,,ii #aah? ,,congress #a/ ,session ,s4 #agii ,,9 ,,! ,,s5ate ,,( ,,! ,,unit$ ,,/ates ,june #a1 #bjbc,mr4 ,hag]ty introduc$ ! foll[+ bill2 :i* 0 read twice & ref]r$ to ! ,committee on ,bank+1 ,h\s+1 & ,urban ,affairs ,a ,,bill ,to am5d ! ,securities ,ex*ange ,act ( #aicd to require ! regi/ration ( proxy advisory firms1 & = o!r purposes4 #a4 ,%ort title ,?is ,act may be cit$ z ! ,putt+ ,inve/ors ,fir/ ,act ( #bjbc4 #b4 ,def9itions 7a7 ,9 g5]al ,9 ?is ,act3 7#a7 ,commission ,! t]m ,commission means ! ,securities & ,ex*ange ,commission4 7#b7 ,proxy advisory firm ,! t]m proxy advisory firm has ! mean+ giv5 ! t]m 9 p>agraph 7#ha7 ( section #c7;a7 ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #gh;c7a771 z add$ by ?is ,act4 7#c7 ,/ate ,! t]m ,/ate has ! mean+ giv5 ! t]m 9 section #c7;a7 ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #gh;c7a774 7b7 ,securities ,ex*ange ,act ( #aicd def9itions ,section #c7;a7 ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #gh;c7a77 is am5d$ by add+ at ! end ! foll[+3 7#ha7 ,proxy advisory firm ,! t]m proxy advisory firm-- 7,a7 means any p]son :o is prim>ily engag$ 9 ! bus9ess ( provid+ proxy vot+ advice1 rese>*1 analysis1 rat+s1 or recomm5dations to cli5ts1 :i* conduct con/itutes a solicitation )9 ! mean+ ( section #ad2 & 7,b7 does n include any p]son t is exempt "u law or regulation f ! requirem5ts o!rwise applicable to p]sons engag$ 9 su* a solicitation4 7#hb7 ,p]son associat$ ) a proxy advisory firm ,! t]m p]son associat$ ) a proxy advisory firm-- 7,a7 means-- 7i7 any p>tn]1 (fic]1 or director ( a proxy advisory firm 7or any p]son occupy+ a simil> /atus or p]=m+ simil> functions72 7ii7 any p]son directly or indirectly controll+1 controll$ by1 or "u common control ) a proxy advisory firm2 7iii7 any employee ( a proxy advisory firm2 or 7iv7 any p]son ! ,commission det]m9es by rule is controll$ by a proxy advisory firm2 & 7,b7 does n include any p]son t p]=ms cl]ical or m9i/]ial functions ) respect to a proxy advisory firm4 4 #c4 ,regi/ration ( proxy advisory firms 7a7 ,am5dm5t ,! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 is am5d$ by ins]t+ aft] section #ae;,g ! foll[+ new section3 #ae;,h4 ,regi/ration ( proxy advisory firms 7a7 ,conduct prohibit$ ,x %all be unlawful = a proxy advisory firm to make use ( ! mails or any means or in/rum5tality ( int]/ate comm]ce to provide proxy vot+ advice1 rese>*1 analysis1 rat+s or recomm5dations to any cli5t1 unless su* proxy advisory firm is regi/]$ "u ?is section4 7b7 ,regi/ration proc$ures 7#a7 ,application = regi/ration 7,a7 ,9 g5]al ,a proxy advisory firm %all file ) ! ,commission an application = regi/ration1 9 su* =m z ! ,commission %all require1 by rule or regulation1 & conta9+ ! in=mation describ$ 9 subp>agraph 7,b74 7,b7 ,requir$ in=mation ,an application = regi/ration "u ?is section %all conta9 in=mation reg>d+-- 7i7 a c]tification t ! applicant is able to consi/5tly provide proxy advice bas$ on accurate in=mation2 7ii7 ! proc$ures & me?odologies t ! applicant uses 9 develop+ proxy vot+ recomm5dations2 7iii7 ! organizational /ructure ( ! applicant2 7iv7 :e!r or n ! applicant has 9 effect a code ( e?ics1 & if n1 ! reasons !re=2 7v7 any pot5tial or actual conflict ( int]e/ relat+ to ! provision ( proxy advisory s]vices1 includ+ ^? aris+ out ( or result+ f ! own]%ip /ructure ( ! applicant or ! provision ( o!r s]vices by ! applicant or any p]son associat$ ) ! applicant2 7vi7 ! policies & proc$ures 9 place to publicly disclose & manage conflicts ( int]e/ "u subsection 7f72 7vii7 in=mation relat$ to ! pr(essional & academic qualifications ( /aff task$ ) provid+ proxy advisory s]vices2 & 7viii7 any o!r in=mation & docum5ts conc]n+ ! applicant & any p]son associat$ ) su* applicant z ! ,commission1 by rule1 may prescribe z necess>y or appropriate 9 ! public int]e/ or = ! protection ( inve/ors4 7#b7 ,review ( application 7,a7 ,initial det]m9ation ,n lat] ?an #ij days aft] ! date on :i* ! application = regi/ration is fil$ ) ! ,commission "u p>agraph 7#a7 7or )9 su* long] p]iod z to :i* ! applicant cons5ts7 ! ,commission %all-- 7i7 by ord]1 grant regi/ration2 or 7ii7 in/itute proce$+s to det]m9e :e!r regi/ration %\ld be d5i$4 7,b7 ,conduct ( proce$+s 7i7 ,cont5t ,proce$+s ref]r$ to 9 subp>agraph 7,a77ii7 %all-- 7,i7 include notice ( ! gr\nds = d5ial "u consid]ation & an opportunity = he>+2 & 7,,ii7 be conclud$ n lat] ?an #abj days aft] ! date on :i* ! application = regi/ration is fil$ ) ! ,commission "u p>agraph 7#a74 7ii7 ,det]m9ation ,at ! conclusion ( su* proce$+s1 ! ,commission1 by ord]1 %all grant or d5y su* application = regi/ration4 7iii7 ,ext5sion au?oriz$ ,! ,commission may ext5d ! "t = conclusion ( su* proce$+s = n long] ?an #ij days1 if ! ,commission f9ds good cause = su* ext5sion & publi%es its reasons = s f9d+1 or = su* long] p]iod z to :i* ! applicant cons5ts4 7,c7 ,gr\nds = decision ,! ,commission %all grant regi/ration "u ?is subsection-- 7i7 if ! ,commission f9ds t ! requirem5ts ( ?is section are satisfi$2 & 7ii7 unless ! ,commission f9ds 79 :i* case ! ,commission %all d5y su* regi/ration7 t-- 7,i7 ! applicant has fail$ to c]tify to ! ,commission's satisfaction t x is able to consi/5tly provide proxy advice bas$ on accurate in=mation & to mat]ially comply ) ! proc$ures & me?odologies disclos$ "u p>agraph 7#a77;,b7 & ) subsections 7f7 & 7g72 or 7,,ii7 if ! applicant 7 s regi/]$1 its regi/ration w\ld be subject to susp5sion or revocation "u subsection 7d74 7#c7 ,public availability ( in=mation ,subject to section #bd1 ! ,commission %all make ! in=mation & docum5ts submitt$ to ! ,commission by a proxy advisory firm 9 its complet$ application = regi/ration1 or 9 any am5dm5t submitt$ "u p>agraph 7#a7 or 7#b7 ( subsection 7c71 publicly available on ! ,commission's website1 or ?r\gh ano!r comp>able1 readily accessible means4 7c7 ,update ( regi/ration 7#a7 ,update ,ea* regi/]$ proxy advisory firm %all promptly am5d & update its application = regi/ration "u ?is section if any in=mation or docum5t provid$ !re9 becomes mat]ially inaccurate1 except t a regi/]$ proxy advisory firm is n requir$ to am5d ! in=mation requir$ to be fil$ "u subsection 7b77#a77;,b77i7 by fil+ in=mation "u ?is p>agraph1 b %all am5d su* in=mation 9 ! annual submission ( ! organization "u p>agraph 7#b7 ( ?is subsection4 7#b7 ,c]tification ,n lat] ?an #ij cal5d> days aft] ! end ( ea* cal5d> ye>1 ea* regi/]$ proxy advisory firm %all file ) ! ,commission an am5dm5t to its regi/ration1 9 su* =m z ! ,commission1 by rule1 may prescribe z necess>y or appropriate 9 ! public int]e/ or = ! protection ( inve/ors-- 7,a7 c]tify+ t ! in=mation & docum5ts 9 ! application = regi/ration ( su* regi/]$ proxy advisory firm cont9ue to be accurate 9 all mat]ial respects2 & 7,b7 li/+ any mat]ial *ange t occurr$ to su* in=mation or docum5ts dur+ ! previ\s cal5d> ye>4 7d7 ,c5sure1 d5ial1 or susp5sion ( regi/ration2 notice & he>+ ,! ,commission1 by ord]1 %all c5sure1 place limitations on ! activities1 functions1 or op]ations (1 susp5d = a p]iod n exce$+ #ab mon?s1 or revoke ! regi/ration ( any regi/]$ proxy advisory firm if ! ,commission f9ds1 on ! record aft] notice & opportunity = he>+1 t su* c5sure1 plac+ ( limitations1 susp5sion1 or revocation is necess>y = ! protection ( inve/ors & 9 ! public int]e/ & t su* regi/]$ proxy advisory firm1 or any p]son associat$ ) su* an organization1 :e!r prior to or subsequ5t to becom+ s associat$-- 7#a7 has committ$ or omitt$ any act1 or is subject to an ord] or f9d+1 enum]at$ 9 subp>agraph 7,a71 7,d71 7,e71 7,h71 or 7,g7 ( section #ae7;b77#d71 has be5 convict$ ( any (f5se specifi$ 9 section #ae7;b77#d77;,b71 or is enjo9$ f any action1 conduct1 or practice specifi$ 9 subp>agraph 7,c7 ( section #ae7;b77#d71 dur+ ! #aj-ye> p]iod prec$+ ! date ( comm5cem5t ( ! proce$+s "u ?is subsection1 or at any "t !reaft]2 7#b7 has be5 convict$ dur+ ! #aj-ye> p]iod prec$+ ! date on :i* an application = regi/ration is fil$ ) ! ,commission "u ?is section1 or at any "t !reaft]1 (-- 7,a7 any crime t is puni%able by imprisonm5t = #a or m ye>s1 & t is n describ$ 9 section #ae7;b77#d77;,b72 or 7,b7 a sub/antially equival5t crime by a =eign c\rt ( compet5t jurisdiction2 7#c7 is subject to any ord] ( ! ,commission b>r+ or susp5d+ ! "r ( ! p]son to be associat$ ) a regi/]$ proxy advisory firm2 7#d7 fails to furni% ! c]tifications requir$ "u subsections 7b77#b77;,c77ii77,i7 & 7c77#b72 7#e7 has engag$ 9 "o or m prohibit$ acts enum]at$ 9 p>agraph 7#a72 7#f7 fails to ma9ta9 adequate f9ancial & manag]ial res\rces to consi/5tly (f] advisory s]vices ) integrity1 includ+ by fail+ to comply ) subsection 7f7 or 7g72 or 7#g7 engages 9 a prohibit$ act enum]at$ 9 subsection 7j74 7e7 ,t]m9ation ( regi/ration 7#a7 ,volunt>y )drawal ,a regi/]$ proxy advisory firm may1 ^u su* t]ms & conditions z ! ,commission may e/abli% z necess>y 9 ! public int]e/ or = ! protection ( inve/ors1 :i* t]ms & conditions %all include at a m9imum t ! regi/]$ proxy advisory firm w no long] conduct su* activities z to br+ x )9 ! def9ition ( proxy advisory firm 9 section #c7;a77#ha71 )draw f regi/ration by fil+ a writt5 notice ( )drawal to ! ,commission4 7#b7 ,commission au?ority ,9 addition to any o!r au?ority ( ! ,commission "u ?is title1 if ! ,commission f9ds t a regi/]$ proxy advisory firm is no long] 9 exi/5ce or has ceas$ to d bus9ess z a proxy advisory firm1 ! ,commission1 by ord]1 %all cancel ! regi/ration "u ?is section ( su* regi/]$ proxy advisory firm4 7f7 ,managem5t ( conflicts ( int]e/ 7#a7 ,organization policies & proc$ures ,ea* regi/]$ proxy advisory firm %all e/abli%1 ma9ta91 & en=ce writt5 policies & proc$ures reasonably design$1 tak+ into consid]ation ! nature ( ! bus9ess ( su* regi/]$ proxy advisory firm & associat$ p]sons1 to publicly disclose & manage any conflicts ( int]e/ t arise or w\ld reasonably be expect$ to arise f su* bus9ess4 7#b7 ,commission au?ority ,! ,commission %all1 )9 "o ye> ( enactm5t1 issue f9al rules to prohibit1 or require ! managem5t & public disclosure (1 any conflicts ( int]e/ relat+ to ! (f]+ ( proxy advisory s]vices by a regi/]$ proxy advisory firm1 includ+1 )\t limitation1 conflicts ( int]e/ relat+ to-- 7,a7 ! mann] 9 :i* a regi/]$ proxy advisory firm is comp5sat$ by ! cli5t1 any affiliate ( ! cli5t1 or any o!r p]son = provid+ proxy advisory s]vices2 7,b7 bus9ess relation%ips1 own]%ip int]e/s1 or any o!r f9ancial or p]sonal int]e/s betwe5 a regi/]$ proxy advisory firm1 or any p]son associat$ ) su* regi/]$ proxy advisory firm1 & any cli5t1 or any affiliate ( su* cli5t2 7,c7 ! =mulation ( proxy vot+ policies2 7,d7 ! execution1 or assi/ance ) ! execution1 ( proxy votes if su* votes are bas$ ^u recomm5dations made by ! proxy advisory firm 9 :i* a p]son o!r ?an ! issu] is a propon5t2 & 7,e7 any o!r pot5tial conflict ( int]e/1 z ! ,commission deems necess>y or appropriate 9 ! public int]e/ or = ! protection ( inve/ors4 7#c7 ,disclosure ,ea* regi/]$ proxy advisory firm %all annually disclose to ! ,commission & make publicly available ! economic & o!r factors t a reasonable inve/or w\ld expect to influ5ce ! recomm5dations ( su* proxy advisory firm1 includ+ ! own]%ip composition ( su* proxy advisory firm4 7g7 ,reliability ( proxy advisory firm s]vices 7#a7 ,9 g5]al ,ea* regi/]$ proxy advisory firm %all-- 7,a7 h /aff & o!r res\rces suffici5t to produce proxy vot+ recomm5dations t are bas$ on accurate & curr5t in=mation2 7,b7 implem5t proc$ures t p]mit issu]s t are ! subject ( proxy vot+ recomm5dations-- 7i7 access 9 a reasonable "t to data & in=mation us$ to make recomm5dations2 & 7ii7 a reasonable opportunity to provide mean+ful comm5t & corrections to su* data & in=mation1 includ+ ! opportunity to pres5t 79 p]son or telephonically7 details to ! p]son responsible = develop+ su* data & in=mation prior to ! publication ( proxy vot+ recomm5dations to cli5ts2 & 7,c7 employ an ombudsman to receive compla9ts ab\t ! accuracy ( in=mation us$ 9 mak+ recomm5dations f ! subjects ( ! proxy advisory firm's vot+ recomm5dations & seek to resolve ^? compla9ts 9 a timely fa%ion & prior to ! publication ( proxy vot+ recomm5dations to cli5ts2 7,d7 if su* ombudsman is unable to resolve su* compla9ts prior to ! publication ( proxy vot+ recomm5dations to cli5ts1 include 9 ! f9al report ( ! firm to cli5ts a /atem5t detail+ its compla9ts1 if reque/$ 9 writ+ by ! company2 & 7,e7 provide to cli5ts receiv+ proxy advisory firm recomm5dations-- 7i7 in=mation demon/rat+ t draft recomm5dations 7o!r ?an recomm5dations relat+ to an issu]-sponsor$ proposal or recomm5dations consi/5t ) t ( ! majority ( ! bo>d ( directors ( ! issu]7 are 9 ! be/ economic int]e/ ( %>ehold]s2 & 7ii7 a c]tification by ! *ief executive (fic]1 *ief f9ancial (fic]1 & ! prim>y executive responsible = ov]see+ ! compilation & dissem9ation ( proxy vot+ advice t ! draft recomm5dations 7o!r ?an recomm5dations relat+ to an issu]-sponsor$ proposal or recomm5dations consi/5t ) t ( ! majority ( ! bo>d ( directors ( ! issu]7-- 7,i7 are bas$ on int]nal controls & proc$ures t are design$ to ensure accurate in=mation2 7,,ii7 d n violate applicable ,/ate or ,f$]al law2 & 7,,iii7 prioritize economic returns to %>ehold]s4 7#b7 ,def9itions ,9 ?is subsection3 7,a7 ,data & in=mation us$ to make recomm5dations ,! t]m data & in=mation us$ to make vot+ recomm5dations-- 7i7 means ! f9ancial1 op]ational1 or descriptive data & in=mation on an issu] us$ by proxy advisory firms & any contextual or sub/antive analysis impact+ ! recomm5dation2 & 7ii7 does n include ! entirety ( ! proxy advisory firm's f9al report to its cli5ts4 7,b7 ,reasonable "t ,! t]m reasonable "t-- 7i7 means n less ?an #a week be=e ! publication ( proxy vot+ recomm5dations = cli5ts1 unless o!rwise def9$ ?r\gh a f9al rule issu$ by ! ,commission2 & 7ii7 %all n o!rwise int]f]e ) a proxy advisory firm's ability to provide its cli5ts ) timely access to accurate proxy vot+ rese>*1 analysis1 or recomm5dations4 7h7 ,private "r ( action ) respect to illegal recomm5dations ,any proxy advisory firm t endorses a proposal t is n support$ by ! issu] b is approv$ & subsequ5tly f\nd by a c\rt ( compet5t jurisdiction to violate ,/ate or ,f$]al law %all be liable to ! applicable issu] = ! co/s associat$ ) ! approval ( su* proposal1 includ+ implem5tation co/s & any p5alties incurr$ by ! issu]4 7i7 ,designation ( compliance (fic] ,ea* regi/]$ proxy advisory firm %all designate an individual :o reports directly to s5ior managem5t z responsible = adm9i/]+ ! policies & proc$ures t are requir$ to be e/abli%$ pursuant to subsections 7f7 & 7g71 & = ensur+ compliance ) ! securities laws & ! rules & regulations !reund]1 includ+ ^? promulgat$ by ! ,commission pursuant to ?is section4 7j7 ,prohibit$ conduct 7#a7 ,prohibit$ acts & practices ,n lat] ?an "o ye> aft] ! date ( enactm5t ( ?is section1 ! ,commission %all issue f9al rules to prohibit any act or practice relat+ to ! (f]+ ( proxy advisory s]vices by a regi/]$ proxy advisory firm t ! ,commission det]m9es to be unfair1 co]cive1 or abusive1 includ+ any act or practice relat+ to-- 7,a7 advisory or consult+ s]vices 7(f]$ directly or indirectly1 includ+ ?r\gh an affiliate7 relat$ to corporate gov]nance issues2 or 7,b7 modify+ a vot+ recomm5dation or o!rwise dep>t+ f its adopt$ sy/ematic proc$ures & me?odologies 9 ! provision ( proxy advisory s]vices1 bas$ on :e!r an issu]1 or affiliate !re(1 subscribes or w subscribe to o!r s]vices or product ( ! regi/]$ proxy advisory firm or any p]son associat$ ) su* organization4 7#b7 ,rule ( con/ruction ,no?+ 9 p>agraph 7#a71 or 9 any rules or regulations adopt$ !reund]1 may be con/ru$ to modify1 impair1 or sup]s$e ! op]ation ( any ( ! antitru/ laws 7z def9$ 9 ! fir/ section ( ! ,clayton ,act1 except t su* t]m includes section #e ( ! ,f$]al ,trade ,commission ,act1 to ! ext5t t su* section #e applies to unfair me?ods ( competition74 7k7 ,/atem5ts ( f9ancial condition ,ea* regi/]$ proxy advisory firm %all1 on a confid5tial basis1 file ) ! ,commission1 at int]vals det]m9$ by ! ,commission1 su* f9ancial /atem5ts1 c]tifi$ 7if requir$ by ! rules or regulations ( ! ,commission7 by an indep5d5t public auditor1 & in=mation conc]n+ its f9ancial condition1 z ! ,commission1 by rule1 may prescribe z necess>y or appropriate 9 ! public int]e/ or = ! protection ( inve/ors4 7l7 ,annual report ,ea* regi/]$ proxy advisory firm %all1 at ! beg9n+ ( ea* fiscal ye> ( su* firm1 report to ! ,commission on ! numb] (-- 7#a7 %>ehold] proposals its /aff review$ 9 ! prior fiscal ye>2 7#b7 recomm5dations made 9 ! prior fiscal ye>2 7#c7 /aff :o review$ & made recomm5dations on su* proposals 9 ! prior fiscal ye> 7& ! qualifications ( su* /aff72 & 7#d7 recomm5dations made 9 ! prior fiscal ye> :]e ! propon5t ( su* recomm5dation 0 a cli5t ( or receiv$ s]vices f ! proxy advisory firm4 7m7 ,transp>5t policies ,ea* regi/]$ proxy advisory firm %all file ) ! ,commission & make publicly available its me?odology = ! =mulation ( proxy vot+ policies & vot+ recomm5dations4 7n7 ,rules ( con/ruction ,regi/ration "u & compliance ) ?is section does n con/itute a waiv] (1 or o!rwise dim9i%1 any "r1 privilege1 or def5se t a regi/]$ proxy advisory firm may o!rwise h "u any provision ( ,/ate or ,f$]al law1 includ+ any rule1 regulation1 or ord] !reund]4 7o7 ,regulations 7#a7 ,new provisions ,su* rules & regulations z are requir$ by ?is section or are o!rwise necess>y to c>ry out ?is section1 includ+ ! application =m requir$ "u subsection 7a7-- 7,a7 %all be issu$ by ! ,commission1 n lat] ?an #ahj days aft] ! date ( enactm5t ( ?is section2 & 7,b7 %all become effective n lat] ?an #a ye> aft] ! date ( enactm5t ( ?is section4 7#b7 ,review ( exi/+ regulations ,n lat] ?an #bgj days aft] ! date ( enactm5t ( ?is section1 ! ,commission %all-- 7,a7 review its exi/+ rules & regulations :i* affect ! op]ations ( proxy advisory firms2 & 7,b7 am5d or revise su* rules & regulations 9 accordance ) ! purposes ( ?is section1 & issue su* guidance z ! ,commission may prescribe z necess>y or appropriate 9 ! public int]e/ or = ! protection ( inve/ors4 7p7 ,applicability ,?is section1 o!r ?an subsection 7n71 :i* %all apply on ! date ( enactm5t ( ?is section1 %all apply on ! e>li] (-- 7#a7 ! date on :i* regulations are issu$ 9 f9al =m "u subsection 7o77#a72 or 7#b7 #bgj days aft] ! date ( enactm5t ( ?is section4 4 7b7 ,con=m+ am5dm5t ,section #ag7;a77#a7 ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #ghq7a77#a77 is am5d$ by ins]t+ proxy advisory firm1 aft] nationally recogniz$ /ati/ical rat+ organization14 #d4 ,duties ( inve/m5t advisors1 asset manag]s1 & p5sion funds 7a7 ,report+ requirem5ts ,n lat] ?an #a ye> aft] ! date ( ! enactm5t ( ?is ,act & annually !reaft]1 any cov]$ entity t reta9s ! s]vices ( a proxy advisory firm ) respect to ! prec$+ ye> %all provide to ! b5efici>ies & cu/om]s ( ! cov]$ entity1 z applicable1 a report t includes-- 7#a7 ! p]c5tage ( votes ca/ on %>ehold] proposals t foll[ proxy advisor firm recomm5dations = ea* proxy advisory firm reta9$ by ! cov]$ entity2 7#b7 ! p]c5tage ( votes ca/ on environm5tal-1 social-1 or gov]nance-relat$ %>ehold] proposals t foll[ proxy advisory firm recomm5dations = ea* proxy advisory firm reta9$ by ! cov]$ entity2 & 7#c7 an explanation (-- 7,a7 h[ proxy advisory firm recomm5dations are us$ by ! cov]$ entity 9 mak+ vot+ decisions2 7,b7 h[ su* recomm5dations are reconcil$ ) ! fiduci>y duty ( ! cov]$ entity to vote 9 ! be/ economic int]e/s ( %>ehold]s2 7,c7 h[ frequ5tly votes are *ang$ :5 an error occurs or due to new in=mation f issu]s2 & 7,d7 ! degree to :i* inve/m5t pr(essionals ( ! cov]$ entity are involv$ 9 su* vot+ decisions4 7b7 ,requirem5ts ,) respect to %>ehold] proposals ( an issu]1 a cov]$ entity ) m ?an #ajj1jjj1jjj1jjj 9 assets "u managem5t %all-- 7#a7 provide cu/om]s ) a me*anism to indicate h[ ! cov]$ entity %\ld vote on _! behalf2 7#b7 9 any mat]ials provid$ to cu/om]s & relat$ to cu/om]s vot+ _! %>es1 cl>ify t %>ehold]s are n requir$ to vote on e proposal2 & 7#c7 ) respect to ea* %>ehold] proposal = :i* ! cov]$ entity vot$ 7o!r ?an an issu]-sponsor$ proposal or a vote consi/5t ) ! recomm5dation ( ! majority ( ! bo>d ( directors ( ! issu]71 make publicly available ! economic analysis ! cov]$ entity conduct$ to det]m9e t ! vote is 9 ! be/ economic int]e/ ( ! cu/om]s4 7c7 ,cov]$ entity def9$ ,9 ?is section1 ! t]m cov]$ entity means an inve/m5t advisor1 asset manag]1 or p5sion fund ) m ?an #ajj1jjj1jjj 9 assets "u managem5t4 #e4 ,transp>5cy reg>d+ ,,esg funds ,section #aj ( ! ,securities ,act ( #aicc 7#ae ,u4,s4,c4 #gg;j7 is am5d$ by add+ at ! end ! foll[+3 7g7 ,transp>5cy reg>d+ ,,esg funds ,an inve/m5t company t holds itself out z (f]+ an index fund "u :i* inve/m5ts are made pursuant to a set ( environm5tal1 social1 or gov]nance /&>ds %all disclose 9 tabul> =m on ! fir/ page ( ea* prospectus requir$ pursuant to ?is section ! #a-1 #c-1 & #e-ye> annual returns & fees *>g$ to inve/ors ) respect to su* fund comp>$ ) ! annual returns & fees *>g$ to inve/ors = ! mo/ readily comp>able broad-bas$ index fund (f]$ by su* inve/m5t company "u :i* inve/m5ts are n made pursuant to su* /&>ds1 or if su* inve/m5t company does n (f] a comp>able index fund1 a reasonably simil> comp>ison to a readily comp>able broad-bas$ index fund4 4 #f4 ,resubmission ?re%olds = %>ehold] proposals ,section #ad ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #ghn7 is am5d$ by add+ at ! end ! foll[+3 7k7 ,exclusion ( c]ta9 %>ehold] proposal resubmissions ,a %>ehold] proposal may be exclud$ f any proxy or cons5t solicitation mat]ial = an annual meet+ ( ! %>ehold]s ( an issu] if ! proposal-- 7#a7 is n g]mane 7)\t reg>d to :e!r ! proposal involves a significant social policy issue72 or 7#b7 addresses sub/antially ! same subject matt] 7)\t reg>d to :e!r ! proposal involves a significant social policy issue7 z a proposal previ\sly includ$ 9 ! proxy or cons5t solicitation mat]ial = an annual meet+ ( ! %>ehold]s ( an issu]-- 7,a7 = a meet+ ( ! %>ehold]s conduct$ 9 ! prec$+ #e ye>s2 & 7,b7 if ! mo/ rec5t vote-- 7i7 occurr$ 9 ! prec$+ #c ye>s2 & 7ii7 7,i7 if vot$ on once dur+ su* p]iod1 receiv$ less ?an #e p]c5t ( ! votes2 7,,ii7 if vot$ on twice dur+ su* p]iod1 receiv$ less ?an #ae p]c5t ( ! votes2 or 7,,iii7 if vot$ on ?ree or m times dur+ su* p]iod1 receiv$ less #be p]c5t ( ! votes4 4 #g4 ,prohibition on robovot+ ,section #ad ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #ghn7 is fur!r am5d$ by add+ at ! end ! foll[+3 7l7 ,prohibition on robovot+ 7#a7 ,9 g5]al ,! ,commission %all issue f9al rules prohibit+ ! use ( robovot+ ) respect to votes relat$ to proxy or cons5t solicitation mat]ials4 7#b7 ,robovot+ def9$ ,! t]m robovot+ means ! practice ( automatically vot+ 9 a mann] consi/5t ) ! recomm5dations ( a proxy advisory firm4 4 #h4 ,liability = c]ta9 failures to disclose mat]ial in=mation ,section #ad ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #ghn7 is fur!r am5d$ by add+ at ! end ! foll[+3 7m7 ,false or mislead+ /atem5ts ,= purposes ( section #ah1 failure to disclose mat]ial in=mation reg>d+ proxy vot+ advice t makes a recomm5dation to a security hold] z to its vote1 cons5t1 or au?orization on a specific matt] = :i* security hold] approval is solicit$1 & t is furni%$ by a p]son t m>kets its exp]tise z a provid] ( su* proxy vot+ advice1 sep>ately f o!r =ms ( inve/m5t advice1 & sells su* proxy vot+ advice = a fee1 %all be consid]$ to be false or mislead+ ) respect to a mat]ial fact4 4 #i4 ,/udy ( c]ta9 issues ) respect to %>ehold] proposals & proxy advisory firms ,n lat] ?an #ahj days aft] ! date ( ! enactm5t ( ?is ,act1 & e #e ye>s !reaft]1 ! ,securities & ,ex*ange ,commission1 includ+ ! ,(fice ( ! ,advocate = ,small ,bus9ess ,capital ,=mation1 %all c>ry out a /udy & submit a report to ! ,committee on ,bank+1 ,h\s+1 & ,urban ,affairs ( ! ,s5ate & ! ,committee on ,f9ancial ,s]vices ( ! ,h\se ( ,repres5tatives on %>ehold] proposals & proxy advisory firms t includes1 ) respect to1 9 ! case ( ! fir/ report1 ! prec$+ #aj ye>s1 & 9 ! case ( ea* subsequ5t report1 ! prec$+ #e ye>s1 ! foll[+3 7#a7 ,! co/s t issu]s incurr$ 9 respond+ to-- 7,a7 politically1 environm5tally1 or socially motivat$ %>ehold] proposals2 & 7,b7 %>ehold] proposals t fail$ to be agre$ to m ?an once4 7#b7 ,! am\nt ( fees t public companies paid to proxy advisory firms & p]sons associat$ ) proxy advisory firms4 7#c7 ,! s\rce ( funds ) respect to paym5t ( su* fees4 7#d7 ,! academic or pr(essional qualifications ( ! /aff memb]s t provide proxy advisory s]vices at proxy advisory firms4 7#e7 ,! numb] ( %>ehold] proposals t1 if adopt$1 w\ld require an issu] to violate a ,/ate or ,f$]al law4 7#f7 ,an e/imate ( ! co/s t issu]s w\ld incur if su* proposals 7 adopt$4