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🇰🇷 South Korea /Economy & Trade

UK investor forum shows how collective action can sway companies

From Hankyoreh · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

In-depth Named sources Context piece
  • The Investor Forum in the UK, a non-profit organization of institutional investors, helps shareholders collectively engage with companies.
  • It acts as a 'last resort' insurance, with members first attempting individual dialogue before escalating issues to the forum.
  • The forum's 'hub-and-spoke' structure and strict rules ensure legal compliance and prevent information leaks, building trust among global investors.

In the UK, a unique organization called the Investor Forum empowers institutional investors to collectively address corporate issues, a model that could offer insights for South Korea's evolving stewardship code. The forum, a non-profit body comprising over 50 institutional investors like pension funds and asset managers, represents about 25% of the UK stock market's capitalization. This collective weight ensures that companies, which might dismiss individual shareholder concerns, cannot ignore the forum's unified voice.

If shareholders raise issues with a company, they often receive a response like, 'You're the only one with a complaint. All other shareholders are satisfied.'

— Victoria SantDescribing common responses from companies to individual shareholder concerns.

Victoria Sant, Executive Director of the Investor Forum, explained that collective engagement is a 'last resort.' Members typically engage in one-on-one dialogues with the companies they invest in. Only when these individual efforts fail and a company dismisses a concern as isolated does the issue get brought to the forum. The forum then verifies if other shareholders share the same concerns and assesses if a significant enough combined stake can be formed to warrant collective action.

The forum is like an insurance policy that members hope they won't have to use.

— Victoria SantExplaining the role of the Investor Forum as a fallback mechanism.

The forum prioritizes legal safety over immediate influence. It employs a 'hub-and-spoke' model, where member firms communicate only with the forum, not directly with each other. This structure prevents the leakage of non-public information and avoids issues like market manipulation or being classified as 'acting in concert' during mergers and acquisitions. All meetings begin with a declaration that the forum does not seek inside information, and regulatory bodies have approved its operational framework.

We don't seek inside information from companies.

— Victoria SantStating the forum's commitment to legal and ethical engagement.

Unlike activist funds that demand specific changes, the Investor Forum focuses on identifying problems and conveying shareholder concerns to company boards. This discreet approach, operating behind the scenes without media campaigns or public letters, often leads to greater board receptiveness. Sant noted that boards sometimes approach the forum proactively when facing activist investors or considering significant decisions, seeking to understand broader shareholder sentiment.

Don't just say 'you can't,' clearly state 'it's okay to do this.'

— Victoria SantAdvising regulators on how to facilitate collective shareholder action.
DistantNews Editorial

Originally published by Hankyoreh in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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