Proxy Advisor Transparency Act; enact.

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To: Business and Financial
Institutions
MISSISSIPPI LEGISLATURE REGULAR SESSION 2026

By: Senator(s) Harkins

COMMITTEE SUBSTITUTE
FOR
SENATE BILL NO. 2676

AN ACT TO ENACT THE PROXY ADVISOR TRANSPARENCY ACT; TO DEFINE 1
"PROXY ADVISOR," "PROXY ADVISORY SERVICE" AND ADDITIONAL TERMS 2
USED IN THIS ACT; TO REQUIRE CERTAIN DISCLOSURES TO SHAREHOLDERS 3
WHEN A PROXY ADVISOR MAKES A RECOMMENDATION THAT IS BASED OR IS 4
NOT BASED ON A WRITTEN FINANCIAL ANALYSIS; TO PROVIDE THAT 5
VIOLATIONS OF THIS ACT CONSTITUTE AN ACTIONABLE DECEPTIVE TRADE 6
PRACTICE; TO AMEND SECTION 75-24-5, MISSISSIPPI CODE OF 1972, TO 7
CONFORM; AND FOR RELATED PURPOSES. 8
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI: 9
SECTION 1. This act shall be known and may be cited as the 10
"Proxy Advisor Transparency Act." 11
SECTION 2. It is the sense of the Legislature that: 12
(a) When shareholders hire professionals to manage 13
investments, they reasonably expect that the service provider will 14
perform those services in the financial interest of the 15
shareholders, and that the service provider will make 16
recommendations based on financial analysis of which actions would 17
enhance investment value. 18
(b) There is a particular need for disclosures for 19
proxy voting advice because such advice is often provided for 20
hundreds or thousands of shareholder votes each year, and few 21
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investors have the resources to research every shareholder vote, 22
so investors often use proxy advisors for guidance on how to 23
exercise fiduciary duties. 24
(c) Many companies hire proxy advisors pursuant to the 25
Department of Labor's long-standing conclusion that, under the 26
Employee Retirement Income Security Act, the "fiduciary 27
obligations of prudence and loyalty to plan participants and 28
beneficiaries require the responsible fiduciary to vote proxies on 29
issues that may affect the value of the plan's investment." 30
(d) Directors of publicly-held companies owe fiduciary 31
duties to shareholders, and make recommendations in line with 32
those fiduciary duties. 33
(e) Nevertheless, proxy advisors have recommended votes 34
against company management, including votes for shareholder 35
proposals related to environmental, social and governance (ESG) 36
issues; diversity, equity and inclusion (DEI) issues; and social 37
credit and sustainability scores; but have not disclosed to 38
clients that the recommendations were made without conducting a 39
financial analysis to determine how these votes would affect 40
shareholder value. 41
(f) In fact, the chief operating officer of Glass Lewis 42
& Co., a major proxy advisor, stated under penalty of perjury that 43
Glass Lewis does not conduct a written financial analysis before 44
recommending votes on shareholder proposals, and that other proxy 45
advisors do not do so either. Yet proxy advisors have advertised 46
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that the purpose of their recommendations is maximizing, 47
increasing or protecting shareholder value. 48
(g) These facts raise concern that proxy advisors are 49
engaged in fraudulent or deceptive practices and are not 50
disclosing material information to their clients, who otherwise 51
would reasonably believe that they are choosing between 52
recommendations of management and a proxy advisor that are based 53
on dueling financial analyses. 54
(h) Investors purchasing proxy voting services should 55
be informed when recommendations against management are or are not 56
being based on financial analyses that consider the effect on the 57
value of the plan's investment. Investors also should be able to 58
access those analyses upon request, in order to assess whether the 59
analyses were sufficient to uphold fiduciary standards. 60
(i) Requiring proxy advisors to provide clear, factual 61
disclosures under these circumstances helps investors evaluate 62
whether the proxy advisor's recommendations uphold investors' 63
fiduciary duties of prudence and loyalty. 64
(j) Requiring proxy advisors to inform companies of 65
these recommendations also promotes disclosures in line with 66
fiduciary duties. For example, a company that is the subject of a 67
shareholder proposal often has additional information regarding 68
whether a proposal is in the shareholder's financial interests or 69
regarding the costs of a proposal, and notice of a proxy advisor's 70
recommendation allows the company to provide additional responsive 71
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information to shareholders seeking to uphold their fiduciary 72
duties. 73
SECTION 3. As used in this act, the following terms shall 74
have the meaning ascribed herein: 75
(a) "Company" means a publicly traded, for-profit 76
corporation, limited liability company, partnership or other 77
business entity. 78
(b) "Company proposal" means any proposal made by a 79
company to its shareholders that is included in the company's 80
proxy statement, including, but not limited to, director 81
nominations or elections, or any proposal relating to director 82
nominations or elections, executive compensation, corporate 83
transactions, corporate structure, auditor selection or company 84
policy on any subject. 85
(c) "Default recommendation or policy" means a system, 86
set of rules, principles or guidelines designed to assist with 87
voting decisions on any company proposals or proxy proposals. 88
(d) "Proxy advisor" means a person who, for 89
compensation, provides a proxy advisory service to shareholders of 90
a company or to other persons with authority to vote on behalf of 91
shareholders of a company. 92
(e) "Proxy advisory service" means any of the following 93
services that are provided in connection with or in relation to a 94
company, or are provided to any person in this state: 95
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(i) Advice or a recommendation on how to vote on a 96
company proposal or proxy proposal; 97
(ii) Proxy statement research and analysis 98
regarding a company proposal or proxy proposal; or 99
(iii) Development of proxy voting recommendations 100
or policies, including establishing default recommendations or 101
policies. 102
(f) "Proxy proposal" means any proposal made by a 103
shareholder of a company that is included in the company's proxy 104
statement, including, but not limited to, a proposal relating to 105
any of the subjects that could be covered by a company proposal. 106
(g) "Shareholder" includes a shareholder, unitholder, 107
limited partner or other equity owner of a company. 108
(h) "Written financial analysis" means a written 109
document that: 110
(i) Analyzes the expected short-term and long-term 111
financial benefits and costs to the company of implementing a 112
company proposal or proxy proposal; 113
(ii) Concludes which vote or course of action is 114
most likely to positively affect shareholder value; and 115
(iii) Explains the methods and processes used to 116
prepare the analysis, including the experience and geographic 117
location of the personnel who formed the recommendation. 118
SECTION 4. (1) If a proxy advisor makes a recommendation 119
against company management on a company proposal or proxy 120
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proposal, or makes a default recommendation or policy involving 121
votes against company management on company proposals or proxy 122
proposals, and the proxy advisor does not do so based on a written 123
financial analysis, the proxy advisor shall: 124
(a) Concurrently with providing the proxy advisory 125
service, include a clear and conspicuous disclosure to each 126
shareholder, or entity or other person acting on behalf of a 127
shareholder, receiving the proxy advisory service that: 128
(i) Identifies the service being provided; 129
(ii) Identifies the recommendation or policy at 130
issue; 131
(iii) States that the proxy advisor has made the 132
recommendation or policy without doing so based on a written 133
financial analysis regarding the impact of that recommended action 134
on company investors that: 135
1. Analyzes the expected short-term and 136
long-term financial benefits and costs to the company of 137
implementing the company proposal or proxy proposal; 138
2. Concludes what vote or course of action is 139
most likely to positively affect shareholder value; and 140
3. Explains the methods and processes used to 141
prepare the analysis, including the experience and geographic 142
location of the personnel who formed the recommendation. 143
(b) For a proxy advisory service described in Section 144
3(e)(i) or (ii) of this act, concurrently with providing the proxy 145
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advisory service, provide the disclosure under subsection (1)(a) 146
of this section to the board of directors of each company that is 147
the subject of the service; and 148
(c) While any proxy advisory services described by 149
subsection (1) of this section are being provided, publicly and 150
conspicuously disclose on the home or front page of the proxy 151
advisor's website a statement that the advisor's proxy advisory 152
services include one or more services that include recommendations 153
or policies against company management on company proposals or 154
proxy proposals that are not made based on a written financial 155
analysis regarding the impact of that recommended action on 156
company investors that: 157
(i) Analyzes the expected short-term and long-term 158
financial benefits and costs to the company of implementing the 159
company proposal or proxy proposal; 160
(ii) Concludes which vote or course of action is 161
most likely to positively affect shareholder value; and 162
(iii) Explains the methods and processes used to 163
prepare the analysis, including the experience and geographic 164
location of the personnel who formed the recommendation. 165
(2) If a proxy advisor makes a recommendation against 166
company management on a company proposal or proxy proposal, or 167
makes a default recommendation or policy involving votes against 168
company management on company proposals or proxy proposals, and 169
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the proxy advisor does so based on a written financial analysis, 170
the proxy advisor shall: 171
(a) Concurrently with providing the proxy advisory 172
service, include a clear and conspicuous disclosure to each 173
shareholder, or entity or other person acting on behalf of a 174
shareholder, receiving the proxy advisory service that: 175
(i) Identifies the service being provided; 176
(ii) Identifies the recommendation or policy at 177
issue; 178
(iii) States that the proxy advisor has made the 179
recommendation or policy based on a written financial analysis 180
that: 181
1. Analyzes the expected short-term and 182
long-term financial benefits and costs to the company of 183
implementing the company proposal or proxy proposal; 184
2. Concludes which vote or course of action 185
is most likely to positively affect shareholder value; 186
3. Explains the methods and processes used to 187
prepare the analysis, including the experience and geographic 188
location of the personnel who formed the recommendation; and 189
(iv) States that the analysis is available upon 190
request; 191
(b) Make such analysis available within a reasonable 192
time to any recipient of the proxy advisory service upon request; 193
and 194
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(c) For a proxy advisory service described in Section 195
3(e)(i) or (ii) of this act, concurrently with providing the proxy 196
advisory service, provide a copy of such analysis to the board of 197
directors of each company that is the subject of the service. 198
SECTION 5. (1) A violation of this act is a deceptive trade 199
practice under Section 75-24-5 and is actionable under the 200
enforcement provisions contained in Chapter 24, Title 75, 201
Mississippi Code of 1972. The Attorney General may exercise all 202
investigative powers which are available to the Attorney General 203
if he or she has reason to believe a violation of this act has 204
occurred, is occurring or is about to occur. 205
(2) In addition to enforcement under subsection (1) of this 206
section, any person aggrieved by a violation of this act may bring 207
an action seeking a declaratory judgment or injunctive relief 208
against a proxy advisor who violates this act. Not later than 209
seven (7) days after the date on which an action is brought under 210
this subsection (2), the plaintiff shall provide written notice to 211
the Attorney General, who shall have the right to intervene in the 212
action. For purposes of this subsection (2), an aggrieved person 213
includes: 214
(a) A recipient of proxy advisory services provided by 215
the proxy advisor; 216
(b) A company that is the subject of proxy advisory 217
services described in Section 3(e)(i) or (ii) of this act provided 218
by the proxy advisor; and 219
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(c) Any shareholder, unitholder, limited partner or 220
other equity owner of a company described in subsection (2)(b) of 221
this section. 222
SECTION 6. The provisions of this act apply only to a proxy 223
advisory service provided on or after the effective date of this 224
act. Nothing in this law eliminates any claim under Chapter 24, 225
Title 75, Mississippi code of 1972, regardless of whether that 226
claim accrues before or after the effective date of this act. 227
SECTION 7. It is the intent of the Legislature that Sections 228
1 through 7 of this act shall operate with equal force and shall 229
be severable one from the other and that, in the event that any 230
provision of this act shall be held invalid or unenforceable by a 231
court of competent jurisdiction, such provision shall be deemed 232
severable and the remaining provisions of this act deemed fully 233
enforceable. 234
SECTION 8. Section 75-24-5, Mississippi Code of 1972, is 235
amended as follows: 236
75-24-5. (1) Unfair methods of competition affecting 237
commerce and unfair or deceptive trade practices in or affecting 238
commerce are prohibited. Action may be brought under Section 239
75-24-5(1) only under the provisions of Section 75-24-9. 240
(2) Without limiting the scope of subsection (1) of this 241
section, the following unfair methods of competition and unfair or 242
deceptive trade practices or acts in the conduct of any trade or 243
commerce are hereby prohibited: 244
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(a) Passing off goods or services as those of another; 245
(b) Misrepresentation of the source, sponsorship, 246
approval, or certification of goods or services; 247
(c) Misrepresentation of affiliation, connection, or 248
association with, or certification by another; 249
(d) Misrepresentation of designations of geographic 250
origin in connection with goods or services; 251
(e) Representing that goods or services have 252
sponsorship, approval, characteristics, ingredients, uses, 253
benefits, or quantities that they do not have or that a person has 254
a sponsorship, approval, status, affiliation, or connection that 255
he does not have; 256
(f) Representing that goods are original or new if they 257
are reconditioned, reclaimed, used, or secondhand; 258
(g) Representing that goods or services are of a 259
particular standard, quality, or grade, or that goods are of a 260
particular style or model, if they are of another; 261
(h) Disparaging the goods, services, or business of 262
another by false or misleading representation of fact; 263
(i) Advertising goods or services with intent not to 264
sell them as advertised; 265
(j) Advertising goods or services with intent not to 266
supply reasonably expectable public demand, unless the 267
advertisement discloses a limitation of quantity; 268
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(k) Misrepresentations of fact concerning the reasons 269
for, existence of, or amounts of price reductions; 270
(l) Advertising by or on behalf of any licensed or 271
regulated health care professional which does not specifically 272
describe the license or qualifications of the licensed or 273
regulated health care professional; 274
(m) Charging an increased premium for reinstating a 275
motor vehicle insurance policy that was cancelled or suspended by 276
the insured solely for the reason that he was transferred out of 277
this state while serving in the United States Armed Forces or on 278
active duty in the National Guard or United States Armed Forces 279
Reserve. It is also an unfair practice for an insurer to charge 280
an increased premium for a new motor vehicle insurance policy if 281
the applicant for coverage or his covered dependents were 282
previously insured with a different insurer and canceled that 283
policy solely for the reason that he was transferred out of this 284
state while serving in the United States Armed Forces or on active 285
duty in the National Guard or United States Armed Forces Reserve. 286
For purposes of determining premiums, an insurer shall consider 287
such persons as having maintained continuous coverage. The 288
provisions of this paragraph (m) shall apply only to such 289
instances when the insured does not drive the vehicle during the 290
period of cancellation or suspension of his policy; 291
(n) Violating the provisions of Section 75-24-8; 292
(o) Violating the provisions of Section 73-3-38; 293
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ST: Proxy Advisor Transparency Act; enact.
(p) Violating any of the provisions of Title 41, 294
Chapter 149, Mississippi Code of 1972; * * * 295
(q) Violating any of the provisions of Title 45, 296
Chapter 38, Mississippi Code of 1972 * * *; 297
(r) Violating any of the provisions of Title 41, 298
Chapter 151, Mississippi Code of 1972 * * *; and 299
(s) Violating any of the provisions of Section 1 300
through 7 of this act. 301
SECTION 9. This act shall take effect and be in force from 302
and after July 1, 2026, and shall stand repealed on June 30, 2026. 303