URGENT/ACTION REQUESTED
[16159]
June 4, 2003
TO: SEC RULES COMMITTEE No. 53-03
CLOSED-END INVESTMENT COMPANY COMMITTEE No. 37-03
RE: VIEWS REQUESTED ON DRAFT LETTER TO SEC REGARDING REVIEW OF PROXY
PROCESS
The Securities and Exchange Commission recently announced that it directed the staff of
the Division of Corporation Finance to review, and formulate possible changes in, the proxy
rules regarding the election of directors. The staff has been instructed to include in its review
the rules governing the ability of shareholders to submit proposals nominating directors for
inclusion in a company’s proxy statement.∗ The Commission has asked the staff to provide it
with recommendations by July 15, 2003 and has solicited the views of interested persons as part
of this process. In response to the Commission’s request for views, the Institute has prepared a
draft comment letter, a copy of which is attached.
The draft letter states that there is no need for the Commission to change its rules to
permit shareholders to submit director nominations. The reason for this is that there are other,
more effective, means to assure director independence, such as requiring a majority of
independent directors and making independent directors responsible for the selection and
nomination of other independent directors. The draft letter points out that these requirements
are presently applicable to the vast majority of investment companies, and similar requirements
are under consideration by the New York Stock Exchange, Nasdaq, and the American Stock
Exchange for listed companies.
Comments are due to the SEC by June 13, 2003. Please provide me with any comments
that you have on the draft letter by close of business on Tuesday, June 10, 2003. You can reach
me by phone at 202/218-3563, e-mail at ddonohue@ici.org, or fax at 202/326-5827.
Dorothy M. Donohue
Associate Counsel
Attachment (in .pdf format)
∗ SEC Release No. 34-47778 (May 1, 2003). The Release can be accessed through the SEC’s website at http:
www.sec.gov/rules/other/34-47778.htm.