amendments will 
not, appear in the Code of Federal Regulations.

Form N-3

* * * * *

Item 23. Management of the Registrant

* * * * *
    (f) Proxy Voting Policies. Unless the Registrant invests 
exclusively in non-voting securities, describe the policies and 
procedures that the Registrant uses to determine how to vote proxies 
relating to portfolio securities, including the procedures that the 
Registrant uses when a vote presents a conflict between the interests 
of investors, on the one hand, and those of the Registrant's investment 
adviser; principal underwriter; or any affiliated person of the 
Registrant, its investment adviser, or its principal underwriter, on 
the other. Include any policies and procedures of the Registrant's 
investment adviser, or any other third party, that the Registrant uses, 
or that are used on the Registrant's behalf, to determine how to vote 
proxies relating to portfolio securities. Also, state that information 
regarding how the Registrant voted proxies relating to portfolio 
securities during the most recent 12-month period ended June 30 is 
available (1) without charge, upon request, by calling a specified 
toll-free telephone number and, if any, contacting a specified email 
address; (2) on or through the Registrant's website, if it has one, at 
a specified internet address; and (3) on the Commission's website at 
http://www.sec.gov.

Instructions

    1. A Registrant may satisfy the requirement to provide a 
description of the policies and procedures that it uses to determine 
how to vote proxies relating to portfolio securities by including a 
copy of the policies and procedures themselves.
    2. If a Registrant (or financial intermediary through which shares 
of the Registrant may be purchased or sold) receives a request for the 
Registrant's proxy voting record by phone or email, the Registrant (or 
financial intermediary) must send the information disclosed in the 
Registrant's most recently filed report on Form N-PX [17 CFR 274.129] 
in a human-readable format, within three business days of receipt of 
the request, by first-class mail or other means designed to ensure 
equally prompt delivery.
    3. If a Registrant has a website, it must make publicly available 
free of charge the information disclosed in the Registrant's most 
recently filed report on Form N-PX on or through its website as soon as 
reasonably practicable after filing the report with the Commission. The 
information disclosed in the

[[Page 78811]]

Registrant's most recently filed report on Form N-PX must be in a 
human-readable format and remain available on or through the 
Registrant's website for as long as the Registrant remains subject to 
the requirements of rule 30b1-4 [17 CFR 270.30b1-4]. A Registrant may 
satisfy the requirement to provide this information in a human-readable 
format by providing a direct link to the relevant HTML-rendered Form N-
PX report on EDGAR.
* * * * *

Item 31. Financial Statements

* * * * *
    4. Every report required by section 30(e) of the 1940 Act and rule 
30e-1 under it [17 CFR 270.30e-1] shall contain the following 
information:
* * * * *
    (d) a statement that information regarding how the Registrant voted 
proxies relating to portfolio securities during the most recent 12-
month period ended June 30 is available (i) without charge, upon 
request, by calling a specified toll-free telephone number and, if any, 
contacting a specified email address; (ii) on or through the 
Registrant's website at a specified internet address, if applicable; 
and (iii) on the Commission's website at http://www.sec.gov;
* * * * *
    6. (a) When a Registrant (or financial intermediary through which 
units of the Registrant may be purchased or sold) receives a request 
for a description of the policies and procedures that the Registrant 
uses to determine how to vote proxies, the Registrant (or financial 
intermediary) must send the information disclosed in response to Item 
23(f) of this Form, within three business days of receipt of the 
request, by first-class mail or other means designed to ensure equally 
prompt delivery.
    (b) If a Registrant (or financial intermediary through which units 
of the Registrant may be purchased or sold) receives a request for the 
Registrant's proxy voting record by phone or email, the Registrant (or 
financial intermediary) must send the information disclosed in the 
Registrant's most recently filed report on Form N-PX [17 CFR 274.129] 
in a human readable format, within three business days of receipt of 
the request, by first-class mail or other means designed to ensure 
equally prompt delivery.
    (c) If a Registrant has a website, it must make publicly available 
free of charge the information disclosed in the Registrant's most 
recently filed report on Form N-PX on or through its website as soon as 
reasonably practicable after filing the report with the Commission. The 
information disclosed in the Registrant's most recently filed report on 
Form N-PX must be in a human-readable format and remain available on or 
through the Registrant's website for as long as the Registrant remains 
subject to the requirements of rule 30b1-4 under the Investment Company 
Act [17 CFR 270.30b1-4]. A Registrant may satisfy the requirement to 
provide this information in a human-readable format by providing a 
direct link to the relevant HTML-rendered Form N-PX report on EDGAR.
* * * * *

0
17. Amend Sec.  274.129 by revising the heading to read as follows:


Sec.  274.129   Form N-PX, annual report of proxy voting record.

* * * * *

0
18. Form N-PX (referenced in Sec. Sec.  249.326 and 274.129) is 
revised.

    Note: Form N-PX is attached as appendix A to this document. Form 
N-PX will not appear in the Code of Federal Regulations.


    By the Commission.

    Dated: November 2, 2022.
Vanessa A. Countryman,
Secretary.

Appendix A--Form N-PX

United States

Securities and Exchange Commission

Washington, DC 20549

Form N-PX

Annual Report of Proxy Voting Record

General Instructions

A. Rule as to Use of Form N-PX

    Form N-PX is to be used by a registered management investment 
company, other than a small business investment company registered 
on Form N-5 (17 CFR 239.24 and 274.5), to file the registered 
management investment company's complete proxy voting record 
pursuant to Section 30 of the Investment Company Act of 1940 
(``Investment Company Act'') and Rule 30b1-4 thereunder (17 CFR 
270.30b1-4). Form N-PX also is to be used by a person that is 
required to file reports under Rule 13f-1 (``Institutional 
Manager''), to file the Institutional Manager's proxy voting record 
regarding votes pursuant to Sections 14A(a) and (b) of the 
Securities Exchange Act of 1934 (``Exchange Act'') on certain 
executive compensation matters, pursuant to Section 14A(d) of the 
Exchange Act and Rule 14Ad-1 thereunder (17 CFR 240.14Ad-1). Form N-
PX is to be filed not later than August 31 of each year for the most 
recent 12-month period ended June 30, except in the case of 
Institutional Managers that make initial or final filings on Form 
13F during the relevant 12-month period as described in General 
Instruction F.

B. Application of General Rules and Regulations

    The General Rules and Regulations under the Investment Company 
Act and the Exchange Act contain certain general requirements that 
are applicable to reporting on any form under those Acts. These 
general requirements should be read and observed carefully in the 
preparation and filing of reports on this form, except that any 
provision in the form or in these instructions is controlling.

C. Joint Reporting Rules

    1. If two or more Institutional Managers, each of which is 
required by Rule 14Ad-1 to file a report on Form N-PX for the 
reporting period, exercised voting power over the same securities on 
a vote pursuant to Section 14A(a) or (b) of the Exchange Act, only 
one such Institutional Manager must include the information 
regarding that vote in its report on Form N-PX.
    2. Two or more Institutional Managers that are affiliated 
persons, as defined in Section 2(a)(3) of the Investment Company 
Act, may file a joint report on a single Form N-PX notwithstanding 
that such Institutional Managers do not exercise voting power over 
the same securities.
    3. An Institutional Manager is not required to report proxy 
votes that are reported on a Form N-PX report that is filed by a 
Fund.
    4. An Institutional Manager that exercised voting power over any 
security with respect to proxy votes that are reported by another 
Institutional Manager or Managers pursuant to General Instruction 
C.1 or C.2, or are reported on a Form N-PX report filed by a Fund, 
must identify each Institutional Manager and Fund reporting on its 
behalf in the manner described in Special Instruction B.2.d. and 
B.2.e.
    5. An Institutional Manager reporting proxy votes on behalf of 
another Institutional Manager pursuant to General Instruction C.1 or 
C.2 must identify any other Institutional Managers on whose behalf 
the filing is made in the manner described in Special Instruction 
C.2.
    6. A Fund reporting proxy votes that would otherwise be required 
to be reported by an Institutional Manager must identify any 
Institutional Managers on whose behalf the filing is made in the 
manner described in Special Instruction C.2.

D. Signature and Filing of Report.

    1. a. For reports filed by a Fund, the report must be signed on 
behalf of the Fund by its principal executive officer or officers. 
For reports filed by Institutional Managers, the report must be 
signed on behalf of the Institutional Manager by an authorized 
person. Attention is directed to Rule 12b-11 under the Exchange Act 
and Rule 8b-11 under the Investment Company Act concerning 
signatures.
    b. The name and title of each person who signs the report shall 
be typed or printed beneath his or her signature.
    2. A reporting person must file reports on Form N-PX 
electronically using the Commission's Electronic Data Gathering, 
Analysis, and Retrieval (``EDGAR'') system in accordance with 
Regulation S-T. Consult the

[[Page 78812]]

EDGAR Filer Manual and Appendices for EDGAR filing instructions.

E. Definitions.

    As used in this Form N-PX, the terms set out below have the 
following meanings:
    ``Fund'' means a registered management investment company (other 
than a small business investment company registered on Form N-5 (17 
CFR 239.24 and 274.5)) or a separate Series of the registered 
management investment company.
    ``Institutional Manager'' means a person that is required to 
file reports under Rule 13f-1 under the Exchange Act.
    ``LEI'' means, with respect to any company, the ``legal entity 
identifier'' as assigned by a utility endorsed by the Global LEI 
Regulatory Oversight Committee or accredited by the Global LEI 
Foundation. ``Reporting Person'' means the Institutional Manager or 
Fund filing this report or on whose behalf the report is filed.
    ``Series'' means shares issued by a registered management 
investment company that represent undivided interests in a portfolio 
of investments and that are preferred over all other series of 
shares for assets specifically allocated to that series in 
accordance with Rule 18f-2(a) under the Investment Company Act [17 
CFR 270.18f-2(a)].

F. Transition Rules for Institutional Managers

    1. An Institutional Manager is not required to file a report on 
Form N-PX for the 12-month period ending June 30 of the calendar 
year in which the manager's initial filing on Form 13F is due 
pursuant to Rule 13f-1 under the Exchange Act. For purposes of this 
paragraph, an ``initial filing'' on Form 13F means any quarterly 
filing on Form 13F if no filing on Form 13F was required for the 
immediately preceding calendar quarter.
    2. An Institutional Manager is not required to file a report on 
Form N-PX with respect to any shareholder vote at a meeting that 
occurs after September 30 of the calendar year in which the 
manager's final filing on Form 13F is due pursuant to Rule 13f-1 
under the Exchange Act. An Institutional Manager is required to file 
a Form N-PX for the period July 1 through September 30 of the 
calendar year in which the manager's final filing on Form 13F is due 
pursuant to Rule 13f-1 under the Exchange Act; this filing is 
required to be made not later than March 1 of the immediately 
following calendar year. For purposes of this paragraph, a ``final 
filing'' on Form 13F means any quarterly filing on Form 13F if no 
filing on Form 13F is required for the immediately subsequent 
calendar quarter.

Special Instructions

A. Organization of Form N-PX

    1. This form consists of three parts: the Form N-PX Cover Page 
(``Cover Page''), the Form N-PX Summary Page (``Summary Page''), and 
the proxy voting information required by the form (``Proxy Voting 
Information'').
    2. Present the Cover Page and the Summary Page information in 
the format and order provided in the form. Do not include any 
additional information on the Summary Page.

B. Cover Page

    1. Amendments to a Form N-PX report must either restate the Form 
N-PX report in its entirety or include only proxy voting information 
that is being reported in addition to the information already 
reported in a current public Form N-PX report for the same period. 
If the Form N-PX report is filed as an amendment, then the reporting 
person must check the amendment box on the Cover Page, enter the 
amendment number, and check the appropriate box to indicate whether 
the amendment (a) is a restatement or (b) adds new Proxy Voting 
Information. Each amendment must include a complete Cover Page and, 
if applicable, a Summary Page.
    2. Designate the Report Type for the Form N-PX report by 
checking the appropriate box in the Report Type section of the Cover 
Page, and include, where applicable, the List of Other Persons 
Reporting for this Manager (on the Cover Page), the Summary Page, 
and the Proxy Voting Information, as follows:
    a. For a report by a Fund, if the Fund held one or more 
securities it was entitled to vote, check the box for Report Type 
``Fund Voting Report,'' omit from the Cover Page the List of Other 
Persons Reporting for this Manager, and include both the Summary 
Page and the Proxy Voting Information.
    b. For a report by a Fund, if the Fund did not hold any 
securities it was entitled to vote and therefore does not have any 
proxy votes to report, check the box for Report Type ``Fund Notice 
Report'' and file the Cover Page, required signature, and, if 
applicable, the Summary Page information about the series.
    c. For a report by an Institutional Manager that includes all 
proxy votes required to be reported by the Institutional Manager, 
check the box for Report Type ``Institutional Manager Voting 
Report,'' omit from the Cover Page the List of Other Persons 
Reporting for this Manager, and include both the Summary Page and 
the Proxy Voting Information.
    d. For a report by an Institutional Manager, if no proxy votes 
are reported by the Institutional Manager in the filing, check the 
box for Report Type ``Institutional Manager Notice Report,'' on the 
Cover Page and complete the notice report filing explanation 
section. If all the votes required to be reported by the 
Institutional Manager are reported by another Institutional Manager 
or by one or more Funds, check the explanatory box indicating ``all 
proxy votes are reported by other reporting persons,'' include the 
List of Other Persons Reporting for this Manager, and file the Cover 
Page and required signature only. All other reporting persons may 
omit this section. If the reporting manager did not exercise voting 
power over securities involving any reportable voting matter, check 
the explanatory box indicating ``the reporting person did not 
exercise voting power for any reportable voting matter and therefore 
does not have any proxy votes to report for the reporting period'' 
and file the Cover Page and required signature only. If the 
reporting manager has a policy not to vote on any proxy matters, 
clearly disclosed the policy, and did not vote any proxy matters 
during the reporting period, check the explanatory box indicating 
``the reporting person has a clearly disclosed policy of not voting, 
and did not vote, on any proxy voting matters'' and file the Cover 
Page and required signature only.
    e. For a report by an Institutional Manager, if only part of the 
proxy votes required to be reported by the Institutional Manager are 
reported by another Institutional Manager or Managers or one or more 
Funds, check the box for Report Type ``Institutional Manager 
Combination Report,'' include on the Cover Page the List of Other 
Persons Reporting for this Manager, and include both the Summary 
Page and the Proxy Voting Information.
    3. If the Institutional Manager has a number assigned by the 
Financial Industry Regulatory Authority's Central Registration 
Depository system or by the Investment Adviser Registration 
Depository system (``CRD number''), provide the Manager's CRD 
number. If the Institutional Manager has a file number (e.g., 801-, 
8-, 866-, 802-) assigned by the Commission (``SEC file number''), 
provide the Manager's SEC file number. If the Reporting Person has a 
Legal Entity Identifier (``LEI''), provide the Reporting Person's 
LEI.
    4. The Cover Page may include information in addition to the 
required information, so long as the additional information does 
not, either by its nature, quantity, or manner of presentation, 
impede the understanding or presentation of the required 
information. Place all additional information at the end of the 
Cover Page, except as permitted by paragraph (o) of Item 1.

C. Summary Page

    1. Include on the Summary Page the total number of included 
Institutional Managers with votes reported in this Form N-PX report 
pursuant to General Instruction C, not counting the reporting person 
filing this report. See Special Instruction C.2. If none, enter the 
number zero (``0'').
    2. Include on the Summary Page the list of included 
Institutional Managers with votes reported in this Form N-PX report 
pursuant to General Instruction C. Use the title, column headings, 
and format provided.
    a. If this Form N-PX report does not report the proxy votes of 
any Institutional Manager other than the reporting person, enter the 
word ``NONE'' under the title and omit the column headings and list 
entries.
    b. If this Form N-PX report reports the proxy votes of one or 
more Institutional Managers other than the reporting person, enter 
in the list of included Institutional Managers all such 
Institutional Managers together with their respective Form 13F file 
numbers, if known, and, if they exist, any of the respective CRD 
Numbers, LEIs, and SEC File Numbers assigned to each manager. (The 
Form 13F file numbers are assigned to Institutional Managers when 
they file their first Form 13F). Assign a number to each 
Institutional Manager in the list of included Institutional 
Managers, and present the list in sequential order. The numbers need 
not be consecutive. Do not include the reporting person filing this 
report.
    3. For reports filed by a Fund, include on the Summary Page: the 
total number of Series of the Fund reported in this Form N-PX, if 
any; the name of each Series included; each

[[Page 78813]]

Series identification number; and the LEI for any Series of the 
Fund. If this Form N-PX report does not report the proxy votes of 
any Series, enter the word ``NONE'' under the title and omit the 
column headings and list entries.

D. Proxy Voting Information

    1. Disclose the information required or permitted by Item 1 in 
the order presented in paragraphs (a) through (o) of Item 1.
    2. A reporting person must provide the Council on Uniform 
Securities Identification Procedures (``CUSIP'') number for the 
security pursuant to Item 1(b), unless the CUSIP is not available 
through reasonably practicable means, e.g., in the case of certain 
securities of foreign issuers. If the CUSIP is not available through 
reasonably practicable means, the reporting person must provide the 
International Securities Identification Number (``ISIN'') pursuant 
to Item 1(c), unless the ISIN is not available through reasonably 
practicable means. A reporting person may choose to report the 
global share class Financial Instrument Global Identifier (``FIGI'') 
for the security pursuant to Item 1(d).
    3. Item 1(f) requires an identification of the matter voted on 
for all matters. If a form of proxy in connection with a matter is 
subject to rule 14a-4 under the Exchange Act [17 CFR 240.14a-4], the 
description in Item 1(f) must: (i) use the same language that is on 
the form of proxy to identify the matter; (ii) identify all matters 
in the same order as on the form of proxy; and (iii) for election of 
directors, identify each director separately in the same order as on 
the form of proxy, even if the election of directors is presented as 
a single matter on the form of proxy. In all other cases, provide a 
brief identification of the matters voted on and limit use of 
abbreviations, which should not be used other than for commonly 
understood terms or for terms that the issuer abbreviated in its 
description of the matter.
    4. Item 1(g) requires the reporting person to categorize each 
matter from a list of categories that may apply to such matter. In 
responding to Item 1(g), a reporting person must choose all 
categories applicable to such matter.
    5. In responding to paragraph (i) of Item 1, a reporting person 
may use the number of shares voted as reflected in its records at 
the time of filing a report on Form N-PX. If the reporting person 
has not received confirmation of the actual number of votes cast 
prior to filing a report on Form N-PX, the numbers reported may 
reflect the number of shares instructed to be cast. A reporting 
person is not required to amend a previously filed Form N-PX report 
if the reporting person subsequently receives confirmation of the 
actual number of votes cast.
    6. In responding to paragraphs (i) and (j) of Item 1:
    a. An Institutional Manager must report the number of shares 
that the Institutional Manager is reporting on behalf of another 
Institutional Manager pursuant to General Instruction C.1 or C.2 
separately from the number of shares that the Institutional Manager 
is reporting only on its own behalf. An Institutional Manager also 
must separately report shares when the groups of Institutional 
Managers on whose behalf the shares are reported are different. For 
example, if the reporting Institutional Manager is reporting on 
behalf of Manager A with respect to 10,000 shares and on behalf of 
Managers A and B with respect to 50,000 shares, then the groups of 
10,000 and 50,000 shares must be separately reported.
    b. A Fund must separately report shares that are reported on 
behalf of different Institutional Managers or groups of 
Institutional Managers pursuant to General Instruction C.3.
    7. For purposes of paragraph (j) of Item 1, a reporting person 
is considered to have loaned securities if it loaned the securities 
directly or loaned the securities indirectly through a lending 
agent.
    8. If management did not make a recommendation on how to vote on 
a particular matter, a reporting person should respond ``none'' to 
paragraph (l) of Item 1 for that matter.
    9. In the case of a reporting person that is a Fund that offers 
multiple Series, provide the information required by Item 1 
separately by Series (for example, provide Series A's full proxy 
voting record, followed by Series B's full proxy voting record).
    10. In response to paragraph (o), a reporting person may provide 
additional information about the matter or how it voted, provided 
the information does not, either by its nature, quantity, or manner 
of presentation, impede the understanding or presentation of the 
required information. The disclosure permitted by paragraph (o) is 
optional. A reporting person is not required to respond to paragraph 
(o) for any vote, and if a reporting person does provide additional 
information for one or more votes, it is not required to provide 
this information for all votes.

Instructions for Confidential Treatment Requests

    1. An Institutional Manager should make requests for 
confidential treatment of information reported on this form in 
accordance with rule 24b-2(i) under the Exchange Act [17 CFR 
240.24b-2(i)].
    2. Paragraph (i) of rule 24b-2 requires a person filing 
confidential information with the Commission to indicate at the 
appropriate place in the public filing that the confidential portion 
has been so omitted and filed separately with the Commission. An 
Institutional Manager must comply with this provision by including 
on the Cover Page a statement that confidential information has been 
omitted from the public Form N-PX report and filed separately with 
the Commission.
    3. An Institutional Manager must file electronically, in 
accordance with rule 101(d) of Regulation S-T [17 CFR 232.101(d)], 
all requests for and information subject to the request for 
confidential treatment.
    4. An Institutional Manager must file all requests for and 
information subject to the request for confidential treatment in 
accordance with the instructions for filing confidential treatment 
requests for information filed on Form 13F. In making a 
determination as to requests for confidential treatment of 
information filed on Form N-PX, the Commission will apply the same 
standards as set forth in Section 13(f)(4) and (5) of the Exchange 
Act [15 U.S.C. 78m(f)(4) and (5)] and rule 24b-2. If a request for 
confidential treatment of information filed on Form N-PX relates to 
a request for confidential treatment of information included in an 
Institutional Manager's filing on Form 13F, the Institutional 
Manager should so state and identify the related request. In such 
cases, the Institutional Manager need not repeat the analysis set 
forth in the request for confidential treatment in connection with 
the Form 13F filing. The Institutional Manager's request, however, 
must explain whether and, if so, how the Form N-PX and Form 13F 
confidential treatment requests are related and should identify if 
any of the analysis in its request for confidential treatment on 
Form 13F does not apply, or applies differently, to its report on 
Form N-PX.
    5. An Institutional Manager requesting confidential treatment 
must provide enough factual support for its request to enable the 
Commission to make an informed judgment as to the merits of the 
request, including a demonstration that the information is 
customarily and actually kept private by the Institutional Manager 
and that failure to grant the request for confidential treatment 
would be likely to cause harm to the Institutional Manager.
    6. State, and provide justification for, the period of time for 
which confidential treatment of the proxy voting information is 
requested. The time period specified may not exceed one (1) year 
from the date that the Form N-PX report is required to be filed with 
the Commission.
    7. At the expiration of the period for which confidential 
treatment has been granted (the ``Expiration Date'') and unless a de 
novo request for confidential treatment of the information that 
meets the requirements of Rule 24b-2 and these Confidential 
Treatment Instructions is filed with the Commission at least 
fourteen (14) days in advance of the Expiration Date, the 
Institutional Manager will make such proxy voting information public 
as set forth in Confidential Treatment Instruction 8.
    8. Unless a hardship exemption is available, the Institutional 
Manager must submit electronically within six (6) business days of 
the expiration of confidential treatment or notification of denial, 
as applicable, a Form N-PX amendment to its previously filed public 
Form N-PX report that includes the proxy voting information as to 
which the Commission denied confidential treatment or for which 
confidential treatment has expired. Such Form N-PX amendment must be 
timely filed: (i) upon the denial by the Commission of a request for 
confidential treatment; (ii) upon expiration of the time period for 
which an Institutional Manager has requested confidential treatment; 
or (iii) upon the expiration of the confidential treatment 
previously granted for a filing. If an Institutional Manager files 
an amendment, the amendment must not be a restatement; the 
Institutional Manager must designate it as an amendment that adds 
new proxy voting

[[Page 78814]]

information. The Institutional Manager must include at the top of 
the Form N-PX Cover Page the following legend to correctly designate 
the type of filing being made:
    THIS FILING LISTS PROXY VOTE INFORMATION REPORTED ON THE FORM N-
PX FILED ON (DATE) PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT 
AND FOR WHICH (THAT REQUEST WAS DENIED/CONFIDENTIAL TREATMENT 
EXPIRED) ON (DATE).

Paperwork Reduction Act Information

    Form N-PX is to be used by a Fund to file reports with the 
Commission pursuant to Section 30 of the Investment Company Act and 
Rule 30b1-4 thereunder. Form N-PX also is to be used by an 
Institutional Manager to file reports with the Commission as 
required by Section 14A(d) of the Exchange Act and Rule 14Ad-1 
thereunder. Form N-PX is to be filed not later than August 31 of 
each year, containing the reporting person's proxy voting record for 
the most recent 12-month period ended June 30. The Commission may 
use the information provided on Form N-PX in its regulatory, 
disclosure review, inspection, and policymaking roles.
    Funds and Institutional Managers are required to disclose the 
information specified by Form N-PX, and the Commission will make 
this information public. Funds and Institutional Managers are not 
required to respond to the collection of information contained in 
Form N-PX unless the Form displays a currently valid Office of 
Management and Budget (``OMB'') control number. Please direct 
comments concerning the accuracy of the information collection 
burden estimate and any suggestions for reducing the burden to the 
Secretary, Securities and Exchange Commission, 100 F Street NE, 
Washington, DC 20549-1090. The OMB has reviewed this collection of 
information under the clearance requirements of 44 U.S.C. 3507.

[[Page 78815]]

[GRAPHIC] [TIFF OMITTED] TR22DE22.000


[[Page 78816]]


[GRAPHIC] [TIFF OMITTED] TR22DE22.001


[[Page 78817]]


[GRAPHIC] [TIFF OMITTED] TR22DE22.002

FORM N-PX

Item 1. Proxy Voting Record

    If the reporting person is a Fund, disclose the following 
information for each matter relating to a portfolio security 
considered at any shareholder meeting held during the period covered 
by the report and with respect to which the Fund was entitled to 
vote, including securities on loan for purposes of this form. If the 
reporting person is an Institutional Manager, disclose the following 
information for each shareholder vote pursuant to Sections 14A(a) 
and (b) of the Exchange Act over which the Institutional Manager 
exercised voting power, as defined in Rule 14Ad-1(d) under the 
Exchange Act [17 CFR 240.14Ad-1].
    (a) The name of the issuer of the security;
    (b) The Council on Uniform Securities Identification Procedures 
(``CUSIP'') number for the security;
    (c) The International Securities Identification Number 
(``ISIN'') for the security;
    (d) The global share class Financial Instrument Global 
Identifier (``FIGI'') for the security (optional);
    (e) The shareholder meeting date;
    (f) An identification of the matter voted on;
    (g) All categories applicable to the matter voted on from the 
following list of categories:
    (A) Director elections;
    (B) Section 14A say-on-pay votes (examples: section 14A 
executive compensation, section 14A executive compensation vote 
frequency, section 14A extraordinary transaction executive 
compensation);
    (C) Audit-related (examples: auditor ratification, auditor 
rotation);

[[Page 78818]]

    (D) Investment company matters (examples: new or changed 
investment management agreement, assignment of investment management 
agreement, business development company approval of restricted 
securities or asset coverage ratio change, closed-end investment 
company issuance of shares below net asset value);
    (E) Shareholder rights and defenses (examples: adoption or 
modification of a shareholder rights plan, control share acquisition 
provisions, fair price provisions, board classification, cumulative 
voting);
    (F) Extraordinary transactions (examples: merger, asset sale, 
liquidation, buyout, joint venture, going private, spinoff, 
delisting);
    (G) Capital structure (examples: security issuance, stock split, 
reverse stock split, dividend, buyback, tracking stock, adjustment 
to par value, authorization of additional stock);
    (H) Compensation (examples: board compensation, executive 
compensation (other than Section 14A say-on-pay), board or executive 
anti-hedging, board or executive anti-pledging, compensation 
clawback, 10b5-1 plans);
    (I) Corporate governance (examples: term limits, board committee 
issues, size of board, articles of incorporation or bylaws, codes of 
ethics, approval to adjourn, acceptance of minutes, proxy access);
    (J) Environment or climate (examples: greenhouse gas (GHG) 
emissions, transition planning or reporting, biodiversity or 
ecosystem risk, chemical footprint, renewable energy or energy 
efficiency, water issues, waste or pollution, deforestation or land 
use, say-on-climate, environmental justice);
    (K) Human rights or human capital/workforce (examples: 
workforce-related mandatory arbitration, supply chain exposure to 
human rights risks, outsourcing or offshoring, workplace sexual 
harassment);
    (L) Diversity, equity, and inclusion (examples: board diversity, 
pay gap);
    (M) Other social issues (examples: lobbying, political or 
charitable activities, data privacy, responsible tax policies, 
consumer protection); or
    (N) Other (along with a brief description).
    (h) For reports filed by Funds, disclose whether the matter was 
proposed by the issuer or by a security holder;
    (i) The number of shares that were voted, with the number zero 
(``0'') entered if no shares were voted;
    (j) The number of shares that the reporting person loaned and 
did not recall;
    (k) How the shares in paragraph (i) were voted (e.g., for or 
against proposal, or abstain; for or withhold regarding election of 
directors) and, if the votes were cast in multiple manners (e.g., 
for and against), the number of shares voted in each manner;
    (l) Whether the votes disclosed in paragraph (k) represented 
votes for or against management's recommendation;
    (m) If applicable, identify each Institutional Manager on whose 
behalf this Form N-PX report is being filed (other than the 
reporting person filing the report) that exercised voting power over 
the security by entering the number assigned to the Institutional 
Manager on the Summary Page;
    (n) If applicable, identify the Series that was eligible to vote 
the security by providing the Series identification number listed on 
the Summary Page; and
    (o) Any other information the reporting person would like to 
provide about the matter or how it voted.

Signatures

[See General Instruction D]

    Pursuant to the requirements of the [Securities Exchange Act of 
1934 (for Institutional Managers)] [Investment Company Act of 1940 
(for Funds)], the reporting person has duly caused this report to be 
signed on its behalf by the undersigned, thereunto duly authorized.

(Reporting Person)-----------------------------------------------------
By (Signature and Title)-----------------------------------------------
Date-------------------------------------------------------------------

    Print the name and title of each signing officer under his or 
her signature.

[FR Doc. 2022-24292 Filed 12-21-22; 8:45 am]