SEC Issues Guidance Regarding Unbundling of Proxy Proposals

The SEC Division of Investment Management ("staff") issued a Guidance Update in order to ensure consistent application of the "Unbundling Rule" regarding amendments to investment company charters pursuant to Exchange Act Rule 14a-4 ("Requirements as to Proxy").

The Guidance stated that Exchange Act Rule 14a-4(a)(3) and Exchange Act Rule 14a-4(b)(1), together known as the "unbundling rule," are intended to provide a means for shareholders to communicate their views to the board of directors on each matter to be acted upon. Furthermore, the Guidance reiterated the SEC's position that a matter should be voted upon separately if the Investment Company Act, state law or a fund's organizational document requires a matter under consideration to be submitted to shareholders.

See: SEC Guidance.