We are writing to alert you to an important survey related to the SEC’s proxy reform rulemakings and a few other Washington developments.

Important Survey on SEC Proxy Reform Proposals

The Securities and Exchange Commission (SEC) is now evaluating comments submitted in response to its two pending proxy reform proposals, the Amendments to Improve Accuracy and Transparency of Proxy Voting Advice, which would require proxy advisory firms to disclose conflicts of interest and facilitate issuer input prior to issuing a final proxy voting report to clients; and the Amendments to the Shareholder Proposal Rule, which would update the requirements for proposing shareholder proposals.

Nareit has long advocated for SEC action on both of these topics and a submitted comment (links HERE and HERE) on each proposal on Feb. 3, 2020. However, few individual companies (and few REITs) have commented on these proposals. In its comment, Nareit noted that some REIT members cited concerns that their companies, or their boards and/or management, may receive retaliatory treatment from proxy advisory firms if they were to publicly criticize these firms. Apparently, other public companies have raised similar concerns. However, opponents of these proposals have claimed that the dearth of issuer comments may suggest less than full support from the issuer community.

In an effort to provide the SEC with additional information, the U.S. Chamber's Center for Capital Markets Competitiveness is now conducting a survey of public companies regarding “their considerations on whether to publicly engage on these issues as an individual company, either through meetings with the SEC, or through comment letters.” Nareit urges member REITs to respond to this U.S. Chamber survey (link HERE). We have been assured by the Chamber that “all answers and feedback will be anonymous and will be used to inform future corporate governance efforts by the U.S. Chamber, including further discussions and comments with the SEC as they seek to finalize these rulemakings.” The deadline to incorporate your input in this survey is Friday, March 13th. Please email any questions regarding the survey to Erik Rust at erust@uschamber.com.

SEC Adopts New Disclosure Rules for Debt Offerings

On March 2, 2020, the SEC adopted amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees. These amendments, which become effective on Jan. 4, 2021, follow the SEC’s July 2018 proposal, Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities, one of many rulemakings undertaken pursuant to the SEC’s Disclosure Effectiveness Initiative. Notably Nareit’s November 2018 Comment responding to the proposal, which was developed with the assistance of a Nareit member task force, is cited (approvingly) 24 times in the final rule. 

Please do not hesitate to contact Victoria Rostow, SVP Regulatory Affairs and Deputy General Counsel (vrostow@nareit.com; (202) 739-9431) with any related questions.