The manager of the Norwegian oil fund has highlighted a series of stumbling blocks that currently hinder shareholder voting in the European Union, and given the European Commission (EC) a list of five improvements it would like to see materialise in the future Capital Markets Union (CMU).
Responding to the EC’s consultation on the final report of the High-Level Forum (HLF) on capital markets union, Norges Bank Investment Management (NBIM) said: “Voting is one of the most important tools for investors to manage their responsibilities and exercise their rights as owners.
“Yet, investors sometimes encounter obstacles when exercising their voting rights,” the manager of the NOK10.4tn (€974bn) Norwegian Government Pension Fund Global (GPFG) wrote in a letter to the Commission.
The letter’s signatories Carine Smith Ihenacho, NBIM’s chief corporate governance officer and Séverine Neervoort, senior analyst, corporate governance at the Norwegian central bank division, said they were only addressing the chapter of the report in which the HLF made recommendations on shareholder identification, exercise of voting rights and corporate actions.
The pair welcomed the forum’s recommendation to revise the Shareholder Rights Directive, in order to address issues of manual processes, lack of standardisation and fragmentation in the EU single market, and suggested five measures:
- Receiving confirmation from issuers of resolutions having been voted in line with shareholders’ instructions should be automatic, rather than the current proposal that owners should simply be given the right to obtain such confirmation;
- A common approach regarding the deadline to cast votes should be introduced;
- Votes should be counted systematically, with vote tallies being published, and there should be transparency on voting outcome per agenda item;
- There should be a straightforward administrative process for power of attorney in order to facilitate cross-border voting, and the electronic tabulation of votes should always be permitted;
- Common definitions in EU legislation for concepts like ‘record date’ or ‘shareholder’ would help avoid legislative fragmentation and shed light on end investors rather than intermediaries.
Though Norway is a member of the peripheral European Free Trade Association and not an EU member, NBIM said it had €130bn invested in equities in the union and was an active owner aiming “to promote long-term value creation in the companies in which it invests”.
In May, NBIM published a paper on the voting process, expressing what it saw as efficient practice and how key stakeholders could help improve things.
More recently, the Oslo-based manager has spoken out on shareholder voting on sustainability proposals, saying some green motions now being put forward concentrated on tangential issues or tried to micro-manage company boards.