On 16 April 2008, the OECD Steering Group on Corporate Governance invited representatives from the activist hedge fund industry and other activist investors to discuss potential policy issues including their use of shareholders rights (such as board nomination), the impact of their activism on market abuses prevention, the scope for shareholder cooperation into the light of “acting in concert” regulations, as well as the use of derivatives instruments to boost investors’ voting power. The dialogue meeting, which followed a similar initiative held in November 2007 with private equity firms and their trade association in Europe (EVCA), is part of a broader project of the Steering Group aimed at developing a number of analytical instruments for applying the OECD Principles on Corporate Governance to new developments and phenomena of financial markets.
Hedge fund representatives noted that the industry standards proposed for both the UK and the US (Hedge Fund Working Group standard and Presidential Working Group report) address a number of potential issues including sound practices relating to proxy voting, and argued for a convergence on industry standards for the alternative investment industry.
In summarising the discussion, the Chair of the OECD Steering Group on Corporate Governance (Mr. Marcello Bianchi, CONSOB) stated that activist investment strategies had an important role to play in maintaining a sound and efficient capital market. The regulatory framework should allow the developments of shareholders’ activism and any intervention aimed at addressing specific policy issue should be informed by careful analysis about the nature of the issue and about the costs and benefits of proposed policy actions.
Mr Baker, Deputy CEO of the Alternative Investment management Association (AIMA) emphasised that AIMA was keen to continue working closely with the OECD Steering Group on its wider discussions of policy in the area of shareholder activism.