(August 20, 2009) – Some of the world’s largest investors and their advocates are speaking out against a proposal in London that would see long-term shareholders hold more voting rights than their short-term brethren.

Multiple European-based institutional investors and industry groups – including Norway’s sovereign wealth fund and the Association of British Insurers (ABI) – have voiced disapproval at United Kingdom City Minister Paul Myners’ two-tiered voting proposal. The proposed system would see long-term shareholders possess greater power in voting than short-term investors, a system reminiscent of the one used in France.

“I don’t see how that could practically be implemented,“ said Yngve Slyngstad, chief executive of Norges Bank Investment Management – which controls the country’s oil fund and through it 1% of the London market — according to London’s Daily Telegraph. “One share, one vote is a good principle.” The ABI has echoed such concerns, adding that investors might be forced into holding shares for longer than would be prudent due to the proposed change.

Despite opposition, Myners has continued to advocate for novel ideas aimed at increasing shareholder oversight and involvement. “There is a lot of evidence to suggest that most institutions are uncomfortable with the responsibility of ownership, as opposed to investment,“ Myners noted in a recent BBC interview. “We need to do something to fix that, otherwise we have ownerless corporations.”

On top of awarding more votes to long-term shareholders, Myners has expressed interest in a shareholder exchange, where voting rights could be bought and sold. “Some shareholders who never vote could sell their voting rights to others who do want to vote,” he has said. “That would introduce some market discipline into voting. It would have to be limited — voting could not go beyond two votes per share, say. It is quite complicated, but it’s got merit.”

Both ideas have been attacked. Some advocates point out that one vote, one share was a victory for investors, as it wrested power away from vested interests such as controlling families. These proposals, they say, would be a step backwards. With regards to the buying and selling of voting rights, others note that some investors would have an interest in seeing a company do poorly, and thus have an incentive to buy shareholder voting rights with the aim of harming the company.