UK - Leading corporate governance fund managers have warned that they may withhold votes at annual general meetings of European companies in protest against "share blocking".
Institutional investors – inc-luding Merrill Lynch Investment Managers, Henderson Global Investors, Isis Asset Manage-ment and Insight Investment – hit out against rules imposed by Continental companies ahead of AGMs.
Share blocking prevents investors who vote their holdings – often up to three weeks in advance of an AGM – from trading their stock until after the meeting.
The rules – which do not apply in the UK – are designed to prevent unscrupulous shareholders from using their proxy vote and immediately selling stock. But they have been criticised for stopping fund managers trading for a number of weeks.
Institutional investors claim that in a climate where shareholders and policy-makers demand greater activism abroad, share blocking is proving a disincentive to voting.
Insight investor responsibility director Rory Sullivan (pictured) said the removal of blocking rules would receive widespread support.
He said: “In a world where institutional investors are, quite properly, expected to monitor companies actively on a range of corporate governance and corporate responsibility issues, these rules seem to run counter to these expectations of active ownership.”
MLIM said it was “highly likely” it would deliberately not vote its shares in European companies which imposed blocking rules. Henderson head of corporate governance Rob Lake said share blocking was a serious obstacle but in certain “serious” cases it was important to vote nonetheless.
He said the annual general meeting of Royal Dutch in the Netherlands – the Dutch arm of the Shell group – was one example where Henderson decided to vote so as to register clear dissatisfaction with the corporate governance structure.
Isis, which has a policy of not voting on any company that imposes blocking rules, is lobbying companies and regula-tors for changes. It was confident that new rules would be introduced, notably in France and Italy.
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