Lord Myners, HM Treasury's Financial Services Secretary, delivered a
speech yesterday at the Hermes and City of London Corporation Responsible Asset Management Conference. His speech was wide ranging and, once more, he put forward the view that shareholders should view themselves as the "owners" of companies. In this regard he observed:
The problem is that most shareholders do not believe that they are owners; they do not feel responsible for the functioning or the future of companies in which they hold shares. This has profound consequences. The reality of ‘ownerless corporations’ disadvantages public equity as a form of ownership compared with other models – particularly private equity; it leads to pressure for more regulation to offset the vacuum in engaged oversight and it potentially subserviates and alienates employees who cannot diversify employer risk and find themselves working for companies with ‘here today, gone tomorrow’ owners".
Ownership is, of course, a difficult concept because companies, with their own legal personality, cannot be owned in the conventional sense. Lord Myners concluded his speech with the following suggestion:
... the investment community needs to take seriously the case for an organisation to promote and further the debate on governance and stewardship. A number of trade associations – the ABI, IMA, NAPF and others – have devoted resources to governance, but their primary role is to further the interest of their members; they mostly speak for the agents rather than investor principals. A strong, well-resourced body speaking solely on behalf of investors (the ultimate clients) would represent a valuable addition to the forces working for better governance and stewardship.I have called before on the fund management industry to endorse and fund such a body, possibly in partnership with a major business school (and endorse it without strings attached)".
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