Shareholder rights

We are committed to making full use of our rights as a shareholder of investee companies. With a significant proportion of the fund invested directly in European listed equities, protecting and exercising our shareholder rights is a key tool in securing the best returns for our members.

In May 2017 USS raised concerns over proposals in the Netherlands to introduce protectionist measures at Dutch companies. We co-signed a letter convened by the International Corporate Governance Network (ICGN) and joined an investor Delegation to the Ministry of Economic Affairs in the Hague where we had the opportunity to reiterate the points we made in the letter.

USS also sent letters to members of the US House of Representatives in May 2017, to raise concerns over several provisions within the proposed Financial Choice Act which would make US companies less accountable to investors and restrict shareholder rights. The Scheme supported a letter from the US Council for Institutional Investors outlining investor concerns. Further information can be found here.

EU Shareholder Rights Directive

In April 2014, the European Commission published a revision to the 2007 Shareholder Rights Directive and submitted it to the European Council and European Parliament for approval. USS supports the overall aims and objectives of the Directive. We believe a strong corporate governance framework can reduce investment risk, but this is particularly so when it is combined with national corporate laws and listing rules that provide additional safeguards. We believe that reducing investment risk for equity investors through improved transparency and strengthened shareholder protections across Europe will ultimately reduce the cost of capital for issuers.

We have engaged with MEPs and the European Commission to ensure that any amendments to the Directive encourage best practice governance principles. As a UK pension fund, we are working closely with the UK’s Pensions and Lifetime Savings Association (formerly the National Association of Pension Funds or NAPF) to increase the awareness of matters arising from the proposed legislation, and voice our concerns to those influencing the debate.

For more information on USS’s position on the proposed amendments to the Shareholder Rights Directive please see our position paper.

One Share, One Vote

USS is a strong proponent of the principle of one share, one vote. We believe that differential shareholder rights and benefits can create perverse incentives and may lead to undesirable concentrations of power. In practice, differential rights and benefits will enhance the influence of founding families and major shareholders to the detriment of institutional investors and other shareholders.

In November 2014, we published a response to the Hong Kong Exchanges and Clearing, August 2014 Concept Paper on Weighted Voting Rights. We raised concerns regarding the separation of economic exposure from ownership rights advocated for the concept of one share one vote. We highlighted support for the Asian Corporate Governance Association (ACGA’s) response to the Concept Paper which represented the views of many international shareholders, including USS.

In May 2015, we co-filed a one share, one vote shareholder proposal at the AGM of French telecoms company, Orange SA. The proposal requested an amendment of the company’s by-laws to reject the double-voting rights conferred under changes to the French Commercial Code’s ‘Loi Florange’. The proposal was submitted by PhiTrust Active Investors, supported by several other international shareholders active in corporate governance. Whilst the proposal was defeated, the resolution did send a signal to the market and other French companies that investors will stand against steps that reduce their ownership rights.

Last updated: about 13 months ago