Statement in Connection with ISS Filing Lawsuit Challenging Indiana Statute, House Bill 1273

ROCKVILLE, Md. (April 14, 2026) – Institutional Shareholder Services (ISS) today announced the filing of a lawsuit in U.S. District Court for the Southern District of Indiana challenging Indiana’s recently promulgated statute, H.B. 1273. The Complaint contends that H.B. 1273 is an unconstitutional exercise of state power. H.B. 1273 would subject ISS to a regime of state-law mandated warnings whenever ISS recommends to its sophisticated institutional investor clients voting in a manner that runs counter to that of company management. In its filing, ISS is requesting a decision on its forthcoming motion for a preliminary injunction as applied to ISS in advance of the law’s effective date of July 1, 2026.

As laid out in the Complaint, H.B. 1273 violates the U.S. Constitution multiple times over. H.B. 1273 is state-imposed viewpoint discrimination that burdens those holding views counter to management—and only such counter-management speech.  H.B. 1273 is also unconstitutionally vague and violates the dormant Commerce Clause.  H.B. 1273 extends its mandates far beyond Indiana’s boundaries because it purports to apply to any counter-management recommendation that a proxy advisor makes to any of its clients, about any company, anywhere in the world.  The U.S. Constitution forbids states from dictating how other states and countries regulate business in their own jurisdictions.

What’s more, the law turns on a bespoke definition of “written financial analysis” that underscores a misunderstanding of the proxy process. Among other obligations, the Indiana law’s “written financial analysis” would require predicting “short term and long term financial benefits and costs” and “conclud[ing] what vote or course of action is most likely to positively affect interest holder value.” In reality, different clients have differing preferences about the “best” way to advance shareholder value, and many issues that generally come up for a shareholder vote are qualitative and do not lend themselves to mathematical calculation. Yet, if a proxy advisor like ISS does not base a recommendation against management preferences on this “written financial analysis,” H.B. 1273 would force it to make statements that mischaracterize its business and misleadingly imply the recommendations lack rigor.

Indiana’s H.B. 1273, which closely tracks a model state bill introduced in approximately 12 U.S. states, is the latest in unconstitutional attempts to target proxy advisors for the advice they provide to their subscribing institutional investor clients. These attempts threaten to distort the free market of information that sophisticated investors rely on when managing their investment portfolios all over the world.  As sophisticated institutions, U.S. and global institutional investors do not need government overreach to protect them from receiving the very services they hired ISS to perform.

Download a copy of the Complaint here.

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