[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4662 Introduced in House (IH)]
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118th CONGRESS
1st Session
H. R. 4662
To require the Securities and Exchange Commission to conduct a study of
certain issues with respect to shareholder proposals, proxy advisory
firms, and the proxy process, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 14, 2023
Mrs. Wagner introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
To require the Securities and Exchange Commission to conduct a study of
certain issues with respect to shareholder proposals, proxy advisory
firms, and the proxy process, 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 ``Corporate Governance Examination
Act''.
SEC. 2. STUDY OF CERTAIN ISSUES WITH RESPECT TO SHAREHOLDER PROPOSALS,
PROXY ADVISORY FIRMS, AND THE PROXY PROCESS.
Section 4(j) of the Securities Exchange Act of 1934 (15 U.S.C.
78d(j)) is amended by adding at the end the following:
``(10) Study of certain issues with respect to shareholder
proposals, proxy advisory firms, and the proxy process.--
``(A) In general.--Not later than 180 days after
the date of the enactment of this paragraph, and every
5 years thereafter, the Commission shall conduct a
comprehensive study on shareholder proposals, proxy
advisory firms, and the proxy process.
``(B) Scope of study.--The studies required under
subparagraph (A) shall cover--
``(i) the previous 10 years, with respect
to the initial study; and
``(ii) the previous 5 years, with respect
to each other study.
``(C) Contents.--Each study required under
subparagraph (A) shall address the following issues:
``(i) The financial and other incentives
and obligations of all groups involved in the
proxy process.
``(ii) A consideration of whether financial
and other incentives have created a process
that no longer serves the economic interests of
long-term retail investors.
``(iii) An analysis of whether regulations
and financial incentives have created and
protected the outsized influence of proxy
advisors or a duopoly in proxy advice, and if
so, what are the benefits and costs of that
outsized influence or duopoly.
``(iv) The costs incurred by issuers in
responding to politically-, environmentally-,
or socially-motivated shareholder proposals.
``(v) An assessment, including a cost-
benefit analysis, of the adequacy of the
current submission thresholds in Rule 14a-8 (17
C.F.R. 240.14a-8) to ensure that shareholder
proponents have demonstrated a meaningful
economic stake in a company, which is
appropriate to effectively serve markets and
shareholders at large.
``(vi) An examination of the extent to
which the politicization of the shareholder
proposal process is increasing the operating
costs of public companies.
``(vii) An analysis of the impact that
shareholder proposals have on discouraging
private companies from going public.
``(viii) An evaluation of the risk that
shareholder proposals may contribute to the
balkanization of the U.S. economy over time.
``(ix) A thorough assessment of the
economic analysis, if any, conducted by proxy
advisory firms and institutional shareholders
when recommending or voting in favor of
shareholder proposals.
``(x) A review of the extent to which
institutional investors, who owe fiduciary
duties, rely on proxy advisory firm
recommendations.
``(xi) An assessment of whether, in light
of their significant influence on corporate
actions and vote outcomes, proxy advisors are
subject to sufficient and effective regulation
to ensure that their policies and
recommendations are accurate, free of
conflicts, and benefit the economic best
interest of shareholders at large.
``(D) Report.--At the completion of each study
required under subparagraph (A) the Commission shall
issue a report to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives that
includes the results of the study.
``(E) Proxy advisory firm defined.--In this
paragraph, the term `proxy advisory firm'--
``(i) means any person who is primarily
engaged in the business of providing proxy
voting advice, research, analysis, ratings, or
recommendations to clients, which conduct
constitutes a solicitation within the meaning
of section 14 of the Securities Exchange Act of
1934; and
``(ii) does not include any person that is
exempt under law or regulation from the
requirements otherwise applicable to persons
engaged in such a solicitation.''.
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