Bill > S1670

This bill, known as the Investor Democracy is Expected (INDEX) Act, aims to modify proxy voting practices for passively managed funds, such as index funds. Specifically, the bill requires investment advisers who manage passively managed funds and control more than 1% of a company's voting securities to vote those shares proportionally based on the voting instructions of the fund's underlying investors. If an investment adviser cannot obtain voting instructions from all investors, they are prohibited from voting the shares for which instructions were not received, with some exceptions for routine matters and votes requiring majority approval. The bill defines several key terms, including "passively managed fund" (typically index funds tracking a securities index) and "covered securities" (voting securities in which a qualified fund is invested). Investment advisers must provide investors with proxy materials, voting instruction forms, and at least 5 business days to return their voting instructions. The bill also allows third-party voting recommendations and provides a safe harbor for investment advisers who choose not to solicit voting instructions on non-routine matters. The new requirements would take effect two years after the bill's enactment, with the goal of increasing investor participation in corporate governance decisions.

Housing and Urban Affairs

https://www.congress.gov/bill/119th-congress/senate-bill/1670/all-info