01 October 2014

PensionsEurope Position Paper on the proposal for a Shareholder Rights Directive

PensionsEurope consider that a minimum threshold should be established in order to identify significant shareholdings. Those shareholders would be more interested in monitoring the company’s performance and are better aware of their rights. The organisation also question aspects of the requirements for annual public disclosure of the engagement policy. PensionsEurope are concerned about this requirement to provide an explanation of voting behaviour in addition to transparency on the voting behaviour.

The organisation consider it inappropriate to require disclosure of specific contractual arrangements between two parties, especially when for example the fund in which the institutional investor has invested is not public. Public information on the method and time horizon of the evaluation of the specific asset manager may be competitively sensitive. In addition, the focus may shift from the issue of what fee structure is best for the investors to the one most easily justified to the public.

Requiring institutional investors to disclose publicly the main elements of the arrangement with the asset manager would, according to PensionsEurope, not be the right way of achieving long-term investment, instead giving undue prominence to only a narrow element of the strategy with potential unintended consequences. The objective be more effectively achieved by requiring a pension fund to discuss and disclose its investment beliefs to the competent authority and how these are translated through its investment strategy and arrangements with their asset managers. This could be achieved through the Asset Liability Management studies.

Full position paper

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