An investor activist group said BSkyB shareholders should oppose the re-election of chairman James Murdoch to distance the pay-TV company from the hacking scandal that has engulfed News Corp , its largest shareholder.

The Local Authority Pension Fund Forum, which represents the owners of about 1 percent of BSkyB, said on Friday Murdoch was tainted by practices at the now-defunct News of the World tabloid, part of the News International group that fell under his News Corp remit.

The controversy was thrust into the spotlight again on Thursday when Murdoch was questioned by British lawmakers for a second time.

Due to concerns about his independence, and the ongoing risk of reputational contagion from his association with the phone-hacking scandal, LAPFF has recommended that it members oppose his re-election as chair of BSkyB, it said.

BSkyB shareholders need to see some distance put between the company and the scandal engulfing News Corp, but this is not possible without governance reform.

The group, acknowledging Murdoch's contribution to BSkyB's past success, said the company would now benefit from having a new independent chair.

LAPFF last month urged shareholders to oust James Murdoch from the board of News Corp. Murdoch clung on with the support of the Murdoch family, which holds 40 percent of the voting shares, and Prince Al-Waleed bin Talal, News Corp's largest individual shareholder.

BSkyB's annual general meeting will be held on November 29.

(Reporting by Paul Sandle; Editing by Dan Lalor)