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| 2003
News and Press Releases |
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HEADLINE:
UK Investors Demand Votes In US Institutions Call On SEC To Bring American Corporate Governance Standards In Line With Britain
By: Damian Reece
Independent.co.uk. December 12, 2003
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EXCERPT: Britain's biggest financial institutions are demanding a radical shake-up of US corporate governance rules and calling for shareholders to be given greater rights to remove and appoint company directors. The move comes in the wake of a string of US corporate scandals, including Enron, Worldcom and most recently Boeing, which have undermined confidence in the standards of US corporate governance. UK investors are planning to write to the US Securities and Exchange Commission (SEC), putting forward proposals to change regulations and make it easier for shareholders to dictate the make-up of boardrooms. The institutions want the SEC to consider introducing UK-style voting rights, including the right to call extraordinary general meetings (egm) to oust directors.
The investors, which include Morely Fund Management and the University Superannuation Scheme (USS), the UK's third-biggest pension fund with £20bn of assets, have also rejected the claims of US lobbyists who say allowing shareholders access to a company's nominations process would be too destabilising with every election becoming a battle. A draft letter is being circulated among all of the country's biggest institutions for comments, and USS will despatch it to Jonathan Katz, the SEC secretary, next week. They want US shareholders to be given the right to both nominate and remove directors in the interests of protecting the value of their investments. At the moment, US shareholders cannot call an egm to oust underperforming directors, and while there is a process for nominating directors, it is hugely convoluted and expensive.
British pension funds have a growing proportion of their assets held in US shares, and they are increasingly worried about the level of protection US corporate governance rules provide.
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