CANADA - Several large pension plans have reportedly called for the "30% rule" limiting their influence over acquired companies to be scrapped.
The move came as some giant schemes have bought major stakes in firms, but are subsequently unable to choose more than 30% of the board of directors, under Canada’s legislation.
Ontario Municipal Employees Retirement Board (OMERS) CEO, Michael Nobrega, recently commented: "It means if you own 100% of the equity, somebody else that hasn't put up the money has to vote 70% of the shares."
This rule only limits the power of the pension plan to elect members to the board, not the level of buying shares in the company.
Nobrega called the situation "commercially bizarre".
Ontario Teachers’ Pension Plan (OTPP) said it had taken this rule into consideration when successfully bidding for Bell Canada Enterprises (BCE) in which it should hold a 52% stake after the deal’s completion.
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