September 30, 2007
To: Nancy M. Morris, Secretary, U.S. Securities and Exchange Commission,
100 F Street, NE, Washington, DC, 20549-1090 Comment on File Numbers S7-16-07, S7-17-07
With all my respect to ongoing attempts of Security and Exchange Commission to facilitate shareholders access to company financial reports and disclosures. New SEC proposals contained in File Numbers S7-16-07 and S7-17-07 can cause opposite results. The controversial nature of these proposals can complicate shareholders' rights. Proposal S7-17-07 would affect shareholders rights to file proposals to the company and requirements to include these proposals in the company's proxy materials. At the same time, proposal S7-16-07 would allow shareholders to nominate their own candidates for the board of directors, and at the same time will complicate an execution of their rights by setting 5% minimum requirement of ownership of company securities.
Proposal S7-16-07 could facilitate execution of shareholders' rights, but it needs to be revised and rewritten:
- Shareholders still should have a right to address important concerns regarding company's governance and policies. The right of the company to "opt-out" should be revised, because it will give most unresponsive companies a chance to "opt-out". - 5% ownership threshold is not appropriate for most of the companies, because it would effectively block some shareholders and shareholders' groups from using their rights. This percent should be lowered.
- Implementation of chat rooms and electronic forums are welcome approaches for enhancing communication with investors, but it shouldn't substitute current proxy process.
- The raising of shareholder resolution resubmission levels from the current 3%, 6% and 10% vote levels to l0%, 15% and 20% levels will also complicate the process of resubmission.
All of the above should be revised by SEC and new updated proposition should be provide for public opinion.
Los Angeles, Ca.