(Reuters) – The US Securities and Exchange Commission voted on Wednesday to repeal rules introduced under former President Donald Trump that critics said hindered the independence of companies that advise investors on how to vote in corporate elections.
The move is the latest in a long-running battle over regulating proxy advisers such as Institutional Shareholder Services and Glass Lewis, which advises investors on how to vote on issues including board elections, merger transactions and shareholder proposals.
The five-member SEC panel voted 3-2 to adopt the rule changes.
Companies say that the consulting companies have accumulated too much influence over company choices and should be regulated more strictly.
In 2020, the SEC introduced rules that increased the legal responsibilities of proxy counselors and required them to share recommendations with business leaders early on. Investor advocates said the changes tilted the scales in favor of company executives over investors.
Wednesday̵7;s rules specifically repeal two exceptions, including a requirement that proxy advisers give companies a first look at the advice to be placed on the agenda. It also removes a requirement that enabled clients of proxy companies to be notified of any written response to their advice from companies.
The SEC, whose composition has changed under President Joe Biden, first proposed these rule changes in November, saying investors had expressed concern that the conditions created increased compliance costs for proxy advisers and worsened the independence and timeliness of their advice.
“It is crucial that investors who are clients of these proxy consulting firms can receive independent and prompt advice,” said SEC President Gary Gensler.