SWEDEN - The introduction of the proposed Swedish corporate governance code could see small companies withdraw from the stock market, directly affecting the equity holdings of the Swedish National Pension Funds, AP3 says.
Commenting on the proposed code, the Third Swedish buffer fund, Tredge AP-fonden (AP3) said: “If the code’s introduction were to lead to small companies withdrawing from the stock market it would result in the Swedish National Pension Funds no longer being able to maintain direct holdings of equities in these companies.”
AP3 board chair Claes de Neergaard welcomed the proposed code, describing it as “well-balanced and skilfully drafted” but said the fund sought to safeguard the tradition of self-regulation on the Swedish equity market.
“We seek to preserve the diversity of the Swedish corporate governance,” Neergaard said.
“Though there are many advantages in having a code that sets out a benchmark for what constitutes good practice, it is essential to realise that every company is unique.”
Neergaard said there was “no doubt” the code was designed with large companies in mind. There was a risk that small companies would be forced to enlist expensive legal assistance in governance issues, he added.
“At worst companies may feel tempted to delist in order to avoid having to comply with the code,” Neergaard said.
“This would reduce AP3’s ability to invest in these companies.”
AP3 suggested small companies be exempt from complying to avoid problems.
It also suggested the Council for Swedish Corporate Governance review prospects for harmonising corporate governance codes within the Nordic region to reduce complexity for companies listed on more than one Nordic stock exchange and with shareholders domiciled in different Nordic countries.
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