UK/EUROPE - Pension funds and insurance companies are joining forces to oppose a European directive that would curtail shareholder voting rights.
The proposed EU directive to modernise European company law as it stands does not give shareholders the right to vote on remuneration packages that involve share options or the right to approve large company transactions.
Both the NAPF and the ABI believe the directive will undermine their Combined Code of corporate governance.
NAPF investment director David Gould said: “The Combined Code has proven to work well for UK pension funds. These European proposals will do nothing for investors.”
ABI head of investment affairs Peter Montagnon agreed and said that EU plans for harmonising company law would substantially weaken UK standards of corporate governance.
However he said that there was still time to stop this directive if pension funds in the UK act against the proposals.
He added that if the proposals were to become law, the UK would be powerless to impose any requirements that do not feature in the directive.
But there remains some uncertainty among lawyers about what implications the EU directive will have.
Hammond Suddards Edge corporate finance solicitor Janice Shardlow said: “It is unclear whether the intention is to set a minimum standard for all of Europe or whether it is to set the standard for Europe, which would be lower than what we have now.”
The consultation paper was drafted by The High Level Group of Company Law Experts, an initiative set up by the EC last September to discuss the need for the modernisation of company law in Europe.
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