The Proxy Advisors (Shareholders’ Rights) Regulations 2019 (“Regulations”) in the United Kingdom went into effect this past Monday. Proxy advisory services typically include research reports on public companies as well as proxy voting recommendations on how the proxy advisors’ clients, namely shareholders, should vote on all shareholder proposals, including those that are submitted by the public company’s management.
General Overview. The new U.K. regulations are “intended to make sure that proxy advisors’ clients will be able to better understand what standards of conduct the proxy advisor adheres to, how the proxy advisor ensures an adequate standard of quality in its advice and how it manages conflicts of interest, in order to help the market for proxy advisor services to function effectively.”
The Regulations primarily establish a transparency framework rather than a conduct regime or expectation level regarding the controls or quality of proxy advisory services.