Sovereign Wealth Fund Transparency and the European Rules on Institutional Investor Disclosure

This Article deals with the issues of SWF transparency, considering them special institutional shareholders with long-term investment horizons and no particular interests in control. SWFs differ from other institutional investors (like mutual funds and hedge funds) because of the public nature of their principal and the absence of a trust-like relationship with private investors. From this perspective, the Authors believe that it does not make sense arguing about the opportunity to apply European norms about portfolio disclosure and voting policies disclosure to SWFs if these norms are aimed at protecting fund investors. On the other hand, there are other forms of transparency, imposed by European rules on listed companies, whose function is to improve corporate governance dynamics. First, there are the ownership transparency provisions which are already binding on SWFs. Second, new EU rules require some institutional investors to publicly disclose their engagement policies and the time horizon followed in their investment strategies. However, these new norms do not take into account some investors—like SWFs—that can remain non-transparent: this could be considered an unjustified and unequal treatment that deserves to be removed in order to level the position of every institutional shareholder. Also the Santiago Principles could be not adequate to satisfy the corporate governance needs of transparency because they are just a voluntary set of principles. In conclusion, to improve the corporate governance of listed companies, a system of mandatory disclosure that would shed light on the interests and attitudes of every institutional shareholder (including SWFs) is still needed.