EU corporate governance consultation reveals demand for investor voting disclosure

Need for regulation of proxy voting agencies also identified.

The “vast majority” of respondents to the European Commission’s consultation on corporate governance at banks want institutional investors to be forced to disclose how they vote at company annual general meetings.

The Commission, the executive arm of the European Union, launched its Green Paper on Corporate governance in financial institutions and remuneration policies in June. By the close of the consultation in September, it had received 214 responses – of which 25% were from the investor community.

“The vast majority of respondents that provided an answer to this question are in favour of mandatory disclosure of voting policies and records by institutional investors,” the Commission says in its review of the responses.
It “would have a positive impact on the awareness of investors, optimise investment decision of ultimate investors, facilitate issuers’ dialogue with investors and encourage shareholder engagement”.Most respondents supported the idea that institutional investors should adhere to a code of best practice, whether at national, European or international level, at least on a “comply or explain” basis.

Perhaps not surprisingly, given that 58 of the respondents were from the UK, there was support for the UK Stewardship Code as a model for investor codes of best practice. But some felt there was a need either for a European code of best practice or for a common standard at European level with mutual recognition of national stewardship codes.

On the company side, there was support for mechanisms to enable firms to identify their shareholders. The respondents identified a need to “reduce costs, remove legal obstacles and regulatory barriers” stopping shareholders from actively engaging with companies. They saw the need to facilitate cross-border voting and were in favour of regulating proxy voting agencies.