Kansas SB 375: Enacting the Kansas housing investor tax credit act and expanding Kansas housing programs to facilitate economic development by providing tax credits for investment in residential housing projects in underserved rural and urban communities to accommodate new employees and support business growth.

Bill Text

SENATE BILL No. 375
AN ACT concerning consumer protection; relating to investments; enacting the proxy
advisor transparency act; providing legislative findings and definitions; requiring
proxy advisors to make certain disclosures when recommending an action against
company management; authorizing the attorney general to investigate and take
enforcement actions against violators.
Be it enacted by the Legislature of the State of Kansas:
Section 1. The provisions of sections 1 through 6, and
amendments thereto, shall be known and may be cited as the proxy
advisor transparency act.
Sec. 2. The legislature of the state of Kansas finds the following:
(a) When shareholders hire professionals to manage investments,
such shareholders reasonably expect that the service provider will
perform those services in the financial interest of the shareholders, and
that the service provider will make recommendations based on financial
analysis of what actions would enhance investment value;
(b) there is a particular need for disclosures for proxy voting
advice, because such advice is often provided for hundreds or
thousands of shareholder votes each year and, with few investors
having the resources to research every shareholder vote, investors often
use proxy advisors for guidance on how to exercise fiduciary duties;
(c) many companies hire proxy advisors pursuant to the United
States department of labor's long-standing conclusion that, under the
employee retirement income security act, the "fiduciary obligations of
prudence and loyalty to plan participants and beneficiaries require the
responsible fiduciary to vote proxies on issues that may affect the value
of the plan's investment";
(d) directors of publicly held companies owe fiduciary duties to
shareholders and make recommendations in line with such fiduciary
duties;
(e) nevertheless, proxy advisors have recommended votes against
company management, including votes for shareholder proposals
related to environmental, social or governance (ESG) issues, diversity,
equity or inclusion (DEI) issues and social credit and sustainability
scores, but have not disclosed to clients that the recommendations were
made without conducting a financial analysis to determine how these
votes would affect shareholder value;
(f) the chief operating officer of Glass Lewis, a major proxy
advisor, stated under penalty of perjury that Glass Lewis does not
conduct a written financial analysis before recommending votes on
shareholder proposals and that other proxy advisors also do not do so.
Proxy advisors, however, have advertised that the purpose of their
recommendations is maximizing, increasing or protecting shareholder
value;
(g) these facts raise concern that proxy advisors are engaged in
fraudulent or deceptive practices and are not disclosing material
information to their clients, who otherwise would reasonably believe
that they are choosing between recommendations of management and a
proxy advisor that are based on dueling financial analyses;
(h) investors purchasing proxy voting services should be informed
when recommendations against management are or are not being based
on financial analyses that consider the effect on the value of the plan's
investment. Investors also should be able to access such analyses upon
request in order to assess whether the analyses were sufficient to
uphold fiduciary standards;
(i) requiring proxy advisors to provide clear and factual
disclosures under these circumstances helps investors evaluate whether
the proxy advisor's recommendations uphold investors' fiduciary duties
of prudence and loyalty; and
(j) requiring proxy advisors to inform companies of these

SENATE BILL No. 375—page 2
recommendations also promotes disclosures in accordance with
fiduciary duties. An example of which is a company that is the subject
of a shareholder proposal often has additional information regarding
whether a proposal is in the shareholder's financial interests or
regarding the costs of a proposal, and notice of a proxy advisor's
recommendation allows the company to provide additional responsive
information to shareholders seeking to uphold their fiduciary duties.
Sec. 3. As used in this act:
(a) "Act" means the proxy advisor transparency act.
(b) "Affiliated group" means a group of one or more entities in
which a controlling interest is owned by a common owner or owners,
either corporate or noncorporate, or by one or more of the member
entities.
(c) "Charitable organization" means an organization that is exempt
from federal income taxation under section 501(c)(3) of the internal
revenue code of 1986.
(d) "Company" means a publicly traded, for-profit corporation,
limited liability company, partnership or other business entity.
(e) "Company proposal" means any proposal made by a company
to such company's shareholders that is included in the company's proxy
statement, including, but not limited to, director nominations or
elections, or any proposal relating to director nominat