ICI Supports NYSE Proposal to Improve Corporate Governance

Washington, DC, May 19, 2003 - The Institute supports a New York Stock Exchange proposal to improve corporate governance by enhancing the role of independent directors and strengthening the oversight responsibilities of audit committees.

Background
The NYSE is proposing to implement significant changes to its listing standards as a means to help restore investor confidence by empowering and ensuring the independence of directors and strengthening corporate governance practices.

ICI Position
The Institute's perspective on the proposal is unique in that investment companies are both investors in and issuers of securities. As equity investors, the Institute's members rely on high-quality financial reporting from corporations in order to make informed investment decisions. As entities that issue securities unique from those offered by operating companies, the Institute's members support proposals that ensure strong fund governance and superior financial disclosure while recognizing the inherent differences of investment companies and the strong legislative and regulatory requirements already governing funds.

An Institute comment letter expresses support for the NYSE's proposed corporate governance reforms, stating that the proposed changes will serve the interests of mutual fund investors by improving the governance of listed companies and the integrity of financial reporting.

The Institute comment letter also discusses the application of the proposal to investment companies. The Institute comments on several of the proposed changes, including:

restrictions on an individual's ability to serve on more than three public companies' audit committees simultaneously;
the proposed requirement that each member of the audit committee be financially literate;
the proposed requirement that all listed companies have an internal audit function; and
the proposed requirement that audit committee members discuss earnings press releases as well as financial information provided to analysts and rating agencies.

Related Links
In an April 2003 comment letter, the Institute expressed support for similar NASD efforts to improve corporate governance. For more information, visit the corporate governance section of the Institute's website.