[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4645 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 4645
To amend the Investment Advisers Act of 1940 with respect to proxy
voting of passively managed funds, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 14, 2023
Mr. Huizenga introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Investment Advisers Act of 1940 with respect to proxy
voting of passively managed funds, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Empowering Shareholders Act of
2023''.
SEC. 2. PROXY VOTING OF PASSIVELY MANAGED FUNDS.
(a) In General.--The Investment Advisers Act of 1940 (15 U.S.C.
80b-1 et seq.) is amended by inserting after section 208 (15 U.S.C.
80b-8) the following:
``SEC. 208A. PROXY VOTING OF PASSIVELY MANAGED FUNDS.
``(a) Investment Adviser Proxy Voting.--
``(1) In general.--An investment adviser that holds
authority to vote a proxy solicited by an issuer pursuant to
section 14 of the Securities Exchange Act of 1934 (15 U.S.C.
78n) in connection with any vote of covered securities held by
a passively managed fund shall--
``(A) vote in accordance with the instructions of
the beneficial owner of such covered securities;
``(B) vote in accordance with the voting
instructions of such issuer; or
``(C) abstain from voting.
``(2) Exception.--Paragraph (1) shall not apply with
respect to a vote on a routine matter.
``(b) Safe Harbor.--With respect to a matter that is not a routine
matter, in the case of a vote described in subsection (a)(1), an
investment adviser shall not be liable to any person under any law or
regulation of the United States, any constitution, law, or regulation
of any State or political subdivision thereof, or under any contract or
other legally enforceable agreement (including any arbitration
agreement), for any of the following:
``(1) Not soliciting voting instructing from any person
under subsection (a)(1) with respect to such vote.
``(2) Voting in accordance with the voting instructions of
an issuer pursuant to subparagraph (B) of such subsection.
``(3) Abstaining from voting in accordance with
subparagraph (C) of such subsection.
``(c) Definitions.--In this section:
``(1) Covered security.--The term `covered security'--
``(A) means a voting security, as that term is
defined in section 2(a) of the Investment Company Act
of 1940 (15 U.S.C. 80a-2(a)), in which a qualified fund
is invested; and
``(B) does not include any voting security (as
defined in subparagraph (A)) of an issuer registered
with the Commission as an investment company under
section 8 of the Investment Company Act of 1940 (15
U.S.C. 80a-8).
``(2) Passively managed fund.--The term `passively managed
fund' means a qualified fund that--
``(A) is designed to track, or is derived from, an
index of securities or a portion of such an index;
``(B) discloses that the qualified fund is a
passive index fund; or
``(C) allocates not less than 40 percent of the
total assets of the qualified fund to an investment
strategy that is designed to track, or is derived from,
an index of securities or a portion of such an index
fund.
``(3) Qualified fund.--The term `qualified fund' means--
``(A) an investment company, as that term is
defined in section 3 of the Investment Company Act of
1940 (15 U.S.C. 80a-3);
``(B) a private fund;
``(C) an eligible deferred compensation plan, as
that term is defined in section 457(b) of the Internal
Revenue Code of 1986;
``(D) a trust, plan, account, or other entity
described in section 3(c)(11) of the Investment Company
Act of 1940 (15 U.S.C. 80a-3(c)(11));
``(E) a plan maintained by an employer described in
clause (i), (ii), or (iii) of section 403(b)(1)(A) of
the Internal Revenue Code of 1986 to provide annuity
contracts described in section 403(b) of such Code;
``(F) a common trust fund, or similar fund,
maintained by a bank;
``(G) any fund established under section 8438(b)(1)
of title 5, United States Code; or
``(H) any separate managed account of a client of
an investment adviser.
``(4) Registrant.--The term `registrant' means an issuer of
covered securities.
``(5) Routine matter.--The term `routine matter'--
``(A) includes a proposal that relates to--
``(i) an election with respect to the board
of directors of the registrant;
``(ii) the compensation of management or
the board of directors of the registrant;
``(iii) the selection of auditors;
``(iv) material conflicts;
``(v) declassification; or
``(vi) transactions that would transform
the structure of the registrant, including--
``(I) a merger or consolidation;
and
``(II) the sale, lease, or exchange
of all, or substantially all, of the
property and assets of a registrant;
and
``(B) does not include--
``(i) a proposal that is not submitted to a
holder of covered securities by means of a
proxy statement comparable to that described in
section 240.14a-101 of title 17, Code of
Federal Regulations, or any successor
regulation;
``(ii) a proposal that is--
``(I) the subject of a counter-
solicitation; or
``(II) part of a proposal made by a
person other than the applicable
registrant; or
``(iii) any other matter determined by the
Commission or an exchange registered under
section 6 of the Securities Exchange Act of
1934 (15 U.S.C. 78f) to be not routine.''.
(b) Effective Date.--The amendment made by this section shall take
effect on the first August 1 that occurs after the date that is 2 years
after the date of enactment of this Act.
<all>