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Pension funds cool on new Dutch code

NETHERLANDS – The new Tabaksblat corporate governance code has received a mixed response from pension fund bodies.

The Tabakblat Code, presented this week to parliament and public, has been generally well-received. But pension funds have been slightly critical about some of the specific proposals regarding their own position in shareholder’s meetings.

The code was hailed by finance minister Gerrit Zalm, who said: “The code achieves a good balance between complete freedom and oppressive legislation.”

The code was drawn up by a committee headed by Dutch industrialist Morris Tabaksblat. He was clear about the role of institutions in new framework. “The participation of institutional investors is essential for the success of the new corporate governance structure,” he told a news conference.

Peter de Koning, chairman of the Society for Corporate Governance Research for Pension Funds, or SCGOP, told IPE that the new code has improved the position of capital providers in general.

However, he said that most of the changes are merely technical – and that some practical changes still needed to be made, such as the role of preferential shares.

According to SCGOP the enhanced importance of the shareholders’ meeting is positive. The corporate governance debate had still not been solved, and will continue to be a major issue.

Peter Bastian, director of the Utrecht-based Unie van Beroepspensioenfondsen, the Union of Occupational Pension Funds, said his organisation was generally positive about the new code.

According to Bastian, the role of shareholders has gained importance. The new code has now introduced an infrastructure in which the position of the institutional investors is being more clearly stated.

Still, according to Bastian, one issue still needs to be unresolved. The position of normal voting rights in relation to preferential votes needs to be discussed - and possibly changed.

If the current situation remains, normal shareholders will still not have the same power as preferential shareholders. This results in uneven voting rights.

Jeroen Steenvoorden, director of the Corporate Pension Funds Association, the Stichting voor Ondernemingspensioenfondsen, or OPF, said that the paragraph dealing with pension funds is positive in that the commission does not force pension funds to exercise their voting right.

One of the changes from the draft code is that funds now don't have to explain how they vote. They only need to disclose how they have voted on their websites.

Steenvoorden said the so-called “comply or explain” rule would not be not applicable to pension funds. And he noted that one of the aspects that has not been addressed is the fact that Dutch pension funds are not the major investors in Dutch companies.

Of the 467 billion euros which Dutch pension funds have invested, only around 33 billion euros are in Dutch equities. This means that Dutch pension funds are not the largest party at shareholder meetings. Most shares are held by foreign investors, who are not affected by the new code.

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