At the end of September 2018, 53 per cent of the share capital issued through VP Securities A/S was registered to foreign owners. Most of this share capital was registered to nominee accounts, which means that the de facto foreign shareholder is not registered by name in the relevant company's shareholder register.

In 2018, it is estimated that more than 50,000 foreign shareholders, mainly institutional investors, sought to exercise active ownership in the Danish companies in which they had invested. Yet during the 2018 AGM season, 37 per cent of the voting instructions were dismissed, due to non-compliance with formalities (according to VPs annual AGM analysis) – primarily due to lack of approval of powers of attorney (PoA).

Danish proxy voting “regime” presents challenges

“It is hardly a secret that the proxy voting process in Denmark is not on a par with other processes and standards – or with the proxy voting process in many other countries. From a practical viewpoint, one of the key obstacles to achieving an efficient proxy voting process in Denmark is the requirement for the owner to be registered in the company’s shareholder register, with a PoA being required from the beneficial owner. The PoA has to be sent through the chain of stakeholders and intermediaries, i.e. shareholders, custodian banks, proxy agents, sub-custodian banks, share registrants, issuers, and so on. This ‘journey’ gives rise to several challenges and risks of error,” says Lasse Larsen, Head of Investor Services Denmark at SEB.

In cooperation with other intermediaries in the value chain – and at the express request of the large international custodian banks – in recent years SEB has worked on optimising the Danish proxy voting process. Among other things, SEB has developed a semi-automatic process for connecting PoAs in place with voting instructions received, as an element of easing the approval of PoAs.

SEB has developed a process for more efficient handling of PoAs

“In short, the process ensures that once a PoA has been approved, the approval applies across companies – so that you only have to perform the time-consuming procedure once. This has harmonised the process, increased efficiency, minimised risk and reduced the number of errors. We give high priority to cooperation across the value chain, since mutual initiatives are necessary to ease the proxy voting process. This also signals to the global community within our field that steps are being taken to create mutual understanding and interpretation of the process. We have therefore offered use of our process to VP,” says Lasse Larsen.

“At VP we are pleased that we have had the opportunity to use the same methodology as SEB. After adapting it to our specific role in the value chain, we have – like SEB – achieved increased efficiency,” says Flemming Merring, Head of Issuer Services at VP.