Stewardship and Collateral

Abstract

Recent case law has confirmed that investors in indirectly held securities are not recognised as shareholders or bondholders, and are thus disenfranchised. This cuts across calls for greater investor activism. Further, the post-crisis emphasis on financial market collateral promotes operational changes running counter to enfranchisement and activism. The suggested solution is to recognise two categories of holding, namely traditional securities and collateral depositary receipts.