The top U.S. securities regulator on Wednesday called on Corporate America to modernize its proxy voting practices to give shareholders a greater voice in governing the companies they own.

It is imperative that our proxy voting process work, Securities and Exchange Commission Chairman Mary Schapiro told a Practising Law Institute securities conference in New York.

The failure to reform the shareholder voting process in the past has, in my view, affected company and board responsiveness to shareholder concerns, Schapiro said.

Schapiro said her agency was eyeing the mechanics for shareholder voting and vowed to give shareholders an easier and cheaper way to nominate corporate directors.

Investors have long clamored for a way to influence the composition of the corporate board -- an issue known as proxy access. Those demands increased after the government used billions of dollars in taxpayer funds to prop up companies including insurer AIG and Bank of America .

A key congressional committee helped further their cause on Wednesday by passing a bill to boost investor protections.

The House Financial Services Committee's bill affirms the SEC's authority to give shareholders proxy access, among other things. If the bill becomes law, the SEC would have a better chance of fending off lawsuits from businesses that contend proxy access is a matter of state law.

Currently, shareholders are able to nominate directors but can only do so through a proxy fight, which they contend is expensive and burdensome.

The SEC proposal gives investors who own as little as 1 percent of a large company's shares the ability to nominate directors. Schapiro said she hoped the SEC would consider final rules early next year and that the proxy access goes to the heart of good corporate governance.

PROXY VOTING REVIEW UNDER WAY

The SEC has already taken steps to give shareholders more say on how their companies are governed by adopting a rule that would bar broker-dealers from voting for corporate directors on behalf of their clients unless told to do so.

But Schapiro contends more needs to be done and said the SEC was reviewing the mechanics by which proxies are voted and the way in which information to shareholders is conveyed.

Among other things, the SEC is looking at voting among retail investors, who historically have low participation rates. The agency is also exploring whether rules are needed to ensure that proxy advisory firms are basing their recommendations on reliable information.

The SEC will seek public comment on shareholder voting within months.

(Reporting by Rachelle Younglai, editing by Maureen Bavdek, Dave Zimmerman, Tim Dobbyn)

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