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The CNMV wants institutional investors to take long-term stakes in listed companies

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The “proxy advisors” and large institutional investors must participate in the long-term performance of listed companies. National Securities Market Commission (CNMV) President Rodrigo Buenaventura announced that the panel has opened the Code of Conduct for Institutional Investors, Asset Managers and Proxy Advisors for public consultation. This code, which will be in effect until mid-September, aims to “encourage greater ownership in companies so that they have investors who are better informed, more active and more involved in their strategy and decisions”.

The aim of the CNMV is also to participate in their march to strengthen governance, given the greater weight that this type of investor accumulates in listed companies. In reality, it is a non-binding guide, but companies that choose to comply must state in their annual report how they have applied the Code’s principles over the previous year.

“The Code addresses everything related to the allocation of capital and responsible corporate governance, with the primary objective of creating value and sustainable benefits for the company and society at large, improving companies in terms of long-term corporate profitability,” explained Buenaventura.

In drafting the code, advice was sought from an advisory group made up of experts from relevant sectors such as insurance, investment firms, legal and accounting firms, proxy advisors and issuers, as well as other national regulators. In addition, other similar codes that have been approved in recent years, such as the British or the Japanese, have been taken into account in its creation.

The proposal, put out for consultation by the regulator this Friday, sets out seven principles, including the need to invest and having a long-term strategy, knowledge and monitoring of investee companies, their development and publicity, the participation policy of the exercise of voting rights. Also the transparency of the participation measures carried out and their results, the management of conflicts of interest as well as the internal company management and the remuneration policy.

As detailed by Buenaventura, the market regulator has opted for a transitional period of three years to allow the large investors who join this initiative to choose which principles they comply with and which they do not, and this justifies the decision not to proceed, some of them. However, point 6 regarding the Conflicts of Interest Policy must be applied from the outset.

Source elpais.com

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