ICI Supports EU Proposal on Independent Directors' Responsibilities, June 2004

Washington, DC, June 4, 2004 - A recent recommendation made by the European Commission regarding the responsibilities of independent directors will provide directors and companies in the European Union with useful tools to ensure the effectiveness of independent directors, the Institute stated in a recent comment letter.

Background
The recommendation regarding independent directors is the latest in series of initiatives undertaken by the European Commission to implement the EU's Corporate Governance Action Plan. The Commission expects to adopt the recommendation on the role of independent directors in early autumn 2004.

ICI Position
The Institute supports the Commission's approach of making a recommendation to member states and agrees that the recommendation should cover EU-listed companies having their registered office in a member state.

The Institute's comments reflect the experiences of approximately 1,000 US funds that have a global or international focus and our many members managing investment companies and pension funds outside the United States.

suggests that the number of independent directors on a company's board of directors should be adequate in relation to the total number of directors (both executive and non-executive) on the board rather than in relation to the total number of non-executive or supervisory directors as suggested by the Commission;
recommends that member states consider whether independent directors should constitute a majority of the board;
agrees with the Commission's approach not to limit the number of directorships, but recommends that directors be reminded of their responsibilities and the time commitment that such responsibilities would likely entail and to require certain transparency in this area; and
agrees that the nomination committee should be composed of a majority of independent directors and urges the Commission to recommend that the nomination of independent directors be entirely in the hands of independent directors.