S.B. No. 2337 introduces regulations for proxy advisory services in Texas, emphasizing the need for transparency and accountability in the advice provided to shareholders. The bill mandates that proxy advisors disclose when their recommendations are based on nonfinancial factors, such as environmental, social, or governance (ESG) criteria, rather than solely on the financial interests of shareholders. It requires proxy advisors to provide clear disclosures to shareholders when their advice may conflict with the financial interests of the company or when they offer differing recommendations to multiple clients. Additionally, the bill stipulates that proxy advisors must conduct and disclose a written economic analysis of the financial impact of shareholder-sponsored proposals that deviate from the board's recommendations.

The bill also establishes enforcement mechanisms, categorizing violations as deceptive trade practices under Texas law, allowing affected parties to seek declaratory judgments or injunctive relief against non-compliant proxy advisors. The new chapter on proxy advisory services will take effect on July 1, 2025, contingent upon receiving a two-thirds vote from both houses of the legislature; otherwise, it will take effect on September 1, 2025.

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