Give Pension Funds Greater Voice; Scrap 30 percent Limit on Voting-Equity Stakes: C.D. Howe Institute



    TORONTO, Feb. 25 /CNW/ - Regulators should eliminate the 30 percent rule
that restricts pension funds from holding more than 30 percent of the voting
equity in a corporation, according to a study released today by the C.D. Howe
Institute. In A Matter of Voice: The Case for Abolishing the 30 percent Rule
for Pension Fund Investments, law professor Poonam Puri points out that
pension fund managers have devised elaborate ways to effectively skirt the
rule. She makes the case that it is time for regulators to enforce the rule or
eliminate it entirely and give pension funds a voice commensurate with their
equity stake.
    The author outlines three principle challenges to the 30 percent rule: 1)
the rule is only subject to superficial compliance as regulators have allowed
companies to work around the rule, resulting in unnecessary complexity and
increased transaction costs; 2) since no other OECD jurisdiction has a similar
rule, Canadian plans are at a disadvantage relative to foreign competitors
when competing for a given investment; and 3) there are governance problems
that result from disaggregating ownership from control.
    Professor Puri explains the case for adopting prudent person standards,
combined with appropriate guidance and direction to pension fund managers, in
place of quantitative restrictions.
    For the study click here: http://www.cdhowe.org/pdf/commentary_283.pdf





For further information:

For further information: Robin Banerjee, Policy Analyst, C.D. Howe
Institute, (416) 865-1904; Poonam Puri, Osgoode Hall Law School, York
University, (416) 736-5542


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