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OECD (2011),The Role of Institutional Investors in Promoting Good Corporate Governance, Corporate Governance, OECD Publishing.http://dx.doi.org/10.1787/9789264128750-en
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Corporate Governance
The Role of Institutional Investors in Promoting Good Corporate GovernanceContents
Executive Summary
Assessment and Recommendations
Part I OverviewChapter 1. The Structure and Behaviour of Institutional Investors
Part II In-depth Country Reviews on the Role of Institutional Investors in Promoting Good Corporate Governance Chapter 2. Australia: The Role of Institutional Investors in Promoting Good Corporate Governance
Chapter 3. Chile: The Role of Institutional Investors in Promoting Good Corporate Governance
Chapter 4. Germany: The Role of Institutional Investors in Promoting Good Corporate Governance
Annex A. The Questionnaire of the OECD Corporate Governance Committee
Annex B. The Data Requested in the Questionnaire of the OECD Corporate Governance Committee
ISBN 978-92-64-12874-326 2011 11 1 P -:HSTCQE=VW]\YX:
Th
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Corporate Governance
The Role of Institutional Investors in Promoting Good Corporate Governance
Corporate Governance
The Role of Institutional Investors in Promoting
Good Corporate Governance
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FOREWORD
Foreword
This report presents the results of the second thematic peer review based on the OECD Principlesof Corporate Governance. The report is focused on the role of institutional investors in promoting
good corporate governance practices including the incentives they face to promote such outcomes. It
covers 26 different jurisdictions, including in-depth reviews of Australia, Chile and Germany.
The report is based in part on a questionnaire that was sent to all participating jurisdictions in
January 2011 (see Annex A). All countries were invited to respond to the first question so as to
provide an overall context within which the review would take place. The three jurisdictions that
were subject to the in-depth review were invited to complete all questions.
The report first reviews what is known about the institutional investor landscape including the
behavioural codes and legal framework. It then describes what is known about the incentives that
condition their actions before considering the record of engagement and voting. The second part
comprises the three country reviews. The report was prepared by Grant Kirkpatrick, Hctor Lehued
and Kenji Hoki with inputs from Simon Wong and Marco Morales and approved for publication
under the authority of the OECD Corporate Governance Committee in August 2011.
The OECD corporate governance peer review process is designed to facilitate effective
implementation of the Principles and to assist market participants and policy makers to respond to
emerging corporate governance risks. The reviews are also forward looking so as to help identify, at
an early stage, key market practices and policy developments that may undermine the quality of
corporate governance. The review process is open to OECD and non-OECD jurisdictions alike.
THE ROLE OF INSTITUTIONAL INVESTORS IN PROMOTING GOOD CORPORATE GOVERNANCE OECD 2011 3
TABLE OF CONTENTS
Table of Contents
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Assessment and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Part I
Overview
Chapter 1. The Structure and Behaviour of Institutional Investors . . . . . . . . . . . . . . . . 191.1. Background, objectives and issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.2. The institutional investor landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
1.3. Codes, legal frameworks and disclosure requirements . . . . . . . . . . . . . . . . . . . 32
1.4. Co-operation between investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
1.5. Investment behaviour of institutional investors: the driving forces . . . . . . . . 40
1.6. The voting and engagement record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Part II
In-depth Country Reviews on the Role of Institutional Investors
in Promoting Good Corporate Governance
Chapter 2. Australia: The Role of Institutional Investors in Promoting Good Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 692.1. Institutional investor landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
2.2. Legal rules and other guidance relating to shareholder rights and responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
2.3. Exercise of shareholder rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
2.4. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Annex 2.1: Summary of legal provisions relating to the fiduciary responsibilities of institutional investors in Australia . . . . . . . . . . . . . . . . . . . . . . . . 86
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Chapter 3. Chile: The Role of Institutional Investors in Promoting Good Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 893.1. The corporate governance landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
3.2. Legal and regulatory framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
THE ROLE OF INSTITUTIONAL INVESTORS IN PROMOTING GOOD CORPORATE GOVERNANCE OECD 2011 5
TABLE OF CONTENTS
3.3. Exercise of shareholder rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
3.4. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Chapter 4. Germany: The Role of Institutional Inv