The Swiss government has ruled that all local pensions funds must vote in all the annual general meetings (AGMs) of Swiss companies in which they hold a stake, Barbara Ottawa reports.
Earlier this spring, the majority of the Swiss electorate voted in favour of an initiative aiming to cap bonuses for managers and increase active shareholder participation – including by pension funds.
In the first draft of the resulting decree, the government considered allowing Pensionskassen to not attend AGMs, or to abstain from voting, if such a move were deemed beneficial for members. However, in the final version of the decree, the government has ruled out the possibility of not attending the AGM.
Simon Heim, a pensions lawyer and consultant at Towers Watson in Switzerland, said the government would now require “absolutely mandatory shareholder engagement”. “There is still the possibility for Pensionskassen to abstain from the vote if it is in the interest of their members, but participation in the vote at AGMs is absolutely mandatory,” he said.
Heim repeated his criticism that this possibility of abstention was effectively increasing ’no’ votes, as Swiss corporate law requires an absolute majority. “This has to be seen as a considerable interference with pension funds’ autonomy,” he said.
Heim added that the additional regulatory burden would increase costs, especially at smaller pension funds, and mostly benefit proxy advisers. “Additionally, it will drive more investors away from direct equity holdings to investing in fund structures – which is unlikely to be what the initiators of the campaign intended,” he said.