On December 16, 2009, the SEC adopted amendments to the rules governing proxy statement disclosure and to the forms for fund registration statements that significantly expand the information that funds must disclose regarding certain board governance matters. The amendments become effective on February 28, 2010 and require enhancements to proxy statement disclosure in the following areas: (1) the board’s leadership structure; (2) the board’s role in risk oversight; (3) the qualifications and experience of directors and director nominees; (4) prior directorships; (5) directors’ prior legal and disciplinary actions; and (6) the role of diversity in considering board candidates.

With respect to registration statement disclosure, the amendments apply to disclosure regarding the management of funds included in the SAI. The SAI amendments mirror the proxy statement amendments, but do not require the enhanced disclosure regarding directors’ prior legal and disciplinary actions or the role of diversity in considering board candidates.

Specifically, under the amendments, funds must describe the funds’ leadership structure, including a description of the responsibilities of the board and a statement as to whether the board has an independent chair. If the board chair is not independent, funds are required to disclose whether they have a lead independent director and the function of the lead independent director. In describing their leadership structure, funds must also include a statement about why the leadership structure is appropriate in light of the specific characteristics of the funds. With respect to the required disclosure regarding the board’s role in risk oversight, funds must describe how the board administers its risk oversight function, whether through the whole board or through a committee.

The amendments also require funds to disclose for each director or nominee (i.e., including those directors not up for election), the particular experience, qualifications, attributes or skills that led the board to conclude that the person should serve as a director. In addition, if an individual is chosen to be a director or a nominee because of specific expertise related to service on a specific committee (such as the audit committee), then this information should be disclosed as part of the discussion of the person’s qualifications to serve on the board. In addition, funds must disclose any directorships held by a director or nominee during the past five years with any public company or other fund, whether or not the director still serves as a director of that entity. For proxy statements, the disclosure amendments also require a fund to disclose information regarding specified legal proceedings involving a director or nominee that occurred during the prior ten years, rather than the prior five years as is currently required.

Finally, the amendments require funds to disclose in proxy statements whether, and if so how, a nominating committee considers diversity in identifying nominees for director. If the board or the nominating committee has a policy regarding the consideration of diversity, funds must also disclose how this policy is implemented and how the board or committee assesses the policy’s effectiveness. The amendments do not define diversity, but instead allow funds to define diversity as they consider appropriate (such as on the basis of varied professional experience, education, skill, race or gender).

The SEC’s Division of Investment Management has published guidance to assist funds in determining when they are required to implement the disclosure amendments based, among other things, on a fund’s fiscal year-end.