Institute Comments on Proposed Amendments to Shareholder Proposal Rules

Washington, DC, December 30, 1997 - The Institute has filed a comment letter on the Securities and Exchange Commission's recently proposed amendments to the rules governing shareholder proposals.

The letter opposes the proposed override mechanism and suggests that if the Commission ultimately decides to adopt an override mechanism, it should revise the proposal to ensure that it applies only in cases where there truly is broad-based support for the proposal. Therefore, proponents should be required to gather the support of at least 500 shareholders. The letter supports the Commission's proposed increase in the resubmission thresholds, but recommends that the thresholds be expressed as a percentage of the votes required to pass the proposal rather than as a percentage of the votes cast, as proposed. The letter recommends that if the Commission decides to retain the "votes cast" standard, the resubmission thresholds should be increased to 15 percent, 25 percent, and 35 percent, respectively. The letter also asks the Commission to correct certain staff interpretations of Rule 14a-8's exceptions for ordinary business operations and for moot proposals issued in the context of shareholder proposals involving closed-end investment companies.