Fund governance reg may downsize boards; Funds that complied are unlikely to revert if rule is scrapped.(News)

Investment News, July, 2005

Byline: Sara Hansard WASHINGTON - Whether or not the controversial mutual fund governance rule is allowed to go into effect, fund company experts and lawyers say that small and midsize fund companies might simply reduce the number of "interested'' board directors to bring the incidence of independents up to the required 75%.

That could have the unintended consequence of leaving boards with less expertise about the fund company, as well as leaving boards understaffed at a time of rising workloads. The newly - and hastily - reissued rule, which faces a second court challenge from the U.S. Chamber of Commerce, requires that at least 75% of a fund's directors, including the chairman, be independent. Many fund companies already have taken steps...

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