April 14, 2003
By Vera von Lieres
Cape Town - The new head of m Cubed Asset Management, part of multimanager m Cubed, has welcomed the setting up of proxy voting guidelines for asset managers by Investment Solutions to improve corporate governance, but says more is needed.
Morris Mthombeni, the new managing director of m Cubed Asset Management, on Friday urged trustees to get more involved in corporate governance issues in companies.
Mthombeni said news that competitor Investment Solutions had drawn up proxy voting guidelines and corporate governance regulations for asset managers in its portfolios was positive.
It meant fund managers were starting to wake up to the potential of proxy voting.
"It is very exciting that fund managers are starting to explore opportunities to use shareholders' political power to ensure that corporate governance is enforced in the country," he said.
However, he said m Cubed would like this taken a step forward, to the point where trustees and investors got more involved in articulating their preferences.
"Trustees should be compelled to have their own proxy voting guidelines, thereby having a greater say in what they believe to be appropriate corporate governance in firms," said Mthombeni
.
In the US, for example, it was standard for trustees to have a say in corporate governance issues. Global investment managers used sophisticated proxy voting systems to engage with the companies in which they invested, through companies established specifically for this purpose, said Mthombeni.
In this system, investment managers did not need an army of people to attend annual general meetings. Instead, they needed only to establish their proxy voting policies and outsource their implementation to specialist proxy voting agencies.
This practice enabled global managers to engage on a variety of issues, from corporate governance, financial and non-financial disclosures to environmental risks and business strategy.
In South Africa, a proxy voting framework could be used to address black economic empowerment obligations and the impact of Aids on companies.
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