Nuveen is a No-Go for Saba

On February 16, 2024, the SEC's Division of Investment Management gave a no-action letter to three Nuveen closed-end funds. This means that they can exclude a shareholder proposal from their proxy materials in reliance on Rule 14a-8(b)(1) under the Securities Exchange Act of 1934. The proposal was submitted by Saba Capital Management, L.P. and it called for the declassification of the funds' Board of Trustees.

But, the Nuveen funds argued that Saba was not a holder of securities entitled to vote on the proposal under Rule 14a-8(b)(1). And guess what? The SEC staff agreed with the Nuveen funds! They said that there appears to be a basis for their view that the Proposal may be excluded in reliance on Rule 14a-8(b)(1).

Saba, who submitted the same proposal in the First Trust letter from 2020, argued that the SEC staff should reconsider their conclusion in First Trust and other precedents, but the SEC staff wasn't buying it. They reaffirmed the flexibility of funds, especially those organized as Massachusetts business trusts, to craft the terms of the relationship with their shareholders with respect to voting matters.

This decision is going to have a significant impact on future shareholder proposals submitted to closed-end funds organized under the laws of various states. It could further reinforce the notion that such funds have considerable leeway to define the scope of shareholder voting rights in their governing documents.

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