The Securities and Exchange Commission (SEC) has voted in favor of rescinding rules requiring the disclosure of proxy adviser recommendations to corporate executives. Amendments have also been made to Rule 14a-8 no-action letters.

The Proxy Voting Advice rule, first established in 2020, faced fierce criticism from investors, which argued that providing boards with early access to proxy adviser advice made it harder for shareholders to hold boards accountable and for advisory firms to deliver independent advice to their clients in a timely manner.

The final amendments rescind certain conditions from the rule, with advisers no longer being required to give issuers a first look at advice to be sent to clients.

Amendments also remove a requirement allowing clients of proxy firms to be notified of any written responses to their advice from companies.

These changes come in light of “continued concerns” that the potential benefits to investors of these conditions “do not sufficiently justify the risks they pose to the cost, timeliness, and independence of proxy voting advice,” the regulator said.

Institutional Shareholder Services welcomed the rule changes, while the National Association of Manufacturers (NAM) has revealed its intention to sue the regulator for seeking to “undoubtedly harm the competitiveness of publicly traded manufacturers.”

In addition, the SEC amended proposed rules under Rule 14a-8, which provide issuers a method by which to omit shareholder proposals from their proxy statements.

Issuers can seek to exclude proposals on three bases; proposals having already been substantially implemented, being duplicative, or being ineligible for resubmission.

Gong forward, issuers will not be able to omit proposals on the grounds of being substantially implemented unless the company has “already implemented the essential elements of the proposal.”

Under current rules, companies can exclude proposals that “substantially duplicate another proposal previously submitted to the company by another proponent that will be included in the company’s proxy materials for the same meeting.”

New amendments specify that a proposal “substantially duplicates” another proposal only if it “addresses the same subject matter and seeks the same objective by the same means.”