Corporate Governance

Not Always a Paradise

By J. Robert Brown

Great Britain has sometimes been labeled a shareholders paradise.  Unlike the United States, large shareholders have access to the company's proxy statement for their nominees.  They also get a say on pay and directors must be elected by a majority of the votes cast. 

But there is at least one place where protections between the two countries differ.  As the WSJ reports, in an article about growing shareholder activism in Europe:  "The U.K. government has so far shied away from requiring fund managers to disclose their votes, though several fund managers do so voluntarily."  The SEC required disclosure by mutual funds back in 2003.  See Rule 30b1-4, adopted in Disclosure of Proxy Voting Policies and Proxy Voting Records by Registered Management Investment Companies, Investment Company Act Release No. 25922 (Sept. 23, 2003)(requiring open end mutual funds to disclose how they voted proxies of portfolio securities).  As a result, their patterns can be examined and investors unhappy with the approach can vote with their feet and exit the fund. 

On this one issue, the shareholders paradise could learn a thing or two. 

Full post as published by The Race to the Bottom on September 08, 2009 (boomark / email).