SEC Grants No-Action Relief for Retail Voting Program: Potential Implications for Business Development Companies and Registered Investment Companies

Background

On September 15, 2025, the staff of the SEC’s Division of Corporation Finance issued a no-action letter¹ to Exxon Mobil Corporation (Exxon) permitting it to implement a retail voting program that allows retail shareholders to provide a standing instruction to vote their shares in line with the recommendations of the board of directors (Retail Voting Program). Specifically, the staff of the SEC’s Division of Corporation Finance confirmed that it would not recommend enforcement action under Rule 14a-4(d)(2) (which prohibits a proxy from conferring authority to vote at any annual meeting other than the next upcoming annual meeting) and Rule 14a-4(d)(3) (which prohibits a proxy from conferring authority to vote with respect to more than one shareholder meeting) under the Securities Exchange Act of 1934 if the Retail Voting Program is implemented in accordance with the parameters and conditions set forth in the no-action letter, together with Exxon’s incoming letter (the Exxon Letter).²

The key features and considerations of the Retail Voting Program are as follows:  

• Eligibility. The Retail Voting Program must be available to all retail investors, including registered and beneficial owners via their bank, broker or plan administrator at no cost, and each will be offered the same opportunity to opt in to the program. Registered investment advisers exercising voting authority are not eligible to participate in the program.  
• Tailored Voting Instructions. Participating shareholders may apply their standing voting instruction to either (i) all matters or (ii) all matters except contested director elections and any acquisition, merger or divestiture that requires shareholder approval under state law or stock exchange rules.
• Notices. During the time period when Exxon is not soliciting votes for its annual shareholder meeting, participating shareholders must receive an annual reminder of their opt-in status and selection and will be reminded of their ability to opt out and cancel their standing voting instruction with respect to subsequent meetings. Participating shareholders that apply their standing voting instruction to “all matters” will receive additional reminders in connection with any meeting involving contested director elections and any acquisition, merger or divestiture that requires shareholder approval under state law or stock exchange rules.
• Cancelation. Participating shareholders may cancel their standing voting instruction at any time, at no cost, and cancellation of the standing voting instruction will apply to meetings for which Exxon has not filed a definitive proxy statement. Once Exxon has filed a definitive proxy statement for that meeting, shareholders are able to override their instructions by voting using the proxy materials received for that meeting.
• Proxy Materials Availability. Participating shareholders must continue to receive all proxy materials for upcoming shareholder meetings, and the Retail Voting Program will not limit or restrict shareholders from voting using proxy materials received.
• Disclosure. Full disclosure regarding the Retail Voting Program must be made on Exxon’s website and proxy statement.

Implications for Funds

In the Exxon Letter, Exxon observed that the large volume of shareholder proposals disproportionately impacted retail investors, who often lack the time or professional resources to evaluate and vote on such matters, leading to lower participation rates for retail investors.³ A Retail Voting Program can ease burdens on retail investors, reduce costs, and simplify voting processes, all of which can serve to increase voting engagement and participation.

The ability to implement a retail voting program similar to the Retail Voting Program would be particularly beneficial for Funds with large retail shareholder bases and low retail investor voting participation at shareholder meetings. In particular, low retail shareholder participation at shareholder meetings can be a significant impediment to obtaining shareholder approval for those proposals requiring the “majority of the outstanding voting securities” voting standard required by the Investment Company Act of 1940 (1940 Act), which is more stringent than a simple majority vote.⁴ A retail voting program would also enhance representation of a Fund’s retail shareholders by increasing participation through opt-in standing instructions, thereby improving quorum and approval rates for key proposals and supporting the Fund’s operations, governance and strategic initiatives. If the IM staff were to grant no-action relief to Funds to permit them to implement retail voting programs similar to the Retail Voting Program, we would expect that the parameters and conditions of such relief to be substantially similar to those set forth in the Exxon Letter.

Other Considerations

If the IM staff were to grant no-action relief to Funds similar to that set forth in the Exxon Letter, Funds would also need to consider the legality of their shareholders giving them a standing voting instruction under state corporate law and their governing documents. For example, both the Delaware General Corporation Law and the Maryland General Corporation Law set a default time period for the validity of proxies but allow shareholders to specify a longer time period.⁵