SEC approves new disclosure legislation

The Securities and Exchange Commission (SEC) has rubber-stamped new regulations that will require US companies to provide more information about pay structures and the backgrounds of their executives.

Passed after just one of the agency's five commissioners raised an objection, the new rules state that firms must clarify how their compensation practices for directors relate to risk management.

In addition, after making board appointments companies will be obliged to disclose the experience, skills and qualifications of the new directors to their shareholders.

Details of previous directorships held by new executives over the previous five years will also be made public.

SEC chairman Mary Schapiro said the regulations would "improve the disclosure around risk, compensation and corporate governance".

She added: "Good corporate governance is a system in which those who manage a company are effectively held accountable for their decisions and performance."

The new rules will come into effect on February 28th next year.

Under a separate measure passed by the SEC this week, financial advisers are due to come under increased scrutiny in an attempt to avoid a repeat of the Bernard Madoff fraud.