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DOL Publishes Proposed Rule on Employee Benefit Plan Proxy Voting and Exercises of Other Shareholder Rights

The U.S. Department of Labor has released a proposed rule that would address the application of the prudence and exclusive purpose duties under the Employee Retirement Income Security Act (ERISA) with respect to proxy voting and exercises of other shareholder rights. The proposed rule amends DOL’s longstanding “investment duties” regulation at 29 CFR 2550.404a-1.

According to DOL, the proposal includes provisions that would articulate general duties requiring fiduciaries to vote any proxy where the fiduciary prudently determines that the matter being voted upon would have an economic impact on the plan. It also prohibits fiduciaries from voting any proxy unless the fiduciary prudently determines that the matter has an economic impact on the plan. To help fiduciaries comply with these duties, the proposal also sets forth “permitted practices” under which the plan fiduciary can adopt certain proxy voting policies and parameters reasonably designed to serve the plan’s economic interest.

The proposal includes a 30-day comment period and instructions on submitting comments through www.regulations.gov. DOL states that commenters are free to express their views not only on the specific provisions of the proposal, but also on any issues germane to the subject matter of the proposal.

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