ICI Submits Comment Letter to SEC Recommending Ways to Improve the Proxy Voting System

July 23, 2019

In connection with the Proxy Roundtable hosted by the SEC in November 2018, on June 11, 2019, the Investment Company Institute (ICI) submitted additional recommendations for improving the proxy system for funds and shareholders. In its comment letter, the ICI described aspects of the proxy process that have proved to be costly and burdensome, highlighting differences between funds and operating companies. The ICI then recommended ways to better align the benefits and costs of proxy requirements and facilitate proxy solicitations. For example, the ICI recommended, among other things, that the SEC (1) rationalize certain shareholder approval requirements in the Investment Company Act of 1940 (ICA) to better reflect modern realities of the securities markets and funds’ relationships with their shareholders (e.g., a specific recommendation to replace shareholder approval with a disclosure-oriented approach for changes to certain fundamental policies); (2) create an additional way for funds to achieve a “majority vote” for applicable ICA items where an overwhelming majority of voting shareholders support an item; and (3) permit funds to deliver proxy materials to, and communicate with, their beneficial shareholders directly in connection with proxy proposals.

Click here to access the ICI’s comment letter.


Compliance, Investment Advisers, Investment Companies, Mutual Funds, Regulatory