Institutional Investors’ Mandatory Voting Disclosure: The Proposal of the European Commission against the Background of the US Experience

Author:

Schmolke Klaus Ulrich

Publisher

Springer Science and Business Media LLC

Subject

Law,Political Science and International Relations,Business and International Management

Reference279 articles.

1. According to data provided by the Federal Reserve Bank, the percentage of holdings of US equities by US institutional investors grew from 35.98 per cent to 42.43 per cent between 1995 and 2004, while the share of mutual funds, closed-end funds and exchange-traded funds grew together from 13.89 per cent to 26.87 per cent (mutual funds alone: from 13.33 per cent to 24.86 per cent). See Board of Governors of the Federal Reserve System, Flow of Funds Accounts of the United States, Annual Flows and Outstandings, 1995–2004, Table L.213, available at: http://www.federalreserve.gov/releases/z1/current/annuals/a1995–2004.pdf. The US equity holdings were computed by taking ‘issues at market value’ and deducting ‘rest of the world — holdings of foreign issues by US residents’; institutional ownership was computed by deducting ‘household sector’, ‘state and local government’ and ‘rest of the world — holdings of US issues by foreign residents’.

2. As to the growth of holdings in US equities by institutional investors and mutual funds, respectively, in the period from 1985 to 2000, see the table provided by Alan R. Palmiter, ‘Mutual Fund Voting of Portfolio Shares: Why Not Disclose?’, 23 Cardozo L. Rev. (2002) p. 1419 at p. 1426 and his references in n. 6.

3. Cf., the impressive figures presented by Rolf Skog, ‘A Remarkable Decade: The Awakening of Swedish Institutional Investors’, EBLR (2005) p. 1016.

4. See Klaus J. Hopt, Where Does the Action Plan of the European Commission Lead?, ECGI Law Working Paper No. 52/2005, October 2005, available at: http://ssrn.com/abstract=863527, giving an illustrating example.

5. For the United States see, e. g., Bernard S. Black, ‘Shareholder Passivity Reexamined’, 89 Mich. L. Rev. (1990) p. 520; ibid., ‘Agents Watching Agents: The Promise of Institutional Investor Voice’, 39 UCLA L. Rev. (1992) p. 811; Edward B. Rock, ‘The Logic and (Uncertain) Significance of Institutional Shareholder Activism’, 79 Geo. L.J. (1991) p. 445. As to the relevant debate in certain EU Member States, see also the reference in the Report of the High Level Group of Company Law Experts in a Modern Regulatory Framework for Company Law in Europe, 4 November 2002, p. 56, available at: http://ec.europa.eu/internal_market/company/docs/modern/report_en.pdf.

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