Bill > SB2641

This bill revises laws related to pension plans and proxy advisors in Tennessee, defining terms like "company," "direct holdings," "fiduciary," "financial analysis," "indirect holdings," "pension plan," "person," "political subdivision," and "proxy advisory firm." A "political subdivision" refers to local government entities, and a "pension plan" is a defined benefit plan for employees of these entities. A "fiduciary" is someone with discretionary authority over a pension plan's assets or administration, or who provides investment advice for a fee. A "proxy advisory firm" is an entity that provides voting advice or recommendations to political subdivisions regarding shareholder proposals, but is not a fiduciary to that subdivision. The bill mandates that political subdivisions managing pension plans must invest and manage assets for the exclusive financial benefit of beneficiaries, maximize long-term shareholder value, and exercise all voting rights on direct holdings. They must also submit an annual report detailing their use of proxy advisory firms and voting decisions, and ensure agreements with these firms acknowledge the firm's obligations. Furthermore, proxy advisory firms are prohibited from providing advice if a conflict of interest exists, must provide a "financial analysis" supporting recommendations that differ from company management's, and cannot base negative recommendations on past shareholder support if the previous proposal was approved. This act takes effect on July 1, 2026.