Taking ownership of ownership The challenges of panEuropean

Taking ownership of ownership The challenges of pan-European share ownership Sarah Wilson Managing Director Manifest Information Services Ltd

3 Themes, 1 Question: Who is in charge of voting? • What are the barriers? • Voting issues • Changes coming

What is Manifest? • Structured, consistent, comparable & timely • Governance metrics, proxy guidance • Independent & impartial

Who’s in charge? • Probably not who you think! • Cast of characters – – – – Registrars Custodians/Sub-custodians Voting agencies Fund managers Beneficial owners Trade Associations Regulators

Registrars • Registered ownership model is of enormous benefit • Need to export this model to other markets • Oversight of AGM process, vote tabulation: legally profound process, confidence, communication, clarity

Custodians • Most shares “owned” via pooled nominees • Pooled ownership obliterates real ownership • Custodians have mostly outsourced voting to 3 rd parties • ONE OF THE MOST SIGNIFICANT BARRIERS

Voting Agencies • Come in many flavours: – Tied to trade associations (Conflicts? ) – Paid by issuers (conflicts? ) – Axe to grind? – Relatively “cheap” analysis – M&A issues/investment research

Fund Managers • Again, many flavours – Full-on, engaged, professional; or – Box-ticking, Lowest Common Denominator • Who engages? • Domestic/overseas issues

Beneficial Owners • Not one size fits all – Pension funds – LGPSs – Trusts – Charities – Insurance funds • Domestic vs international perspectives

Trade Associations & Regulators • • Gate-keepers of collective thinking Guidelines may not be dynamic Steering & rowing problems Collective view vs the individual

Barriers • Foreign stock exchange rules imposed outside domestic frontiers • Pooled a/c’s • Sub-custody access • Share-blocking • Wet-ink signatures • Physical attendance • Ancient rituals & procedures not keeping pace with technology

Barriers (2) • Lack of investment • Perceived “low-value” of governance • Needs closer integration with investment activities • Investment governance vs. issuer governance

Future Issues • Promulgation of transparent, global, open standards • Closer integration: – Governance & Investment – IROs/Co-Secs • Real ownership dialogue – Get behind the nominee – Talk to real owners Away from box-ticking/off-the-shelf boiler-plate

Future Issues • Know the cast & understand their motivations • Understand the mechanics – get the real answers, not the spin • Governance is highly-charged & politicised

EU Consultation • Broadly very supportive • Concerned about lack of joining up with clearing/settlement • Many issues could be resolved by better working practices & willingness to embrace change • Lack of healthy competition

Finally Thank you for listening! Sarah Wilson +44 (0)1376 504503 sarah. wilson@manifest. co. uk http: //www. manifest. co. uk