Corporate governance set back fears from stock
exchange merger
The merger of the London and Frankfurt stock exchanges could be a major
setback for corporate governance, specialists have warned.
The London and Frankfurt markets have different structures
affecting corporate governance which poses questions about which structure will dominate
the iX the name of the merged exchange.
The UK has a more advanced
corporate governance code which all UK companies listed on the London Stock
Exchange must comply with, but Germany has only recently introduced a voluntary
code of best practice.
Sarah Wilson, managing director of corporate governance and
voting agency Manifest, said that though iX will be subject to UK
regulation - and consequently the code -companies incorporated in Germany will
not be subject to the full force of legislation.
"Our concern is that
the way the exchanges are handling all this is going to be a bad move for
shareholders unless we get some key questions answered," Wilson told P
W.
Wilson, in a briefing to clients, said the listing rules, now
under the control of the Financial Services Authority, include the combined
code as an appendix and require certain statements to be made that relate to
compliance.
But the scope only extends to companies incorporated in the UK. Any
German member of the exchange would therefore appear to be exempt from such
requirements.
Wilson said: "We are particularly concerned that after so much
progress in the UK over the past 10 years this merger could be a seriously
retrograde step for governance best practice.
"We shall be taking the views of the market over the coming days and
talking directly to the parties concerned to ensure that shareholders
hardearned rights are not eroded."
Pensions Week
8 May, 2000
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