The Securities and Exchange Commission is considering proposals that would enhance mutual fund governance, a senior official said Tuesday.

On Wednesday the SEC is expected to announce initiatives that wouldensure that most mutual fund board members come from outside the company.

Douglas J. Scheidt, associate director and chief counsel of the SEC's investment management division, said Tuesday that "in the near future" the agency would provide examples of activities that would cause a director to be labeled "interested." He spoke to about 60 lawyers at an investment management regulation conference.

The SEC also plans to weigh in on whether certain actions by outside directors require prior approval, when funds may advance legal expenses to directors, and how funds may compensate outside directors with shares in a way that is "consistent with the spirit" of a rule that prohibits the practice. -- Cheryl Winokur

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