Dutch engaged share ownership guidance launched by Eumedion

New “stewardship” guidance from €1trn investor forum

Eumedion, the governance forum that represents 67 Dutch and foreign institutional investors with more than €1trn in combined assets, has unveiled a 10-point non-binding set of ownership principles – in effect a “stewardship code” – for its pension fund and asset management members.

“Eumedion has drafted this series of best practices as guidance for its participants – which include pension funds and the asset managers of these pension funds – in fulfilling their essential role in the governance of listed companies,” the foundation said.

The new comply-or-explain Best Practices for Engaged Share-Ownership guidance asserts that responsible behaviour not only entails voting at shareholder meetings, but also includes the monitoring of, and dialogue with, investee companies.

It also includes “environmental and social (ES) aspects in the field of risk management, disclosure and remuneration policy, supporting the company in respect of good governance and consulting other shareholders and stakeholders where appropriate”.

The guidance is in line with other codes such as the UK Stewardship Code, the Statement of Principles on Institutional Shareholder Responsibilities from the International Corporate Governance Network, the UN Principles for Responsible Investment and the Code for External Governance of the European Fund and Asset Management Association (EFAMA). It’s in addtion to the existing Dutch corporate governance code.

Eumedion acknowledges that some members may not have the resources to engage with companies.But it urges members “to mandate their asset managers to do dialogue and other engagement activities on their behalf”. Eumedion also encourages collective engagement where appropriate.

One notable aspect of the guidance (point 10) covers securities lending around the voting record date for the general meeting. The guidance states if an institutional investor is engaged in a dialogue with the investee company, outside an AGM context, it is advisable that the investor’s position “is made completely clear to the company on its request”.

The guidance points state that Eumedion members:

1) Monitor their Dutch investee companies.

2) Have clear policies on the exercise of their shareholders’ rights, which may include entering into dialogue with Dutch investee companies and other engagement activities. They report at least once per year on the implementation of their policies.

3) Have clear policies for dealing with disagreements with boards.

4) Are willing to deal collectively where appropriate.

5) Seek to mitigate conflicts of interest.

6) Have a clear policy on voting and publicly disclose this policy.

7) Cast informed votes on all the shares they hold in Dutch companies.

8) Publicly disclose at least once in a quarter how they voted the shares in Dutch investee companies.

9) Take aspects relating to environmental and social policy and to governance into account in their policies on the exercise of their shareholder rights.

10) Do not borrow shares solely to exercise voting rights.