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Data service identifies issuers' foreign shareholders
09 October 2011
In the face of greater demands for better corporate governance, Euroclear and Capital Precision have introduced a new service to allow European equity issuers identify their global shareholders
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Euroclear and Capital Precision have joined forces to provide European equity issuers with a data service to allow them to identify their global shareholders.
The service will include information on domestic and foreign shareholder identification, and on shareholder groupings by investor type and strategy. Additionally it will provider detailed analysis of shareholders and peer companies.
Mohamed M’Rabti, director in Euroclear’s product management division, told Global Investor/ISF the development came after it has had requests from European equity issuers for more transparency around their shareholders.
“Euroclear, together with Capital Precision, aims to fill in the gaps and create as full and complete a picture as possible of holders,” he said.
The service offering will be expected to cover equities issued in five European markets where Euroclear acts as a central securities depository, including Belgium, Finland, France, Sweden and the Netherlands.
While regulatory frameworks in some European markets already allow issuers to ask for disclosure of the identity of their shareholders, M’Rabti said there have been calls for the European Commission to create harmonised laws for shareholder identification.
However, he went on to say that European markets still have uncoordinated requirements on what can be disclosed and that some markets have no such framework at all.
The problem has been that issuers do not know their foreign holdings, which is what Capital Precision will help with through identifying the issuer’s shareholders from outside the issuer’s home market.
“As firms step further towards globalisation – with a growing number of non-domestic shareholders – understanding a firm’s long-term strategy can become a challenge for investors,” commented M’Rabti.
Euroclear said the new product offering complements its partnership with Broadridge to streamline the electronic voting process in the Dutch market.
M’Rabti said this will help issuers because knowing shareholders before general meetings will allow issuers to have a dialogue with them, ultimately leading to higher participation rates and stronger corporate governance as issuers will be able to encourage their shareholders to vote.
He went on to say that on average in certain markets, only 40 to 60 percent of shareholders vote at a general meeting. He pointed out that firms should be asking themselves if the other 40 to 60 percent have been identified and if they have received timely information about the meeting.