[11092]
July 1, 1999
TO: BOARD OF GOVERNORS No. 44-99
RE: DRAFT RESOLUTION ENDORSING REPORT ON BEST PRACTICES FOR
FUND DIRECTORS
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As you know, the Advisory Group on Best Practices for Fund Directors released its report on
June 24th. The Report, a copy of which you have received, contains 15 recommended best practices to
enhance the independence of independent directors and the effectiveness of fund boards as a whole.
On July 7th the Institute’s Board will meet to determine whether or not to recommend the adoption of
the best practices by the Institute’s membership.
The issue of best practices for fund directors was first considered by the Board at its meeting
this past January. At that time, the Board instructed the Institute staff to begin work on a best practices
paper. Shortly thereafter, in February, the SEC convened a Roundtable on the Role of Independent
Investment Company Directors. Several participants in the Roundtable called for the formulation of
best practices for the industry. Following the Roundtable, many members and independent directors
approached me and urged the Institute to take the lead in this area. We also became aware that third
parties, including industry consultants and accounting firms, intended to develop best practices if the
Institute declined to act.
In response to these developments, the Institute’s Executive Committee appointed an Advisory
Group of three senior industry executives and three independent directors to consider existing industry
practices in this area and identify those practices that would enhance the independence of independent
directors and the effectiveness of fund boards. In the course of developing its paper, the Advisory
Group consulted with numerous industry experts and Institute committees. In addition, at the Advisory
Group’s request, Craig Tyle and I contacted members of the Board to seek your input on the
recommendations.
I believe that the Advisory Group was successful in identifying industry best practices and
balancing the diversity of the industry with the need for high standards industry-wide. Attached is a
draft resolution that endorses the Advisory Group’s Report and recommends that all ICI members
adopt the practices recommended. It is attached for your consideration
prior to the Board meeting. Since I am away from the office until July 6th, please contact Craig Tyle if
you have questions about the draft resolution or the July 7th meeting. I look forward to seeing you on
July 7th.
Matthew P. Fink
President
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