SEC Final Rule Declines to Apply Universal Proxy Card Mandate to Regulated Funds

On Nov. 17, 2021, the Securities and Exchange Commission (“SEC”) adopted final rules requiring participants in contested director elections to use universal proxy cards that include all director nominees presented for election at a shareholder meeting (“Rules”). The Rules allow for shareholders voting by proxy to vote for a combination of director nominees from competing slates, just as they could at an in-person meeting. Notably, consistent with the 2016 Proposing Release, the Rules as adopted do not apply to solicitations for contested elections involving registered investment companies registered under Section 8 of the Investment Company Act of 1940 (“1940 Act”) or business development companies as defined by Section 2(a)(48) of the 1940 Act. In this article, associate Shaina Maldonado discuss the SEC’s decision and the implications for regulated funds.