U.S. SEC set to vote on new regulations for proxy advisers: source

(Reuters) – The U.S. Securities and Exchange Commission is set to vote on Nov. 5 on a proposal for setting new limits on shareholders’ ability to call for change at companies, a source familiar with the matter said.

FILE PHOTO: The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, United States, June 24, 2011. REUTERS/Jonathan Ernst/File Photo

The regulator is expected to propose rules that would require proxy adviser firms to give companies two chances to review proxy materials before they are sent to shareholders, according to the source.

It will also vote to increase the re-submission thresholds for motions that shareholders file at companies on issues ranging from executive compensation to climate change disclosures.

The thresholds would rise under the new proposal, although Reuters could not ascertain by exactly how much.

By raising the thresholds, the SEC would undermine investors’ ability to file proposals that tend to get more support over time, said Sanford Lewis, an attorney who leads a group of frequent resolution filers.

“Our proposals often serve as a needed alert, rather than a diversion,” he said in an email.

The proposed new rules for shareholder resolutions also drew criticism from activists who in recent years have gained more backing for proposals on areas once seen as sideshows, such as on climate change, gun safety and director elections.

In August, the regulatory body issued new guidelines clarifying how investors and advisory firms that cast ballots on their behalf should vote in corporate elections on issues like pay and diversity.

The guidance addressed some of the grievances U.S. corporations had about so-called proxy advisers, such as mistakes in reports the advisers issue on specific companies and conflicts of interest in their business models.

Proxy advisory firms tell investors how to vote on governance issues in corporate elections and cast ballots on behalf of some asset managers. The role of proxy advisers has gained more attention in recent years as the firms have grown more influential on charged corporate issues.

Reporting by Abhishek Manikandan in Bengaluru and Katanga Johnson in Washington, Ross Kerber in Boston; Editing by Shailesh Kuber and Maju Samuel

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