JURI adopted the report on “Transparency of Institutional Investors” prepared by Klaus-Heiner Lehne and also adopted the opinion on Solvency II prepared by Sharon Bowles.
JURI Committee adopted the report of Klaus-Heiner Lehne (EPP/ DE) on the ‘Transparency of Institutional Investors’ based on the legislative initiative procedure Rule 39.
The Committee wants the Commission to propose new rules on the investment policies of hedge funds or private equity investors. The report also requests EU-wide measures to prevent asset stripping of companies targeted by private equity investors, and more transparency on pay and bonus packaged for fund managers.
The Committee proposes to oblige hedge funds and private equity funds to disclose and explain - vis-à-vis the companies whose shares they acquire or own, retail and institutional investors, prime brokers and supervisors - their investment policy and the associated risks.
The committee called for new rules to enhance transparency of voting policies of hedge funds. The Commission is urged to explore whether reporting requirements should also apply to the agreements between several shareholders, as it is not the case today.
The committee also asks the Commission to investigate the possibility to apply, to alternative investments, contract terms allowing for a clear limitation of risk, for measures to be taken if thresholds are exceeded, for a clear description of lock-up periods and for explicit conditions concerning cancellation and termination of investment contracts.
The committee calls for full transparency over managers' remuneration systems, including the use of stock options, through formal approval by the general meetings of the company's shareholders. Moreover, a code of best practice should be established, according to the adopted text, in agreement with the industry, to introduce financial incentives which discourage excessive risk-taking behaviour. MEPs in committee propose a one-stop-shop website with a register of those market players complying with the code of conduct.
The report asks the Commission to investigate the issue of money laundering, specifically in the context of hedge and private equity funds, and put forward legislation if necessary.
MEPs want the Commission to propose rules forbidding "asset stripping" by investors who misuse their financial power in a way that merely disadvantages the company acquired in the long term, without having any positive impact on its future - or the interests of employees, creditors and business partners. They therefore propose common EU rules to guarantee capital maintenance of companies.
Regarding private equity funds, Members in committee suggested, among several proposals, that the Commission should address the issue of irresponsible lending to private equity funds, where banks disclaim any responsibility for what the loan is used for and where the money that repays the loan comes from.
A absolute majority of MEPs is required to approve this report at plenary stage, according to the legislative initiative procedure, Rule 39 of EP Rules of Procedure.
The Committee also adopted the opinion on Solvency II prepared by Sharon Bowles.
The results of the vote and the adopted compromise amendments are attached below.
Transparency of Institutional Investors
Draft report Transparency
Amendments Transparency
Opinion Transparancy
Voting list and compromise amendments as adopted see further down.
Solvency II
Draft Opinion Solvency II
Amendments Solvency II
Voting list
Oral amendments
All amendments were adopted except:
37, 9, 11, 39, 18, 48, 19, 20, 49, 53, 25, 55, 57, 58, 2nd part of 29, 1st part of 31, 2nd part of 32, 5, 34
© Graham Bishop
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