ICI Supports SEC Shareholder Proxy Access Effort

Washington, DC, October 2, 2007 - ICI reiterated its support for an SEC effort to grant long-term shareholders greater access to companies' proxies, and said will support a recent proposal if certain safeguards are applied, according to recent comment letter.

Background
On July 25, the SEC voted to issue for comment two competing proposals addressing shareholders' ability to place on the company proxy amendments to bylaws affecting the terms for nomination and election of directors. One proposal would deny shareholders this access; the second would allow shareholders to place such amendments on the proxy if they had held a 5 percent share of the company's stock for one year or longer, and met other conditions.

ICI Position
In an October 2 comment letter to the SEC, ICI provided greater detail on its recommendations concerning an SEC proposal than it did in September congressional testimony. In House testimony delivered on September 27, ICI President and CEO Paul Schott Stevens said that ICI would support one of two proposals. However, ICI will urge the SEC to review its standards for deeming shareholders eligible to place such amendments, in four areas: the threshold for share ownership held by shareholders proposing the amendments; the period that proponents must hold their shares; disclosure by the proponents; and their intent.

ICI comments on the SEC proposal focus on seven specific points:

1) Access should be limited to shareholders who have acquired shares without the intent of changing or influencing control of the issuer;

2) Access must be predicated on a significant ownership interest;

3) All members of a shareholder proponent group must have continuously and beneficially held the company's voting securities for an extended period;

4) All shareholder proponents should be required to file a Schedule 13G;

5) Shareholder proponents, along with nominating shareholders and their nominees, should have liability for their statements or statements made on their behalf;

6) Companies and shareholders should be permitted to establish electronic shareholder forums; and

7) The SEC should not make any changes to Rule 14a-8 relating to non-binding shareholder proposals based upon its general request for comment on those types of changes, and instead should use the response to its general request for comment to consider whether it is necessary to formulate and propose specific amendments to the rule.

Related Links
This site includes a section devoted to corporate governance issues affecting funds and fund shareholders.