Jul. 22, 2025
Dear Ms. Countryman, I write in strong opposition to the proposals by NYSE and Cboe BZX (SR–NYSE–2025–20; SR–CboeBZX–2025–072) seeking to exempt newly listed closed-end funds (CEFs) from the requirement to hold annual shareholder meetings. From both a governance and investor protection standpoint, these proposals are untenable and appear inconsistent with Section 6(b)(5) of the Securities Exchange Act of 1934. They do not serve to protect investors or the public interest, but rather to entrench management and reduce board accountability. 1. De facto Elimination of Shareholder Voting for Existing CEFs Despite their stated focus on “new” CEFs, the proposals create a clear path for existing funds to restructure or relist in order to evade the shareholder meeting requirement. This is not hypothetical; the NYSE itself acknowledges that a fund reorganizing into a “new” vehicle would become exempt. Given the prevalence of merger-friendly organizational documents among CEFs (especially those structured as Delaware statutory trusts) many funds could undergo such transformations without a shareholder vote, undermining the supposed limitation of the proposals to “new” funds. 2. Lack of Redemption Mechanism Necessitates Voting Rights Unlike ETFs, CEFs lack any NAV-aligned redemption mechanism. This structural illiquidity makes periodic voting the sole check on board performance. The Commission itself has acknowledged this distinction in past rulemakings. Stripping CEF shareholders of their only governance mechanism amounts to a functional denial of investor protection. 3. NAV Discounts Are a Governance Issue, Not a Market Feature It is incorrect to frame persistent NAV discounts as “features” or market phenomena beyond the board’s control. In practice, wide or sustained discounts frequently reflect poor governance, misaligned fees, ineffective discount control mechanisms, or failure to respond to shareholder input. When management refuses to act, annual meetings provide the only avenue for correction. 4. The Cost Argument Is Economically and Empirically Flawed The exchanges and their proponents have overstated the cost burden of annual meetings while ignoring their governance benefits. Uncontested meeting costs are modest (~$32,000), and contested meetings remain rare. Even when proxy contests occur, they have historically delivered long-term value recovery for shareholders. That should not be viewed as a net cost, but a corrective mechanism embedded in the market structure. 5. Retail Investors Are Engaged, and Voting Data Shows It Claims that retail shareholders are indifferent or aligned with management are contradicted by data, even the ICI’s own data. Contested elections between 2019 and 2024 saw over 40 percent of retail shareholders vote against management. That is evidence of demand for accountability. Conclusion The Commission previously declined to approve similar proposals, and for good reason. These “repackaged” versions are no more consistent with the Exchange Act’s investor protection mandate. They create broad potential for circumvention, diminish investor rights, and set a dangerous precedent for listed vehicles lacking NAV redemption. As an individual investor with material exposure to CEFs, I urge the Commission to reject these proposals in full. Sincerely, Bernard Haven, CFA