Institutional Investors' Mandatory Voting Disclosure - European Plans and U.S. Experience
50 Pages Posted: 17 Oct 2006
The European Commission proposed in its action plan "Modernisation of company law and enhancing corporate governance in the European Union - a plan to move forward" of the year 2003 a mandatory disclosure of institutional investors' voting behavior with regard to their portfolio companies as a medium-term measure. This proposal was evidently inspired by SEC rules mandating voting disclosure of investment companies and investment advisers adopted in the same year.
However, the realization of the Commission's proposal is far from certain. It has not only met strong opposition by commentators when it was presented to the public in 2003. The Commission itself recently launched a consultation process to reassess the necessity and desirability of the medium- and long-term proposals of its action plan thereby indicating that it will take the principle of subsidiarity of EC law much more seriously than in the past. At the same time, the British government gets ready to adopt a disclosure rule at the national level.
This paper examines the U.S. debate on and experience with institutional investors' mandatory voting disclosure. With the aid of the insights and arguments thereby gathered the paper argues that there was and still is a case for a mandatory voting disclosure rule at EC level.
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