View source for Proxy Voting Integrity and Transparency Act

{{Infobox ALEC Bills
|bill_title          = Proxy Voting Integrity and Transparency Act
|date_introduced     = July 27, 2023
|date_reviewed       =
|date_finalized      =
|date_amended        =	
|date_accessed       =
|type                = Model Policy
|status              = Draft
|task_forces         = Tax and Fiscal Policy
|keywords            = Proxy vote
|notes               =
}}
<h1>Proxy Voting Integrity and Transparency Act</h1>
Section A: Addition to current statutes governing Treasurer duties [Optional section needed if law establishing the office requires clarification. Bracketed portions may be adjusted for the needs of each state]

(1) State investments; investment managers; list; posting

(a) The state treasurer shall post a current list of its investments by name on the state treasurer’s publicly accessible website and shall update any changes to the list within 30 calendar days.

(b) The state treasurer shall post the current list of its investment managers on the state treasurer’s publicly accessible website and shall update any changes to the list within 30 calendar days.

(c) All state investments made by the state treasurer shall be made in the sole interest of the beneficiary. The state treasurer’s evaluation of an investment must be based on pecuniary factors as prescribed in [insert statutory reference to Section B below]

 

Section B: proposed new article under statutory title/section governing public finances and the handling of public funds and investments: 

 

Article <NUMBER>. GOVERNMENT INVESTMENTS FIDUCIARY PROTECTION

(1) Definitions: In this article, unless the context otherwise requires: [Bracketed portions may be adjusted for the needs of each state]

(a) “pecuniary factor” means a factor that has a material effect on the financial risk or the financial return of an investment based on investment horizons consistent with a plan’s investment objectives and funding policy.

(b) “Plan” means any fund or program that is established or maintained by this State or a political subdivision of this state, including a university under the jurisdiction of the [insert state higher education governing body/bodies] and a community college district as defined in [insert specific section references], to do any of the following:

(1) Provide retirement income or other retirement benefits to employees or former employees.

(2) Defer income by employees for a period of time extending to the termination of covered employment or beyond.

(3) Invest taxpayer monies for any purpose.

(2) Plans; voting of ownership interests

a. A governmental entity that establishes or maintains a plan must make all direct investment decisions based solely on pecuniary factors when evaluating a proxy vote.

(1) A factor cannot qualify as a pecuniary factor if the investment agent that has labeled the factor a pecuniary factor cannot demonstrate that the factor is likely to have a material effect on the public fund’s financial returns after having undertaken objective analysis of the factor that includes all materially relevant considerations.

(b) A governmental entity that establishes or maintains a plan must vote all directly held shares, or have the governmental entity’s directly held shares voted, based solely on pecuniary factors when voting proxies.

(c) If a governmental entity that establishes or maintains a plan has indirect investments or commingled investments, the governmental entity must notify the general partner or investment manager that in all cases where the governmental entity has the option, the general partner or investment manager must:

Make investment decisions based solely on pecuniary factors when evaluating an investment.
Proportionally vote directly held shares, or have the governmental entity’s directly held shares proportionally voted, based solely on pecuniary factors.
(d) A plan may not adopt a practice of following the recommendations of a proxy advisory firm or other service provider unless such firm or service provider agrees in writing to following proxy voting guidelines set by plan fiduciaries and that are consistent with the fiduciary’s obligation to act based only on pecuniary factors.

(3) Proxy vote reporting [Bracketed portions may be adjusted for the needs of each state]

(a)All proxy votes shall be posted on the relevant public plan website no later than 14 calendar days in advance of votes being submitted. For each vote, the report shall contain a vote caption, the plan’s vote, the recommendation of company management, and, if applicable, the proxy advisor’s recommendation.

(b) All proxy votes shall be aggregated and reported annually to the [applicable government entity or official] to be publicly archived. For each vote, the report shall contain a vote caption, the plan’s vote, the recommendation of company management, and, if applicable, the proxy advisor’s recommendation.

(c) Reporting required under subsection a and b shall be posted on a publicly available webpage on the [relevant public trust’s] website.

(4) Injunction by beneficiary.[OPTIONAL]

(a) A beneficiary of a plan may bring an action in district court to restrain or enjoin an investment manager or proxy advisor from casting a proxy vote based on nonpecuniary factors

(1) The court may award court costs and reasonable attorney’s fees to a party who prevails in an action brought under this section.