(October 13 – 16: 00 ET) – The Securities and Exchange Commission is proposing new rules designed to beef up the role of independent directors at mutual fund companies.
Under the proposed rules, independent directors would have to make up a majority of a board – up from the current 40%.
Independents would nominate other independent directors. They would have independent legal counsel and errors and omissions insurance. Directors would have to improve their disclosure, including providing information about their identity and business experience; their fund holdings; any potential conflicts of interest; and the board’s role in fund governance.
The SEC will also encourage the creation of independent audit committees. It has announced the creation of the Mutual Fund Directors Education Council to encourage improved independence and accountability. Comments on the rule proposals are due January 28, 2000.
In contrast to the U.S. these sorts of requirements are virtually non-existent in Canada. Jim Hunter of Mackenzie Financial Corp. has proposed that fund companies initiate self-regulation in Canada.
-IE Staff
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