Bill > SB2337

This bill introduces new regulations for proxy advisory services in Texas, focusing on transparency and preventing potentially misleading investment advice. The legislation requires proxy advisors (professionals who provide recommendations on how shareholders should vote in corporate elections or on specific proposals) to clearly disclose when their voting advice is not solely based on financial considerations. Specifically, if a proxy advisor's recommendations involve non-financial factors like environmental, social, and governance (ESG) goals, diversity and inclusion (DEI) initiatives, or social credit scores, they must provide explicit disclosures explaining how these factors might impact shareholder financial interests. The bill mandates that such advisors must: (1) clearly state when their advice is not purely financially motivated, (2) provide a detailed explanation of non-financial recommendation bases, (3) immediately notify the company about such recommendations, and (4) publicly display on their website that their services may include advice not exclusively focused on financial returns. Additionally, the bill requires proxy advisors to disclose when they provide materially different voting recommendations to different clients, including notifying shareholders, the company, and the attorney general. Violations of these requirements can be treated as deceptive trade practices, and affected parties can seek declaratory judgments or injunctive relief. The law will take effect on July 1, 2025, pending legislative approval.

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https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=SB2337