SHARE joined with the Council of Institutional Investors and 44 other investors and investor organizations in a joint letter to the US House Committee on Financial Services to express our opposition to legislation that has recently been introduced and is pending in the Committee related to proxy advisory firms.
The “Corporate Governance Reform and Transparency Act of 2017,” would require, as a matter of federal law, that proxy advisory firms share their research reports and proxy voting recommendations with the companies about whom they are writing before they are shared with the institutional investors who are their clients.
As the letter says, “the proposed legislation appears to be based on several false premises, including the erroneous conclusion that proxy advisory firms dictate proxy voting results and that institutional investors do not drive or form their own voting decisions …. [the legislation] would weaken corporate governance in the United States; undercut proxy advisory firms’ ability to uphold their fiduciary obligation to their investor clients; and reorient any surviving firms to serve companies rather than investors.”
SHARE agrees that the system of corporate governance in the US and in Canada relies on independent and informed voting by shareholders and that limiting the independence and availability of advice on voting decisions undermines the objective of good corporate governance.