This month’s cover story tackles a thorny issue for many investor relations officers – shareholder identification. It is the key to good investor relations. After all, if you don’t know who your investors are, it is a bit difficult to do any ‘relating’ to them.
As the article points out, some markets have it a lot easier than others. Indeed, many investor relations officers in the UK might find it impossible to practice IR at their current level if they were faced with the blank wall of bearer shares staring their continental counterparts in the face.
Still, there is room for improvement on the level of holding information available in every market. Many outside the US look enviously at the 13f disclosure system, yet IROs in the States moan continuously about working with out of date information and incomplete records. Similarly, the UK’s 212 notice system is admired by many in the US, yet UK-based IROs yearn for the openness and public access to holding information on their peers that those in the US enjoy.
Clearly, no system is perfect. A little bit of concerned tinkering or, in some cases, major structural work, on the part of legislators and regulators would not go amiss. It is up to investor relations officers (and their representative societies) to lobby for change in each market.
However, legislative and regulatory change does not happen overnight. Nor is that necessary for improvements to be made. Holding information should not have to be wrung from institutions via legislative force.
Listed companies are being pushed into improved disclosure by institutional investors the world over; and it’s time they returned the favor. As suggested in the cover story, the company-investor relationship should be a two-way relationship. Large institutional holders can help companies by disclosing their level of holdings, either direct to the company itself or to their advisors. Keeping that information under wraps to ‘maintain competitive advantage’ is a fallacy in most situations, just as it is for listed companies trying to withhold information from investors.
The time has surely come for institutional investors to fall into line on the disclosure front. And the excuse that they don’t have accurate total holding information to hand simply won’t wash. Investor relations officers should apply some polite pressure to those institutions reluctant to reveal whether they are invested in your stock. That way the investor relations task would become a whole lot easier.
