Form N-PX Amendments and Impact on 13F Filers

On November 2, 2022, the SEC adopted amendments to the Form N-PX that effects managers who file the Form 13F.

The SEC is requiring each person that is an “institutional investment manager” and is required to file reports under section 13(f) of the Exchange Act, to report its say-on-pay votes on Form N-PX.

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.

The SEC has adopted 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. 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.

Managers are required to report say-on-pay votes under section 14A with respect to any security over which it exercised voting power. The SEC is not modifying the scope of securities to align with those reported on Form 13F. Every institutional investment manager subject to section 13(f) is required 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.

The SEC is not providing exception from reporting when the manager does not vote, but 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.

A designation will be added 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.

Joint reporting provisions are being adopted that permit reporting persons to report jointly their say-on-pay votes in three scenarios. Specifically, the SEC will permit:

1.       A single manager to report say-on-pay votes in cases where multiple managers exercise voting power.

2.       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.

3.       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 required to file a “notice” or “combination” Form N-PX report that identifies each manager or fund reporting on its behalf.

The amended rules will be effective on July 1st, 2024. Form N-PX filings will be due by August 31st, 2024 covering the period of July 1, 2023 to June 30, 2024.