New N-PX reporting requirements for 13F filers (Institutional Investment Managers)

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Overview

Form 13F filers will need to prepare for new reporting requirements mandated by the SEC under the final N-PX rule which now mandates Mutual Funds to report their proxy votes on Form N-PX in XML format instead of the previous HTML/ASCII format. I reviewed the impact of the rule for Mutual Funds in a recent blog, The SEC modernizes Form N-PX to require Mutual Funds to report proxy votes in XML. This rule impacts more than just funds, however. Institutional investment managers who report on Form 13F will now be required, for the first time, to file on Form N-PX information related to say-on-pay votes for their 13F positions.

The N-PX report filed annually by 13F managers consists of the standard cover and proxy vote record information table, similar to their existing Form 13F holdings reports also filed in XML format. The proxy vote record table requires information about the securities for which the manager exercises their vote when the issuer has a say-on-pay proposal. The SEC requires public companies/issuers to conduct an advisory shareholder vote at least once every three years related to their executive compensation, called a “say-on-pay” vote. While the vote is not binding, the results often receive significant attention from shareholders and in the market. In the N-PX proxy vote table, managers will report required information about the issuer and how they voted the “Say-On-Pay” item.  Additionally, two or more institutional managers can file jointly on Form N-PX, similar to Form 13F.

Confidential treatment

Currently, institutional managers can request confidential treatment from publicly reporting on Form 13F some or all of the 13F securities they hold during a given period. This provision is designed to protect their specific investing strategy from being made public. Similarly, the SEC included a provision in the N-PX rule to allow 13F filers to request confidential treatment from reporting their say-on-pay proxy votes on Form N-PX. New EDGAR form types N-PX CTR and N-PX CTR/A are available for this process.

Notice filing

The final rule requires all institutional managers to file some form of N-PX for securities they hold related to “say-on-pay” votes. Even if the manager has a practice of not voting and does not vote for any say-on-pay proxy, they must still file an N-PX notice report. In this case, they are not required to disclose any security-level information in the proxy vote record table. The notice needs to include the N-PX cover page and signatures. A Notice filing would also be used by managers whose say-on-pay voting records are being reported by another 13F manager.

Compliance timing

The data for the say-on-pay votes will need to be recorded for all shareholder meetings held between July 1st of one year to June 30th of the following year. This information is then reported annually on Form N-PX by August 31st. Affected Institutional managers need to file their first N-PX (in the new XML format) by August 31, 2024, for the annual reporting period from July 1, 2023, to June 30, 2024. The SEC adopted timing adjustments for investment managers that become newly subject to Form 13F filing requirements or that cease being subject to Form 13F requirements in the final rule.  13F filers must collect the required say-on-pay vote data now to prepare for the upcoming N-PX filing obligation.

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For 55+ years, the dedicated SEC reporting experts at Toppan Merrill have supported issuers navigating the regulatory disclosure and filing process. Connect with one of our experts at info@toppanmerrill.com or by calling 800.688.4400.

Jennifer Froberg - Sr SEC Product Specialist

With over 15 years of industry experience in the SEC regulatory landscape, Jennifer supports and advises clients in how to get their filings right. Part of a Toppan Merrill team of EDGAR experts who provide practical compliance expertise in a variety of subjects, Jennifer focuses on analyzing the scope of SEC rulemaking, where the agency is headed and how regulatory changes will impact the filers, investors and the market. She has a particular focus on structured data and ESG initiatives.

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