Form N-PX (A-Proxy Voting) Supporting Statement

OMB CONTROL NUMBER: 3235-0582

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
Form N-PX
A.

JUSTIFICATION
1.

Necessity for the Information Collection

Form N-PX is used for reports pursuant to section 30 of the Investment Company Act of
1940 (the “Act”) 1 and rule 30b1-4 under the Act by all registered management investment
companies, other than small business investment companies registered on Form N-5 (“funds”), to
file their complete proxy voting records not later than August 31 of each year for the most recent
twelve-month period ended June 30. 2
Funds are required to disclose certain information on Form N-PX for each matter relating
to a portfolio security considered at any shareholder meeting held during the period covered by
the report and with respect to which the fund was entitled to vote. This required information
includes certain information about the portfolio security, the voting matter, and whether and how
the fund cast its vote. 3
On November 2, 2022, the Commission adopted rule and form amendments
(“Amendments”) that would enhance the information funds report on Form N-PX and make that
information easier to analyze. 4 The Commission also adopted a new rule that would require an
institutional investment manager subject to section 13(f) of the Securities Exchange Act of 1934

1

15 U.S.C. 80a-29.

2

Rule 30b1-4 under the Act; General Instruction A of Form N-PX.

3

Item 1 of Form N-PX.

4

Enhanced Reporting of Proxy Votes by Registered Management Investment Companies; Reporting of
Executive Compensation Votes by Institutional Investment Managers, Investment Company Release No.
34745 (November 2, 2022) [87 FR 78770 (Dec. 22, 2022)] (“Adopting Release”).

(“Exchange Act”) to report annually on Form N-PX how it voted proxies relating to executive
compensation matters, as required by section 14A of the Exchange Act. The Amendments require
funds (and, for executive compensation matters, institutional investment managers) to (i) identify
voting matters using language from the issuer’s form of proxy (with certain exceptions for
issuers who are not subject to the Commission’s proxy rules) and categorize their votes from a
list of categories; (ii) disclose quantitative information regarding the number of votes cast (or
instructed to be cast) and the number of shares not voted because they are out on loan; and (iii)
file reports in an XML structured data language using a standardized format. In addition, the
Amendments included changes to forms N-1A, N-2, and N-3 that require funds, if they have a
website, to make publicly available free of charge the information disclosed in the fund’s most
recently filed report on Form N-PX on or through its website as soon as reasonable practicable
after filing the report.
2.

Purpose and Use of the Information Collection

The purpose of Form N-PX is to meet the filing and disclosure requirements of rules
under the Act and also to enable funds to provide investors with information necessary to
evaluate overall patterns in the manager's voting behavior. This information collection is
primarily for the use and benefit of investors. The information filed with the Commission also
permits the verification of compliance with securities law requirements and assures the public
availability and dissemination of the information. Due to the Amendments, Form N-PX will also
be used by institutional investment managers to meet the filing and disclosure requirements of
section 14A under the Exchange Act.

2

3.

Consideration Given to Information Technology

The Commission’s Electronic Data Gathering, Analysis, and Retrieval System
(“EDGAR”) automates the filing, processing, and dissemination of full disclosure filings. This
automation has increased the speed, accuracy, and availability of information, generating benefits
to investors and financial markets. Reports on Form N-PX are required to be filed electronically
on EDGAR and, under the Proposal, reports on Form N-PX would be required to be filed in
structured (XML) format, which permits the electronic analysis of the data in a single filing and
comparisons over time or across multiple filers. The public may access filings on EDGAR
through the Commission’s website (http://www.sec.gov) or at EDGAR terminals located at the
Commission’s public reference rooms.
4.

Duplication

The Commission periodically evaluates rule-based reporting and recordkeeping
requirements for duplication and reevaluates them whenever it proposes a rule or form or a
change in a rule or form. The information required by Form N-PX is not generally duplicated
elsewhere.
5.

Effect on Small Entities

The Commission reviews all rules periodically, as required by the Regulatory Flexibility
Act, 5 to identify methods to minimize recordkeeping or reporting requirements affecting small
businesses. The current disclosure requirements for Form N-PX do not distinguish between
small entities and other funds. Although the burden on smaller funds may be greater than those
of larger funds, the Commission believes that imposing different requirements on small entities

5

5 U.S.C. 601 et seq.

3

would not be consistent with investor protection. Similarly, the Amendments will affect funds
that are currently required to report on the form, including those that are small entities. The
Commission considered the effects of the Amendments on small entities as part of its Final
Regulatory Flexibility Act Analysis of the amendments. 6
The Commission has endeavored through the Amendments to minimize the regulatory
burden on all funds, including small entities, while meeting our regulatory objectives. It is
important to establish a consistent framework for proxy information provided by funds to
enhance the consistency and availability of this information to investors, and investors in funds
of all sizes will benefit from the Amendments’ enhancements to Form N-PX. Therefore, the
Amendments establish requirements for reporting proxy information that are broadly applicable
to all funds, including small funds. The Commission, however, made certain modifications to
the Amendments as adopted, as compared to as proposed, that may have the effect of easing
unnecessary burdens. In particular, the Commission streamlined the list of categories from
which reporting persons will be required to choose in order to reduce overlap between the
categories and eliminated the proposed requirement to select from a list of subcategories in
addition to the categories. Thus, while acknowledging that the Amendments as adopted will
impose costs on smaller entities, they are tailored to accomplish the Commission’s goals while
minimizing those costs.
The Commission does not presently believe that the Amendments would require the
establishment of special compliance requirements, timetables, or exceptions for small entities.
The Amendments were designed to increase transparency about how funds vote. Different
disclosure requirements for small entities, such as reducing the level of proxy voting disclosure

6

Adopting Release, supra footnote 4.

4

for small entities, would prevent investors in small funds from benefitting from the information
provided by the Amendments. Small funds currently must follow the same proxy voting
reporting requirements as large funds in light of these concerns.
The Commission endeavored to clarify, consolidate, and simplify the requirements of the
Amendments applicable to funds, including those that are small entities, as discussed in the
Adopting Release. Finally, the Commission did not consider the use of performance rather than
design standards to be consistent with its statutory mandate of investor protection with respect to
reporting of proxy voting records.
6.

Consequences of Not Conducting Collection

Rule 30b1-4 under the Act requires that reports of funds’ proxy voting records on
Form N-PX be filed with the Commission annually and Section 14A of the Exchange Act
requires that institutional investment managers report how they voted on executive compensation
resolutions required by that section. Less frequent collection would mean that current
information might not be available to fund investors.
7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

None.
8.

Consultation Outside the Agency

The Commission requested public comment when it proposed the Amendments,
including the collection of information requirements resulting therefrom. 7 Before adopting the
Amendments, the Commission received and evaluated public comments on the collection of

7

Enhanced Reporting of Proxy Votes by Registered Management Investment Companies; Reporting of
Executive Compensation Votes by Institutional Investment Managers, Investment Company Release No.
34389 (September 29, 2021) [86 FR 57478 (Oct. 15, 2021)] at Section V.

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information requirements. While several commenters provided comments on the potential costs
of the Amendments as proposed, no commenters specifically addressed the Commission’s PRA
analysis. Two commenters stated that some reporting persons use service providers in the
reporting process and that the proposed amendments could necessitate reconfiguration of the
processes those service providers use. One commenter suggested that proxy voting advisory
firms will undertake much of the work of vote categorization, which will result in costs for funds
for their services. The commenter also stated that smaller funds that do not currently use an
outside vendor to file Form N-PX may engage one as a result of the rule. On the other hand, a
commenter stated that, while certain funds may bear new costs, funds may already track much of
the information they will be required to report; the increased costs would thus only be due to
transferring existing data onto a new form, rather than designing a new process to track the
information in the first place. In addition, several commenters stated that lent share disclosure
may be burdensome to implement. As discussed in the Adopting Release, the Commission
modified its estimates in response to comments. 8
The Commission and the staff of the Division of Investment Management participate in
an ongoing dialogue with representatives of the investment company industry through public
conferences, meetings, and informal exchanges. These various forums provide the Commission
and the staff with a means of ascertaining and acting upon the paperwork burdens confronting
the industry.
9.

Payment or Gift

Not applicable.

8

See Adopting Release, supra note 4, at Section IV.

6

10.

Confidentiality

Not applicable.
11.

Sensitive Questions

No information of a sensitive nature, including social security numbers, will be required
under this collection of information. The information collection collects basic information that
may include names, job titles, work addresses and telephone numbers. However, the agency has
determined that the information collection does not constitute a system of record for purposes of
the Privacy Act. Information is not retrieved by a personal identifier. In accordance with Section
208 of the E-Government Act of 2002, the agency has conducted a Privacy Impact Assessment
(PIA) of the EDGAR system, in connection with this collection of information. The EDGAR
PIA, published on 2/5/2020, is provided as a supplemental document and is also available at
https://www.sec.gov/about/privacy/pia/pia-edgar.pdf.
12.

Burden of Information Collection

The following estimates of average burden hours and costs are made solely for purposes
of the Paperwork Reduction Act of 1995 (“PRA”) 9 and are not derived from a comprehensive or
even representative survey or study of the cost of Commission rules and forms. In our most
recent PRA submission for Form N-PX, we estimated a total hour burden of 47,984 hours and a
total annual internal cost burden of $17.66 million. Compliance with Form N-PX is mandatory.
Responses to the collection of information requirements will not be kept confidential. The table

9

44 U.S.C. 3501 et seq.

7

below summarizes our PRA initial and ongoing annual burden estimates associated with the
Amendments. 10
FORM N-PX PRA ESTIMATES

Internal initial
burden hours

Internal annual
burden hours1

Wage rate2

Internal time
costs

Annual external
cost burden

$1,000

PROPOSED ESTIMATES
Funds Holding Equity Securities
Estimated annual burden
of current Form N-PX per
response

7.2

×

$3733

$2,686

8

×

$3254

$2,600

Additional estimated
annual burden associated
with amendments to
Form N-PX

10

×

$3355

$3,350

Proposed website
availability requirement6

0.5

×

$2546

$127

Estimated number of
annual responses8

× 7,064

× 7,064

× 7,064

Total annual burden

181,545

$61,901,832

$10,596,000

Estimated initial burden
to accommodate new
reporting requirements

24

$500

Funds Not Holding Equity Securities
Estimated annual burden
of current Form N-PX per
response

0.17

×

$3733

$63

Additional estimated
annual burden associated
with amendments to
Form N-PX
Estimated number of
annual responses8

× 3,188

Total annual burden

542

× 3,188
$200,844
Funds of Funds

Estimated annual burden
of current Form N-PX per
response

1

×

$3733

$373

$100

Additional estimated
annual burden associated

0.5

×

$3733

$187

$100

10

The Proposal would also amend Forms N-1A, N-2, and N-3 to disclose that funds’ proxy voting records are
available on (or through) their websites. Although the website availability requirement would be located in
the relevant registration form, the Commission proposed to reflect the burden for these requirements in the
burden estimate for Form N-PX — Annual Report of Proxy Voting Record, and not in the burden for Forms
N-1A, N-2, or N-3.

8

with amendments to
Form N-PX
Proposed website
availability requirement6

0.5

Estimated number of
annual responses8

× 1,367

× 1,367

× 1,367

Total annual burden

2,734

$939,129

$273,400

×

$2546

$127

Institutional Investment Managers
Changes to systems to
accommodate new
reporting requirements

30

10

×

$3259

$3,250

Estimated annual burden
associated with Form
N-PX filing requirement

5

×

$33510

$1,675

$1,000

Estimated number of
annual responses11

× 7,744

× 7,744

× 7,744

Total annual burden

116,160

$38,139,200

$7,744,000

FINAL ESTIMATES
Funds Holding Equity Securities
Estimated annual burden
of current Form N-PX per
response

7.2

×

$4003

$2,880

$1,000

12

×

$3494

$4,188

$50013

Additional estimated
annual burden associated
with amendments to
Form N-PX12

12

×

$3495

$4,188

$1,00013

Website availability
requirement6

0.5

×

$2726

$136

Estimated number of
annual responses8

× 5,496

× 5,496

× 5,496

Total annual burden

188,490

$67,737,479

$14,865,142

Estimated initial burden
to accommodate new
reporting requirements12

36

Funds Not Holding Equity Securities
Estimated annual burden
of current Form N-PX per
response

0.17

×

$4003

$68

Additional estimated
annual burden associated
with amendments to
Form N-PX
Estimated number of
annual responses8

× 2,588

× 2,588

Total annual burden

440

$176,005
Funds of Funds

Estimated annual burden
of current Form N-PX per
response

1

×

$4003

$400

$100

Additional estimated

0.5

×

$4003

$200

$100

9

annual burden associated
with amendments to
Form N-PX
Website availability
requirement6

0.5

Estimated number of
annual responses8

× 1,619

× 1,619

× 1,619

Total annual burden

3,238

$1,191,584

$323,800

×

$2726

$136

Institutional Investment Managers
Changes to systems to
accommodate new
reporting requirements12

45

15

×

$3499

$5,235

$50013

Estimated annual burden
associated with Form
N-PX filing requirement12

7.5

×

$34310

$2,573

$2,00013

Estimated number of
annual responses11

× 8,381

× 8,381

× 8,381

Total annual burden

188,572

$65,438,848

$20,952,500

Total Burden
Currently Approved
Burden

47,984

$17,657,958

Additional Burden
Associated with
Amendments

332,757

$18,483,484

Total Burden

380,741

$36,141,445

Certain products and sums do not tie due to rounding.
1. Includes initial burden estimates amortized over a three-year period.
2. The Commission’s estimates of the relevant wage rates are based on salary information for the securities industry compiled by the
Securities Industry and Financial Markets Association’s Office Salaries in the Securities Industry 2013. The estimated figures are
modified by firm size, employee benefits, overhead, and adjusted annually to account for the effects of inflation, with the last
adjustment occurring in early 2022 (or 2021 in the case of estimates from the proposal). See Securities Industry and Financial
Markets Association, Report on Management & Professional Earnings in the Securities Industry 2013.
3. Represents the estimated hourly wage rate of a compliance attorney.
4. Represents the blended estimated hourly wage rates of a programmer and a compliance attorney and includes, inter alia, the costs
of obtaining from service providers data on the number of shares on loan but not recalled. In the case of the final estimates, the
blended hourly rate is based on 18 hours for a programmer at $297 per hour and 18 hours for a compliance attorney at $400 per
hour.
5. Represents the blended estimated hourly wage rates of a programmer and a compliance attorney. In the case of the final estimates,
the blended hourly rate is based on 6 hours for a programmer at $297 per hour and 6 hours for a compliance attorney at $400 per
hour.
6. While the amendments will require funds to disclose that their proxy voting records both are available on fund websites and will be
delivered to investors upon request, the Form N-PX PRA estimates includes only the burdens associated with website posting. Funds’
registration forms currently require them to disclose that they either make their proxy voting records available on their websites or
deliver them upon request. We understand most funds deliver proxy voting records upon request and, therefore, the burdens of
delivery upon request are already included in the information collection burdens of each relevant registration form.
7. Represents the estimated hourly wage rate of a webmaster.
8. These estimates are conducted for each fund portfolio, not for each filing, and are an average estimate across all Form N-PX
reporting persons. In certain cases, a single Form N-PX filing will report the proxy voting records of multiple fund portfolios. In those
circumstances, the reporting person will bear the burden associated with each fund portfolio it reported. This average estimate
takes into account higher costs for funds filing reports for multiple portfolios without assuming any economies of scale that
multiple-portfolio fund complexes may be able to achieve.
9. Represents the blended estimated hourly wage rates of a programmer and a compliance attorney. In the case of the final estimates,
the blended hourly rate is based on 22.5 hours for a programmer at $297 per hour and 22.5 hours for a compliance attorney at
$400 per hour.
10. Represents the blended estimated hourly wage rates of a programmer and a compliance attorney. In the case of the final estimates,

10

the blended hourly rate is based on 3 hours for a programmer at $297 per hour and 4.5 hours for a compliance attorney at $400
per hour.
11. At proposal, included 7,550 initial filings and assumed an additional 194 filings as a result of the final adverse disposition of a
request for confidential treatment or upon expiration of confidential treatment. Now includes 8,147 initial filings and estimates an
additional 234 filings.
12. The Commission’s estimates of the internal initial and annual time burdens associated with the amendments have been increased
by 50% compared to the proposal.
13. In light of comments and modifications to the proposal, the Commission’s estimates of the external ongoing costs associated with
the amendments have been doubled compared to the proposal, and the Commission has additionally included estimated initial
costs of compliance. While the specific external costs will vary depending on the reporting person, this could include the costs of
external reporting vendors or external counsel or of reporting in a custom XML data language. See footnote Error! Bookmark not
defined. in the Adopting Release. Costs are estimated on a per-portfolio (not per-fund complex) basis, and as noted by a commenter,
larger fund complexes may be able to achieve greater economies of scale. The same may also be true of managers.

13.

Cost to Respondents

Cost burden is the cost of services purchased to prepare and update Form N-PX, such as
for the services of outside counsel. The cost burden does not include the cost of the hour burden
discussed in Item 12 above. Estimates are based on the Commission’s experience with the filing
of reporting forms.
The most recent PRA submission estimated that the annual cost burden of Form N-PX is
$1,000 in external costs per portfolio holding equity securities that is paid to third-party service
providers and $100 per fund-of-funds portfolio, or an aggregate external cost burden of
approximately $6.5 million. The current approved external cost burden inventory for this
collection is $17.66 million. 11
As summarized in the table above, the Commission estimates the Proposal would result
in an annual external cost burden of $2,500 per portfolio holding equity securities, $200 per
fund-of-funds portfolio, and $2,500 per institutional investment manager. While the specific
external costs will vary depending on the reporting person, this could include the costs of
external reporting vendors or external counsel or of reporting in a custom XML data language.

11

In the most recent renewal of this collection, we estimated an external cost burden of $6,539,600 but a cost
burden of $17,657,958, which was our estimate of the internal cost burden, was approved.

11

The Commission estimates that the total aggregate annual external cost burden of Form N-PX
would be $36.1 million.
14.

Cost to the Federal Government

The annual cost of reviewing and processing disclosure documents, including new
registration statements, post-effective amendments, proxy statements, shareholder reports, and
other filings of investment companies amounted to approximately $30 million in fiscal year
2021, based on the Commission’s computation of the value of staff time devoted to this activity
and related overhead.
15.

Change in Burden

As summarized in the table above, the Commission estimates that the hour burden
associated with Form N-PX will increase from 47,984 hours to 380,741 hours (an increase of
332,757 hours). The changes in burden hours and cost estimates are due primarily to the
Commission’s estimates of the increased time burden that result from the amendments to Form
N-PX, the new website disclosure requirements, and the new requirement that institutional
investment managers file reports on Form N-PX. 12 The Commission also estimates an increase in
the external costs of Form N-PX from $17,657,958 to $36,141,445 (an increase of
$18,483,484). 13
TABLE 2: CHANGES IN ESTIMATED BURDEN
Annual Number of Responses

Annual Time Burden (hours)

Annual Cost Burden (dollars)

12

In addition, a portion of the increase in estimated burden is due to the Commission using more recent data
to estimate the number of filers that would be affected, which would have changed irrespective of the
Proposal.

13

As discussed above, in the prior renewal of this collection we estimated a lower external cost burden than
the currently approved inventory. See supra footnote 10. Using our estimated external cost burden would
result in a larger cost burden increase of $29,601,845 ($36,141,445 - $6,539,600 = $29,601,845).

12

Form NPX

Currently
Approved

Revised
Estimate

Change

Currently
Approved

Revised
Estimate

Change

Currently
Approved

Revised
Estimate

Change

11,890

18,084

6,194

47,984

380,741

332,757

$17.66M*

$36.14M

$18.48M

*See footnote 13.

16.

Information Collection Planned for Statistical Purposes

The results of any information collected will not be published.
17.

Approval to Omit OMB Expiration Date

We request authorization to omit the expiration date on the electronic version of the form for
design and IT project scheduling reasons. The OMB control number will be displayed.
18.

Exceptions to Certification Statement for Paperwork Reduction Act
Submission

The Commission is not seeking an exception to the certification statement.
B.

COLLECTION OF INFORMATION EMPLOYING STATISTICAL METHODS
The collection of information will not employ statistical methods.

13