GERMANY - Hermes, the BT pension fund-owned asset manager, has warned planned German legislation to curb co-operation between investors could weaken corporate governance standards.
In a letter to Germany's finance minister, Peer Steinbrück, Hermes argues the proposed legislation against investors ‘acting in concert' - cooperating on share votes - will cause "juridical insecurity and make a constructive dialogue between investors more difficult".
Moreover, these proposals are "counterproductive" in terms of the government's aim to encourage transparency, said the fund manager.
The new regime, which would give the German regulator powers to withdraw offending corporate investors' voting rights for six months, is scheduled to take effect next spring.
But in the letter, published on its website, Hermes also argued the proposals would be contrary to United Nations principles for responsible investment, non-binding environmental, social and corporate governance (ESG).
"For long term orientated investors, such as Hermes, [the proposals] will significantly complicate having a dialogue that is constructive and directed at lasting increase in value," Hermes said.
The German ministry of finance was unavailable for comment today at the time of going to press.
IPE reported in August these proposals would mean corporate investors who accumulate more than a 10% stake in a firm will have to clearly state their intentions with that firm ,while another more minor measure is a requirement under which these investors must disclose how they acquired their capital. (See IPE story: Germany to tighten corporate investor supervision)