S7-19-03:From: Geoff Lindey [geoffl@napf.co.uk] Sent: Friday, December 19, 2003 10:38 AM To: rule-comments@sec.gov Subject: S7-19-03: Jonathan G Katz Secretary US Securities and Exchange Commission 450 Fifth Street, NW Washington DC 20549-0609 Dear Mr Katz Re: File No S7-19-03 The National Association of Pension Funds (NAPF) of the United Kingdom represents the interests of around 1,000 British pension funds, encompassing some 5-6,000 employers who sponsor retirement provision for their employees (fund members) in addition to some 400 business members, such as actuaries, consultants, investment managers and lawyers, who advise and provide services to them. NAPF fund members provide benefits for approximately 5.5 million employees, 4.8 million former employees and 7.6 million pensioners. Their scheme assets, total some £650 billion (US $1,100 billion), of which approximately 8% (US $88 billion) is invested in the equities of US listed companies. Both the NAPF and its members have long taken an active interest in good corporate governance in the UK and, increasingly, in other countries in view of the benefit it brings to shareholders in particular and to the economy in general. The NAPF is heartened by the proposals which are being made by the SEC with regard to empowering shareholders to have a greater say in the shape and balance of the Boards of Directors of the companies in which they invest. This is an unambiguously positive move which all who appreciate the importance of sound governance and accountability within the free enterpise system should welcome. For that reason we are happy to endorse the response to your consultation which has been submitted to you by the Council of Institutional Investors in their letter of December 12, 2003. We do not believe that it is appropriate for us to go into detail concernig the triggers which have been proposed but we would suggest that experience shows that one should err on the side of simplicity. Furthermore we share the view of the CII in stating that "Ideally, the final rule should include no triggers." There is one issue which does concern us, however, and that is the reference to "long-term shareowners". However much we understand and even sympathise with the sentiment behind this reference, we take the view that a shareowner is a shareowner, irrespective of the period for which they have been a shareowner. Even if one does not share that view, there are two serious practical difficulties concerning a time bar of which I am sure you are aware. The first relates to a long-term shareowner whose holding has changed in size over the years; it is not clear to us how this would be dealt with in the regulations although this may have been encompassed in the text. Secondly, we are sure that the SEC recognises the importance of stocklending in facilitating liquidity in capital markets. In reality stock-lending is not "lending" at all but is a form of "repo" in which title to the shares passes to another party. Legally a "long-term shareowner" who has "lent" stock could be challenged as not being a long-term shareowner at all. We would think that these concerns could be best overcome by dropping the reference to "long-term shareowners" and relying instead on the size thresholds which you have proposed. None of these comments in any way dilute pour enthusiastic encouragement of the SEC in moving in the direction of full enfranchisement of shareholders. Yours sincerely Geoff Lindey Strategic Adviser, Corporate Governance Tel: +44 (0)20 7808 1340 Fax: +44 (0)20 7222 1285 Mobile: +44 (0)7768 522810 http:\\www.napf.co.uk Disclaimer The information in this E-Mail and in any attachments is CONFIDENTIAL and may be privileged. If you are NOT the intended recipient, please destroy this message and notify the sender immediately. You should NOT retain, copy or use this E-mail for any purpose, nor disclose all or any part of its contents to any other person or persons. Any views expressed in this message are those of the individual sender, EXCEPT where the sender specifically states them to be the views of the National Association of Pension Funds (NAPF). NAPF may monitor the content of E-mails sent and received via its network for viruses or unauthorised use and for other lawful business purposes.