The Proxy Advisor Transparency Act aims to enhance transparency and accountability in proxy advisory services by imposing specific duties on proxy advisors. The bill mandates that proxy advisors provide clear disclosures when making recommendations against company management, particularly if such recommendations are not based on a written financial analysis. This includes identifying the service provided, the recommendation at issue, and the absence of a financial analysis that evaluates the potential financial impacts of the proposed actions. Additionally, proxy advisors are required to send notifications to the boards of directors of the companies involved and to publicly disclose relevant information on their websites.

The act also establishes that violations of its provisions constitute deceptive trade practices, allowing the Attorney General to investigate and enforce compliance. Aggrieved parties, including recipients of proxy advisory services and companies affected by such services, are granted the right to seek declaratory judgments or injunctive relief against non-compliant proxy advisors. The act is set to take effect on November 1, 2026, and does not eliminate any existing claims under applicable deceptive practices laws.