Institutional Investors: Will We See Greater Cooperation Between Them Regarding Corporate Governance?

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Vol: 10, Issue: 2

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Lessing, John
institutional investors; corporate governance; Class Order 98/649; Australian Securities and Investment Commission
article description
A recent exemption granted by the Australian Securities and Investment Commission enables institutional investors to cooperate to influence the corporate governance of the companies in which they invest. However, we are unlikely to see greater cooperation because only certain institutions qualify and the conditions to be satisfied to obtain the concession are onerous and apply for a strictly limited period. Apart from that, institutional investors in Australia have long been reluctant to actively involve themselves in the corporate governance of companies in which they invest for various reasons, including the free rider problem, political considerations, the insider trading provisions, the danger of being seen as a ‘shadow director’, and the nature of the competition between institutions.