Relating to the regulation of the provision of proxy advisory services.

Contracts

• Asset Managers/Institutional Investors: Review Investment Management Agreements (IMAs). If your fiduciary mandate requires maximizing financial returns, ensure your proxy advisor is not triggering "nonfinancial" disclosures, as this creates a paper trail of potential fiduciary breach.
• Proxy Advisors: Client service agreements must be amended to include disclaimers regarding "conflicting advice" (Sec. 6A.102) and to clarify that providing the mandatory statutory notices to issuers does not constitute a breach of client confidentiality.

Hiring/Training

• Proxy Advisors: You must staff economists capable of producing the "Written Economic Analysis" required by Sec. 6A.101(c). General governance analysts are insufficient; the law requires "quantifiable" projections on investment returns.
• Public Companies (Issuers): Investor Relations and Legal teams must be trained to monitor a designated channel for incoming notices from advisors. You must be prepared to file for injunctive relief within 7 days of receiving a non-compliant recommendation.

Reporting & Record-Keeping

• Simultaneous Notice Protocol: Advisors must implement automated systems to send a copy of any nonfinancial disclosure to the Subject Company at the exact moment it is sent to the client.
• The "Economic Analysis" File: For every recommendation supporting a shareholder proposal against the Board, advisors must retain a written calculation of short- and long-term costs and the projected financial impact.
• AG Notifications: Advisors must file notices with the Attorney General regarding conflicting advice and retain proof of these filings.

Fees & Costs

• Insurance Premiums: Proxy advisors operating in Texas should anticipate immediate increases in Errors & Omissions (E&O) premiums due to the new DTPA liability exposure.
• Litigation Budget: Public companies should budget for potential legal costs associated with seeking declaratory judgments against advisors to block non-compliant proxy votes.