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Tougher rules aim to bring takeover clarityInvestment returns for pension

Investment returns for pension funds and shareholders investing in struggling firms could fall as a result of Labour proposals to bolster rules on takeovers.

Labour’s manifesto proposes that takeovers should require the support of two-thirds of shareholders instead of a simple majority.

It wants to strengthen the stewardship code so institutional shareholders have to declare how they vote and bank shareholders must app rove
remuneration policies.

It wants bidders to be more transparent about long-term plans for their takeover targets and is calling for more disclosure of share ownership, bidders to detail how they will finance their bids and greater transparency over advisers’ fees.

The manifesto says: “Too many takeovers turn out to be neither good for the acquiring company nor the firm being bought. The system needs reform.”

Hargreaves Lansdown head of pensions research Tom McPhail says: “If a business is limping along generating poor profits, new management could increase profitability and produce better dividends. If the Government stifles that, it could mean lower returns for shareholders, including pension funds, but we do need adequate safeguards.”

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