EUROPE - Listed companies need better ways to communicate with long-term institutional and retail investors to avoid a continued outflow of funds from equity markets, EuropeanIssuers (EI) said.
The advocate for listed companies said the growth of international shareholders and the growing number of intermediaries is disconnecting companies from their shareholders.
And it warned this had resulted in the market value of companies moving separately from their true values.
EI chairman Jacques Schraven said companies' shareholder base has become unstable and "that long term corporate strategies for the creation of sustainable value are frustrated".
"We have a problem of corporate governance," said EI secretary general Dorien Fransens. "From day one companies have been telling me that they do not know who their shareholders are."
She added: "In general, participation of institutional investors at shareholder meetings is not very high, but that's because it's not easy on an international level."
She said a long string of intermediaries may stand between a shareholder and the company. Intermediaries, like custodians, should provide companies with details of who their shareholders are, said Fransens.
The advocacy group also recommends setting up shareholder rights that are contingent with the length of ownership, offering a loyalty dividend, or multiple voting rights for long-term owners.
Schraven explained: "Those with a genuine interest should take the decisions, not the fruit flies who will have long disappeared when the effects of these decisions become reality."
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