UK - Government moves to encourage more shareholder activism by pension funds could put them in breach of Takeover Panel rules, proxy voting agency Manifest warns.
The agency said it had been approached by several fund managers expressing their fears in light of the government’s consultation paper – 'Encouraging Shareholder Activism'.
Manifest managing director Sarah Wilson said: “Some of my customers expressed concern that the way the takeover rules are currently written, institutions that wished to be more activist, could fall foul of the concert party rules.”
Wilson has written to the Takeover Panel asking for clarification of the rules on concert party actions – a breach of which can lead to institutions receiving temporary bans from buying and selling stocks.
Wilson explained: “There is some confusion over what constitutes trying to exert control over a company.
Arguably when one is exercising one's shareholder rights you are not trying to exercise control what you want is management to exercise better control.”
An added complication was that activist companies often increased its shareholding so as to have its views taken more seriously, Wilson said.
It is hoped that the Takeover Panel will now issue new guidance to investors on interpreting its the contested concert party rule.
At present concert party activism as tabled by the NAPF or the ABI does not fall foul of the Takeover Panel, unlike that of other loose collectives of institutions which come together on points of common interest. By David Rowley
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