Regulatory Developments

2015

ESMA

On 19 December 2015, ESMA published its report on the implementation of the Best Practice Principles for Shareholder Voting Research [ESMA/2015/1887]

On 8 June 2015, the European Securities & Markets Authority (ESMA) issued a called for evidence [ESMA/2015/920] in order to understand how stakeholders perception of the shareholder voting research industry in the season following the publication of the Best Practice Principles.

ESMA received a total of 27 public responses and they can be found HERE >>

Canadian Securities Administrators

On April 2015 the Canadian Securities Administrators (CSA) adopted National Policy 25-201 Guidance for Proxy Advisory Firms (the Policy). The Policy recommended best practices that are “intended to address the concerns of market participants while recognizing that proxy advisory firms play an important role in the voting process,” The guidance was developed following a stakeholder consulation and contains a number of recommended practices and disclosure for proxy advisory firms to “promote transparency in the services they provide to clients and to foster an understanding among market participants about proxy advisory activities”.

The guidance addresses the identification, management and mitigation of actual or potential conflicts of interest; the transparency and accuracy of vote recommendations; the development of proxy voting guidelines; and communications matters. The Policy is available on CSA members’ websites.

2014

Securities & Exchange Commission

On June 30, 2014, the staff of the United States Securities and Exchange Commission’s (the “SEC”) Divisions of Investment Management and Corporation Finance issued Staff Legal Bulletin No. 20. [link] The bulletin provided guidance on investment advisers’ responsibilities in respect of voting client proxies and the use of proxy advisory firms.  The bulletin emphasises the oversight responsibilities of investment advisers which use shareholder voting services notably establishing an explicit duty to undertake ongoing monitoring of their service providers.  Investment advisers using shareholder votign services should, according to the guidance “adopt and implement policies and procedures that are reasonably designed to provide sufficient ongoing oversight” of the firm.