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House
File
2196
-
Introduced
HOUSE
FILE
2196
BY
WILLS
A
BILL
FOR
An
Act
relating
to
proxy
advisors
and
proxy
advisory
services,
1
and
including
applicability
provisions.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
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Section
1.
NEW
SECTION
.
545.1
Definitions.
1
As
used
in
this
section,
unless
the
context
otherwise
2
requires:
3
1.
“Company”
means
a
publicly
traded,
for-profit
4
corporation,
limited
liability
company,
partnership,
or
other
5
business
entity
that
is
organized
under
the
laws
of
this
state
6
and
that
maintains
its
principal
place
of
business
in
this
7
state.
“Company”
includes
a
foreign
entity
that
has
made
8
a
company
proposal
to
become
a
domestic
entity
by
merger,
9
conversion,
or
other
means.
10
2.
“Company
proposal”
means
a
proposal
by
a
company
to
the
11
company’s
shareholders
that
is
included
in
the
company’s
proxy
12
statement
and
includes
but
is
not
limited
to
a
proposal
related
13
to
director
nominations
or
elections,
executive
compensation,
14
corporate
transactions,
corporate
structure,
auditor
selection,
15
or
company
policy.
16
3.
“Default
recommendation”
means
a
system,
set
of
rules,
17
principles,
or
guidelines
to
assist
shareholders
with
voting
18
decisions
on
a
company
proposal
or
proxy
proposal.
19
4.
“Financial
analysis”
means
a
written
document
that
does
20
all
of
the
following:
21
a.
Analyzes
the
expected
short-term
and
long-term
financial
22
benefits
and
costs
to
a
company
of
implementing
a
company
23
proposal
or
proxy
proposal.
24
b.
Reaches
a
conclusion
as
to
what
vote
or
course
of
action
25
may
positively
affect
shareholder
value.
26
c.
Explains
the
methods
and
processes
used
to
prepare
the
27
financial
analysis,
including
the
experience
and
geographic
28
location
of
the
personnel
who
prepared
the
analysis.
29
5.
“Proxy
advisor”
means
a
person
who,
for
compensation,
30
provides
a
proxy
advisory
service
to
shareholders
or
to
other
31
persons
with
the
authority
to
vote
on
behalf
of
shareholders.
32
6.
“Proxy
advisory
service”
means
any
of
the
following
33
services
that
are
provided
by
a
proxy
advisor
in
connection
34
with,
or
in
relation
to,
a
company,
or
are
provided
to
any
35
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person
in
the
state:
1
a.
Advice
or
recommendations
on
how
to
vote
on
a
company
2
proposal
or
proxy
proposal.
3
b.
Research
and
analysis
regarding
a
company
proposal
or
4
proxy
proposal.
5
c.
Development
of
proxy
voting
recommendations
or
policies,
6
including
but
not
limited
to
default
recommendations.
7
7.
“Proxy
proposal”
means
a
proposal
made
by
a
shareholder
8
of
a
company
that
is
included
in
the
company’s
proxy
statement
9
and
includes
but
is
not
limited
to
a
proposal
related
to
10
director
nominations
or
elections,
executive
compensation,
11
corporate
transactions,
corporate
structure,
auditor
selection,
12
or
company
policy.
13
8.
“Shareholder”
means
a
shareholder,
unitholder,
limited
14
partner,
or
other
equity
owner
of
a
company.
15
Sec.
2.
NEW
SECTION
.
545.2
Proxy
advisor
services
——
16
enforcement.
17
1.
If
a
proxy
advisor
provides
a
proxy
advisory
service
to
18
a
shareholder
or
other
person
with
authority
to
vote
on
behalf
19
of
the
shareholder,
or
makes
a
default
recommendation
against
20
company
management
on
a
company
proposal
or
proxy
proposal,
21
and
the
proxy
advisory
service
or
default
recommendation
is
22
not
based
on
a
financial
analysis,
the
proxy
advisor
shall,
23
concurrently
with
providing
the
proxy
advisory
service
or
24
default
recommendation,
do
all
of
the
following:
25
a.
Provide
a
clear
disclosure
to
each
shareholder
or
other
26
person
with
authority
to
vote
on
behalf
of
a
shareholder
that
27
does
all
of
the
following:
28
(1)
Identifies
the
specific
proxy
advisory
service
being
29
provided.
30
(2)
Identifies
the
recommendation
or
policy
at
issue.
31
(3)
States
that
the
proxy
advisory
service
or
default
32
recommendation
is
not
based
on
a
financial
analysis.
33
b.
Except
for
a
proxy
advisory
service
that
provides
voting
34
recommendations
or
policies,
or
a
default
recommendation,
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provide
the
disclosure
under
paragraph
“a”
to
the
board
of
1
directors
of
each
company
that
is
the
subject
of
the
proxy
2
advisory
service.
3
c.
Conspicuously
post
on
the
home
page
of
the
proxy
4
advisor’s
internet
site
a
statement
that
the
proxy
advisor’s
5
proxy
advisory
services
include
one
or
more
proxy
advisory
6
services
that
involve
recommendations
or
policies
against
7
company
management
on
company
proposals
or
proxy
proposals
that
8
are
not
based
on
a
financial
analysis.
9
2.
If
a
proxy
advisor
provides
a
proxy
advisory
service
to
10
a
shareholder
or
other
person
with
authority
to
vote
on
behalf
11
of
the
shareholder,
or
makes
a
default
recommendation
against
12
company
management
on
a
company
proposal
or
proxy
proposal,
13
and
the
proxy
advisory
service
or
default
recommendation
14
is
based
on
a
financial
analysis,
the
proxy
advisor
shall,
15
concurrently
with
providing
the
proxy
advisory
service
or
16
default
recommendation,
do
all
of
the
following:
17
a.
Provide
a
clear
disclosure
to
each
shareholder
or
other
18
person
with
authority
to
vote
on
behalf
of
a
shareholder
that
19
does
all
of
the
following:
20
(1)
Identifies
the
specific
proxy
advisory
service
being
21
provided.
22
(2)
Identifies
the
default
recommendation
at
issue.
23
(3)
States
that
the
proxy
advisory
service
or
default
24
recommendation
is
based
on
a
financial
analysis.
25
(4)
States
that
the
financial
analysis
is
available
upon
26
request.
27
b.
Make
the
financial
analysis
available
within
a
reasonable
28
time
to
any
client
of
the
proxy
advisory
service
upon
request.
29
c.
Provide
a
copy
of
the
financial
analysis
to
the
board
30
of
directors
of
each
company
that
is
the
subject
of
the
proxy
31
advisory
service.
This
paragraph
shall
not
apply
to
a
proxy
32
advisory
service
that
provides
proxy
voting
recommendations
or
33
policies,
or
a
default
recommendation.
34
3.
A
violation
of
this
section
is
an
unlawful
practice
under
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section
714.16.
1
4.
An
action
may
be
brought
in
district
court
to
enjoin
a
2
proxy
advisor’s
violation
of
this
section.
In
any
proceeding
3
for
an
injunction,
the
aggrieved
person
bringing
the
action
4
shall
provide
written
notice
of
the
action
to
the
attorney
5
general
no
later
than
seven
calendar
days
after
the
date
the
6
action
is
filed
in
district
court.
The
attorney
general
may
7
intervene
in
any
action
for
injunctive
relief
under
this
8
subsection.
The
following
persons
may
bring
an
action
under
9
this
subsection:
10
a.
An
individual
who
received
a
proxy
advisory
service
11
provided
by
a
proxy
advisor
that
violated
this
section.
12
b.
A
company,
or
a
shareholder
of
a
company,
that
is
the
13
subject
of
a
proxy
advisory
service
provided
by
a
proxy
advisor
14
that
violated
this
section.
This
paragraph
shall
not
apply
to
15
a
company
that
is
the
subject
of
a
proxy
advisory
service
for
16
the
development
of
proxy
voting
recommendations
or
policies
17
including
establishment
of
default
recommendations.
18
Sec.
3.
Section
714.16,
subsection
2,
Code
2026,
is
amended
19
by
adding
the
following
new
paragraph:
20
NEW
PARAGRAPH
.
t.
It
is
an
unlawful
practice
for
a
proxy
21
advisor
to
violate
section
545.2.
22
Sec.
4.
APPLICABILITY.
This
Act
applies
to
a
proxy
advisory
23
service,
or
a
default
recommendation,
provided
by
a
proxy
24
advisor
on
or
after
July
1,
2026.
25
EXPLANATION
26
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
27
the
explanation’s
substance
by
the
members
of
the
general
assembly.
28
This
bill
relates
to
proxy
advisors
and
proxy
advisory
29
services.
30
The
bill
sets
forth
the
requirements
for
a
proxy
advisor
31
(advisor)
that
provides
a
proxy
advisory
service
(service)
to
a
32
shareholder
or
other
person
with
authority
to
vote
on
behalf
of
33
a
shareholder,
or
that
makes
a
default
recommendation
against
34
company
management
on
a
company
proposal
or
proxy
proposal.
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“Company
proposal”,
“default
recommendation”,
“proxy
advisor”,
1
“proxy
advisory
service”,
and
“proxy
proposal”
are
defined
in
2
the
bill.
3
If
the
service
or
default
recommendation
is
not
based
on
4
a
financial
analysis,
the
advisor
shall,
concurrently
with
5
providing
the
service
or
default
recommendation:
(1)
provide
a
6
disclosure
to
each
shareholder
or
person
with
authority
to
vote
7
on
behalf
of
a
shareholder
that
meets
the
requirements
of
the
8
bill;
(2)
provide
the
same
disclosure
to
the
board
of
directors
9
of
each
company
that
is
the
subject
of
the
service,
except
10
where
the
service
provides
voting
recommendations,
policies,
or
11
default
recommendations;
and
(3)
post
on
the
advisor’s
internet
12
site
a
statement
that
the
advisor’s
services
include
one
or
13
more
services
that
involve
recommendations
or
policies
against
14
company
management
on
company
proposals
or
proxy
proposals
that
15
are
not
based
on
a
financial
analysis.
16
If
the
service
or
default
recommendation
is
based
on
a
17
financial
analysis,
the
advisor
shall,
concurrently
with
18
providing
the
service:
(1)
provide
a
disclosure
to
each
19
shareholder
or
person
with
authority
to
vote
on
behalf
of
20
a
shareholder
that
meets
the
requirements
of
the
bill;
(2)
21
upon
request,
make
the
financial
analysis
available
within
a
22
reasonable
time
to
any
client
of
the
service;
and
(3)
provide
23
the
financial
analysis
to
the
board
of
directors
of
each
24
company
that
is
the
subject
of
the
service,
except
for
services
25
that
provide
voting
recommendations,
policies,
or
default
26
recommendations.
27
A
violation
of
the
bill
is
an
unlawful
practice
under
Code
28
section
714.16.
29
An
individual,
a
company,
or
a
shareholder
of
a
company
30
that
received
a
service
provided
by
an
advisor
that
violated
31
the
bill
may
bring
an
action
in
district
court
to
enjoin
the
32
advisor’s
violation.
The
party
bringing
such
action
shall
33
provide
written
notice
of
the
action
to
the
attorney
general
34
no
later
than
seven
calendar
days
after
the
date
the
action
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is
filed,
and
the
attorney
general
may
intervene
in
any
such
1
action
for
injunctive
relief.
2
The
bill
applies
to
a
service
or
a
default
recommendation
3
provided
by
an
advisor
on
or
after
July
1,
2026.
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