Like Herding Cats: An Analysis of Common State-Law Shareholder Meeting Questions

June 2020


For many registered investment companies under the Investment Company Act of 1940 (1940 Act) (which we will refer to generally as funds), persuading retail investors to vote their shares at shareholder meetings can be a challenge. This challenge can be compounded by the somewhat arcane rules relating to shareholder meeting mechanics. This article addresses some common questions that arise for funds in the context of shareholder meetings, including questions surrounding the treatment of broker non-votes and their impact on the outcome of proposals submitted at a shareholder meeting, who has the power to adjourn or postpone a meeting (and the difference between adjournment and postponement), and the manner in which shares are counted for purposes of determining the establishment of a quorum and for voting. These are a few of the seemingly uncomplicated issues that can prove vexing when they arise in particular instances. To aid in-house and outside fund counsel, we set forth in this article some of the general principles used in addressing these issues.

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