SWEDEN - Första AP-fonden, (AP1), the first Swedish national pension fund, has updated its 'ownership policy' relating to how it uses active ownership to influence corporate governance issues in both Swedish and foreign companies.

AP1 said the policy is based on seven principles for corporate governance and rules for corporate environmental and ethical responsibility, although each point in the policy is divided into two parts, the first part containing general principles applicable to all companies where the fund has holdings, and the second applying to Swedish companies in particular.

The buffer fund explained the policy, which is revised and adopted yearly by AP1's board of directors, has special rules for Swedish companies because the fund "generally has larger holdings in, and therefore also greater opportunity to exert an influence, on these".

Figures from AP1 confirmed as of June 2008 the pension fund had around SEK100bn (€9.5bn) invested in equities worldwide, of which appproximately one-fifth was allocated to Swedish equities.

However, it also added the ownership policy applies regardless of whether the shares are managed in-house or by external managers, and the principles for corporate governance are applicable to both listed and unlisted shares.

"The new ownership policy provides a better basis for us to exert an active ownership influence in both Swedish and foreign companies," said Ossian Ekdahl, AP1's head of corporate governance.

AP1 said "the most important principles" outlined in the policy included the right for shareholders to vote and propose items for discussion at general shareholder meetings, as it claimed "in many countries this is not as self-evident as in Sweden" so it wants to promote "greater openness and give the shareholders greater influence".

Other key issues targeted in the policy included:

Equal treatment of shares granting the same financial rights; Capital structure - the board's responsibility for maintaining a well-balanced capital structure; Election of board members and composition of the board; Management compensation and incentive schemes; Audit and internal controls, and Guidelines for ethical and environmental consideration.

Johan Magnusson, managing director of AP1, said: "We are convinced that investments in well-managed companies will generate higher returns in the long run, and therefore choose to take on a role as active and committed owners."

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

Topics