Sweden: The Swedish Shareholders' Association Proposes 200 Policy Changes to Strengthen the Voice of Small Shareholders

Abstract

This article presents the main ideas in the 2017 revised Ownership Policy of the Swedish Shareholders’ Association, Sveriges Aktiesparares Riksförbund (SARF). With a membership of 70,000 individual shareholders, SARF is the largest non-profit private investor organisation in Europe, and an active member of organisations such as Better Finance and the World Federation of Investors (WFI). SARF wrote the first Swedish ownership policy addressing listed companies in 1993. This is the organizations fifth ownership policy.

The text focuses in particular on six issues where change is desired:

(i) The need to make Swedish self-regulation more accessible to smaller individual shareholders.

(ii) A clear stand against general mandates for the board to decide on rights issues of cash without first offering all shareholders a right to participate;

(iii) Amendments to the Swedish companies act, AKTIEBOLAGSLAGEN to clarify that the board’s primary mission is to create sustainable profits.

(iv) That the members of the Swedish version of the external and shareholder led nomination committee to suggest independent directors to the board, is elected at the AGM.

(v) Enhanced status of independent non-executive directors that are independent of both the company and larger shareholders.

(vi) Clearer alignment of the Swedish takeover rules with both domestic regulations and regulations applicable in other European countries.

Ägarboken (the Ownership Book) (2017) covers in all more than 200 ideas and recommendations that can be summarized into 37 clear suggestions. SARF’s opinions should be of interest to a broader European shareholding public. Across Europe there is an on-going discussion among policy-setters and academics related to different ways to enhance shareholder engagement, especially of institutional investors, manifested by i.e. the Kay Review (2012). On the Stockholm Stock Exchange (SSE), also known as Nasdaq Stockholm, domestic institutional investors are in general more engaged in corporate governance than elsewhere in Europe. However, as shown in this article, the role of the individual small investor community receives less attention.

The article includes comments related to the Swedish institutional framework from both a historical and theoretical perspective. This highlights the importance of including particular features of a national governance framework when developing protective measures for individual European shareholders, that frequently act as small investors in domestic markets.

Note: "This material was first published by Thomson Reuters, trading as Sweet & Maxwell, 5 Canada Square, Canary Wharf, London, E14 5AQ, in _International Company and Commercial Law Review _as Sophie Nachemson-Ekwall, “Sweden: The Swedish Shareholders’ Association Proposes 200 Policy Changes to Strengthen the Voice of Small Shareholders” [2018] I.C.C.L.R. 31–51 and is reproduced by agreement with the publishers."

Keywords: minority shareholders, corporate governance, shareholder rights