The Financial Services Board’s proposal to oblige departing directors in the insurance industry to divulge reasons for their departure is a boost for shareholder activism, the country’s largest empowered asset manager said on Tuesday.
Ian Troost, life insurance analyst at Metropolitan Asset Mangers said that if the proposal was accepted it would provide greater transparency and significantly improve corporate governance.
“However, precautionary measures would have to be taken when making this information public knowledge as a loss of confidence in a company may hasten its demise. Life assurance companies are complex animals, so it is imperative that information is appropriately dispersed,” he said.
Troost believes that in the insurance industry there are inherent conflicts between the interests of policyholders and those of shareholders.
“What may be more to one of these parties often means less for the other. It is important to maintain a delicate balance between the interests of policyholders and shareholders, and this is another area in which the registrar can play a role.”
Referring to the silence around Brian Gilbertson’s recent departure from BHP Billiton, Troost adds that it may make sense to extend this proposal to all industry bodies.
“While it may not be always be in the best interest of companies to volunteer sensitive information, it is favourable for shareholders to be kept abreast of any serious developments in companies in which they have invested their money.” – I-Net Bridge