Shareholder identification and its connection to a successful world economy.

That’s a heck of leap isn’t it? Well I am going to try and prove it to you!

Amid the everyday challenges and opportunities of running businesses in the 21st century, today’s CEO’s are concerned about many things. How to get the best out of people, managing an increasingly complex regulatory environment. The impact of the global trade environment on multi-national businesses is favourable, with emerging markets seen as an opportunity. Customer interaction requires significant technology investment, as do energy and people related costs.

So investment in capabilities and assets continues to play a vital part in growing and sustaining businesses all over the world. Good relations with existing investors and well balanced programmes to reach out to new ones, are vital as ever.

And here’s the challenge. Unless you know who your shareholders are – and not just some street name or nominee, showing themselves on the shareholder register for technical reasons – how can you mount an effective relationship building programme? How can you tell how they will vote, their short or long term intentions, changes to their investment mandate or investment managers, and whole host of other issues that it raises? How can you build an effective programme targeting other, new investors, with similar characteristics to your existing shareholders – who have already proved that your investment profile matches their requirements?

Much of the problem in solving these issues is connected to disclosure. I will argue through this blog that in an enlightened market, disclosure of shareholdings is at the centre of a fair market, building market confidence, protecting all investors and eliminating financial crime.

The challenge is that the disclosure rules, which underpin these aims, are a patchwork of differences all over the world.

Thus my mission is to try to help regulators, issuers, investors, analysts and the media to be aware of the effects of these differences, and to encourage those responsible to look at creating beneficial regulatory regimes for all concerned.

Where this becomes a very serious issue is in the area of cross border transactions. As it currently stands there are a number of countries with Disclosure Laws that can have complete visibility of who holds their shares and who is buying and selling stock at each stage of the transaction. The companies within these regulatory environments have a clear advantage over companies in countries where there are no supporting disclosure laws.

For instance if a French company and a German company go into a hostile takeover situation, the French company can leverage NRE Legislation to know exactly who holds their shares and who to go to to get support during the transaction, who has the voting power and who is influencing the buying and selling activity. However the German company has no such law to obtain the same visibility and is therefore effectively “trading blind” and at a huge disadvantage to its rival. The only view they have is historic and not nearly reliable enough to base a defence strategy upon.

Countries that have this huge advantage include France, the UK, Ireland, Norway, South Africa, Australia, Singapore, Hong Kong, Finland etc. Until other countries step up and create their own versions of these Disclosure Laws they are only making their companies unnecessarily vulnerable.

I would much appreciate your views and encourage you to join in the debate. Hey, we might even change world order; next stop Davos!