No-Action Letter - Mutual Fund Directors Forum

September 29, 2026

RESPONSE OF THE OFFICE OF CHIEF COUNSEL
DIVISION OF INVESTMENT MANAGEMENT

Your letter, dated September 29, 2026, requests our assurance that we would not recommend enforcement action to the Securities and Exchange Commission (the "Commission") under rules 14a-3(a), 14a-4(d)(2), 14a-4(d)(3), 14a-4(f), 14a-6(o), 14a-10, and 14a-12(a) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), if an investment company registered under the Investment Company Act of 1940, as amended (the "Investment Company Act"), or that elects to be regulated as a business development company under the Investment Company Act, or, as applicable, a separate series thereof (each, a "Fund") implements the proposed directed shareholder voting program described below (the "Directed Voting Program").[1]

You note that the staff of the Division of Corporation Finance ("CorpFin") issued a no-action position related to rules 14a-4(d)(2) and 14a-4(d)(3) under the Exchange Act for a similar "Retail Voting Program" in a letter to Exxon Mobil Corporation and Davis Polk & Wardwell LLP on September 15, 2025 (the "Exxon Letter").[2] You note that today, CorpFin issued a no-action position related to rules 14a-3(a), 14a-4(f), 14a-6(o), 14a-10, and 14a-12(a) (in addition to rules 14a-4(d)(2) and 14a-4(d)(3)) under the Exchange Act for another similar "Issuer Voluntary Retail Voting Program" in a letter to Tesla, Inc. and Sullivan & Cromwell LLP (the "Tesla Letter").[3] You note that your request addresses an issue not addressed by the Exxon Letter and the Tesla Letter -- the implementation of a shareholder voting program by Funds and their shareholders.

Background

You represent the following:

• Under the Directed Voting Program, a Fund shareholder could give a revocable standing voting instruction whereby, on an ongoing basis, such shareholder's votes would be cast in favor of recommendations approved by the Fund's board of directors ("Board"), including all of the directors of the Fund who are not "interested persons" of the Fund as defined under the Investment Company Act ("Independent Directors").[4]
• The Directed Voting Program would be available to all "retail" shareholders at no cost, and each investor would be offered the same opportunity to enroll in the Directed Voting Program.[5] A shareholder's participation in the Directed Voting Program would be completely voluntary.
• The Directed Voting Program would be: (i) approved by the Fund's Board, including unanimously by the Fund's Independent Directors, prior to its implementation, and (ii) reexamined by the Fund's Board at least every three years and reapproved by the Fund's Board, including unanimously by the Fund's Independent Directors, at such time if they determine that the Directed Voting Program remains in the best interests of Fund shareholders.
• Standing voting instructions under the Directed Voting Program would only apply to matters recommended by the Fund's Board and unanimously approved by the Fund's Independent Directors.
• The Directed Voting Program would not apply to contested director elections and changes to the Fund's investment advisory agreement with its primary adviser that require a shareholder vote (the "Exclusions").[6]
• Shareholders that choose to participate in the Directed Voting Program would have the option to further exclude from their standing voting instructions under the Directed Voting Program votes on: (i) Fund mergers that, under any of the Investment Company Act and its rules, applicable state law, the Fund's organizational documents, or applicable exchange listing standards, require approval of a Fund's shareholders; and (ii) adoption of, or changes to, a Fund's plan adopted pursuant to rule 12b-1 under the Investment Company Act that result in an increase in 12b-1 fees for a Fund (together, the "Opt-Out Items").[7]
• Participating shareholders could opt out of the Directed Voting Program to cancel their standing voting instruction at any time and at no cost. Participating shareholders could only opt out of the standing voting instruction for meetings for which the Fund has not yet filed a definitive proxy statement or N-14 Registration Statement.
• Participating shareholders could always override the votes to be cast by the Fund through the standing voting instruction by voting using the proxy materials they received for that meeting. Participating shareholders will continue to receive the same required information relating to shareholder meetings (including the relevant proxy statement) in the same manner as they do currently. A Fund would make full disclosure on its website and prominently in its relevant proxy statement of the Directed Voting Program.
• A Fund would file with the Commission the relevant materials describing the Directed Voting Program under cover of Schedule 14A pursuant to rule 14a-12 and would subsequently file any material changes to these materials in the same manner.
• Participating shareholders would receive, during the time period when the Fund is not soliciting votes for a shareholder meeting, an annual reminder of their opt-in status and selection. This reminder would remind them: (1) of their ability to opt out and cancel their standing voting instruction with respect to subsequent meetings; and (2) that, to the extent permitted by applicable state law, the Fund's organizational documents and any applicable exchange listing standards, shareholders that do not opt out prior to the filing of a relevant proxy statement with the Commission in relation to a particular meeting will be deemed to be present at such meeting for purposes of establishing a quorum.
• Participating shareholders who did not opt to exclude the Opt-Out Items would receive an additional reminder prior to any meeting involving one or more Opt-Out Items.

You posit that permitting Funds to use a Directed Voting Program would both leverage the role of Independent Directors and alleviate the costs and delays of drawn-out proxy solicitations.

Analysis

Rules 14a-3(a), 14a-4(d)(2), 14a-4(d)(3), 14a-4(f), 14a-6(o), 14a-10, and 14a-12(a) are made applicable to Funds by rule 20a-1 under the Investment Company Act. Specifically:

• Rule 14a-3(a) prohibits solicitation of security holders before such security holders have received a preliminary or definitive proxy statement.
• Rule 14a-4(d)(2) prohibits a proxy from conferring authority to vote at any annual meeting other than the next annual meeting.
• Rule 14a-4(d)(3) prohibits a proxy from conferring authority to vote with respect to more than one meeting.
• Rule 14a-4(f) prohibits delivering a form of proxy to a security holder unless the security holder has received a definitive proxy statement.
• Rule 14a-6(o) generally requires that a solicitation be in accordance with rule 14a-12 if it is sent before security holders have been furnished a definitive proxy statement.
• Rule 14a-10 prohibits undated or postdated proxies.
• Rule 14a-12(a) provides an exemption from the prohibition of rule 14a-3(a) if: (1) each written communication identifies the participants in the solicitation and contains a description of their direct or indirect interests (or where this information can be obtained); (2) a prominent legend directs shareholders to read the proxy statement when it is available; and (3) the definitive proxy statement (compliant with Rule 14a-3(a)) is provided to shareholders before or at the same time as the form of proxy, consent or authorization.

Exchange Act Rules 14a-4(d)(2) and 14a-4(d)(3)

You contend that the proposed Directed Voting Program should not be viewed as conflicting with rules 14a-4(d)(2) and 14a-4(d)(3), given the reminders and easy opt-out and override abilities built into the program and the choices made by shareholders. More specifically, you argue that the choice made (in response to the annual reminder or the proxy materials as discussed above) is a reaffirmation or renewal of the standing voting instruction, which enables compliance with rules 14a-4(d)(2) and 14a-4(d)(3). You contend that this position is consistent with the intent behind rules 14a-4(d)(2) and 14a-4(d)(3).

We note this argument is consistent with the arguments made in the Exxon Letter.

Exchange Act Rules 14a-3(a), 14a-4(f), 14a-6(o), 14a-10, and 14a-12(a)

You note that CorpFin today issued a no-action position related to rules 14a-3(a), 14a-4(f), 14a-6(o), 14a-10, and 14a-12(a) (in addition to rules 14a-4(d)(2) and 14a-4(d)(3)) for another similar "Issuer Voluntary Retail Voting Program" in the Tesla letter. You believe that the Directed Voting Program is similar in all relevant respects to the Issuer Voluntary Retail Voting Program described in the Tesla Letter. You believe that, for the reasons you discuss in your letter and the reasons contained in the Tesla letter, the Directed Voting Program would operate in a manner consistent with all of these additional rules under the Exchange Act.

Implications of the Investment Company Act

You contend that the provisions of the Investment Company Act do not by their terms prevent a Fund shareholder from opting to cast its votes pursuant to a Directed Voting Program. You argue that any limitations on this particular method of voting are imposed on Funds by the Exchange Act rules discussed above, through rule 20a-1 under the Investment Company Act, and by applicable state law, any relevant bylaw or charter provisions, and applicable exchange listing requirements. You note that a Fund utilizing a Directed Voting Program would still require: (i) a shareholder vote on those matters that require shareholder approval under the Investment Company Act; and (ii) that such vote satisfy the vote standard under section 2(a)(42) of the Investment Company Act whenever such provision is applicable.[8]

You believe, moreover, that the Directed Voting Program, as modified from the Exxon Letter in the manner described in your letter, appropriately addresses concerns about informed consent, self-dealing, and management entrenchment that undergird the Investment Company Act.[9] In particular, you note that these concerns are addressed by shareholders' receipt of full disclosure of the Directed Voting Program prior to consenting to opt into it, continued receipt of proxy materials, and receipt of annual (and in some cases additional) reminders of their ability to override and opt out of the program. You also note that these concerns are addressed especially by requirements for unanimous approval of the Independent Directors and by the fact that the Directed Voting Program does not apply to contested director elections, changes to the Fund's investment advisory agreement with its primary investment adviser, and, at the option of the individual shareholder, the Opt-Out Items.[10]

Response

Based on the facts and representations presented in your letter, we would not recommend enforcement action to the Commission under Exchange Act rules 14a-3(a), 14a-4(d)(2), 14a-4(d)(3), 14a-4(f), 14a-6(o), 14a-10, and 14a-12(a) if a Fund implements the Directed Voting Program as described in your incoming letter.

Our letter provides our position on enforcement action only and does not provide any legal conclusions on the issues presented. Because our position is based on all of the facts and representations made in your letter, you should note that any different facts and circumstances might require a different conclusion. This letter reflects the views of the staff of the Division of Investment Management. It is not a rule, regulation, or statement of the Commission, and the Commission has neither approved nor disapproved its content. This letter, like all staff statements, has no legal force or effect; it does not alter or amend applicable law, and it creates no new or additional obligations for any person.

Kieran G. Brown
Senior Counsel

[1] You have not requested, and we are not providing, any no-action assurance with respect to the Investment Company Act, the Investment Advisers Act of 1940, or any of the rules thereunder.

[2] See Exxon Mobil Corporation, SEC Staff No-Action Letter (Sept. 15, 2025).

[3] See Tesla, Inc., SEC Staff No-Action Letter (Sept. 29, 2026). You also note that on September 28, 2026, CorpFin issued a no-action position related to rules 14a-3(a), 14a-4(f), and 14a-12(a) (in addition to rules 14a-4(d)(2) and 14a-4(d)(3)) under the Exchange Act for a "Voting Instruction Program" in a letter to The Goldman Sachs Group, Inc. and Cravath, Swaine & Moore LLP. See The Goldman Sachs Group, Inc., SEC Staff No-Action Letter (Sept. 28, 2026).

[4] See section 2(a)(19) of the Investment Company Act.

[5] For purposes of your letter, you define a "retail" shareholder to mean any person (as defined under section 2(a)(28) of the Investment Company Act) that has, or is entitled to have, voting authority with respect to the shares of a Fund by virtue of owning beneficially and/or of record such shares, regardless of whether the person owns their shares via a bank, broker, or other financial intermediary.

[6] You state that at this time you are only seeking no-action assurance with respect to voting by shareholders at duly called annual or special shareholder meetings and not with respect to any actions that are taken by written consent.

[7] You state that for the avoidance of doubt, no item included in either the Exclusions or Opt-Out Items (defined below) is intended to trigger a requirement for a shareholder vote where one is not otherwise required under, for example, the Investment Company Act and its rules, any applicable staff no-action letter or staff guidance, applicable state law, the Fund's organizational documents, or applicable exchange listing standards.

[8] You note that under the Investment Company Act, a "vote of a majority of the outstanding voting securities" of a Fund, as defined under section 2(a)(42) of the Investment Company Act (an "Investment Company Act Majority"), is required to approve certain Investment Company Act-specified items. See, e.g., sections 13(a), 15(a) and 15(b) of the Investment Company Act and rule 12b-1(b)(1) and rule 17a-8 thereunder. You state that nothing in your letter is meant to alter the analysis of whether an Investment Company Act Majority is required to approve a given proposal. You note that the determination of whether an investor is present for purposes of establishing a quorum is made under state law, even for purposes of matters that require an Investment Company Act Majority.

[9] Section 1(b) of the Investment Company Act.

[10] Of the matters for which shareholder votes are required under the Investment Company Act, you believe that the matters addressed in the Exclusions, and to a lesser degree the Opt-Out Items, could be viewed as presenting the greatest potential to raise the concerns discussed in your letter regarding self-dealing and management entrenchment.