Key Change of ISS Policy for Mutual Funds
Recently, ISS issued the 2012 updates to its U.S. Corporate Governance Policy. These updates include one key change/clarification to its policies that impact mutual funds.
For shareholder meetings on or after February 1, 2012, ISS will recommend that its clients vote AGAINST proposals that authorize a board to hire or terminate subadvisers without shareholder approval if the investment adviser currently employs only one subadviser. The policy has been clarified to recognize the costs that could be associated with solicitation campaigns for approving subadvisory arrangements for multi-managed funds.
Going forward, if a fund currently engages more than one subadviser, the fund can be more comfortable that ISS will be supportive of proposals by such fund seeking SEC exemption from shareholder approval of hiring or terminating subadvisers.
For your convenience, we attach the language from the 2012 update for your review. If you would like to discuss how this clarification will impact your clients please contact:
Bruce H. Goldfarb +1 212 297 0722
bhgoldfarb@okapipartners.com
or
Laura Bissell +1 212 297 1823
Lbissell@okapipartners.com
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