Relation with Shareholders & Disclosure

Question 0

Potential Problems with II

Answer 0

Fund Managers view - short termism, not interest in governance, just financial gain
Skills - Many are part time, lack skils for responsible investment
Shareholder activism -

Question 1

Types of Institutional Investors

Answer 1

Pensions Funds
Life assurance Companies
Unit Trusts
Investment Trusts

Question 2

Conditions when appropriate for II to intervene

Answer 2

Strategy
Operational Performance
Acquisitions/Disposals
Remuneration Policy
Internal Control Failures
Succession planning
Social responsibility
Non compliance with codes

Question 3

Benefits of disclosure - regular & constructive dialogue between company and shareholder

Answer 3

Directors understand interest and concerns of shareholders
Shareholders understand what company trying to achieve
Increase shareholder interest encourages checks on managers
Potential benefits from closure interest by major shareholders

Question 4

Voluntary disclosure

Answer 4

Strong can help attract capital & maintain confidence
Shareholders & investors require regular, reliable, comparable info for decision making
Promote Co. in positive light; marketing tool
Improve public understanding

Weak disclosure & non transparency can encourage unethical behaviour and decrease market integrity