James Moore: Let's hope this brake on heavyweights works
Outlook The invasion of Britain's stock market indices by foreign natural resources companies with dominant shareholders and questionable governance has been a running sore among pension funds and their advisers.
Most hold at least some of their money in stock market index tracking funds because they make sense in terms of cost (they're cheap) and performance (they tend to do better over the long term than all but the best stock-pickers).
Trouble is if you track an index, you don't get any choice in the companies in which you invest. This means that pension funds – and many small savers – have recently ended up having to back the activities of some rather unsavoury businesses.
The problem was brought to a head by ENRC, the primarily Kazakh mining company that was memorably described as "more Soviet than City" by a former independent director who was sacked when the controlling billionaires threw a hissy fit. Yesterday, the Financial Services Authority sought to address the problem. It is proposing that in future where a company has a dominant shareholder, they will be identified as such by watchdogs, triggering the imposition of new rules to protect minority shareholders.
A company will have to have a majority of directors considered as independent by the Combined Code on Corporate Governance. If the controlling shareholder tries to kick out directors they don't like, the minorities will be handed the power to stop them.
There are also changes to the minimum amount of shares a company has to have in tradable "free float" if it wants to list in London, although the FTSE 100 already has tougher rules in place if a firm wants to be included in one of its indices.
It's all broadly to be welcomed, and not before time. The only problem is that it relies on "independent" directors behaving in a robust and independent manner while they sit on boards. As recent events have demonstrated, notably with the mining company Xstrata's attempts to pay its executives enormous bonuses, the theory doesn't always match up to the practice.
Fracking is turning the US into a bigger oil producer than Saudi Arabia
Missing Malaysia Airlines plane: Details emerge of two young Iranians using stolen passports in search for a better life
Three-quarters of Britons are saying it wrong - the top ten most common mispronunciations
Oscar Pistorius trial: Forensic analyst says athlete 'was not wearing prosthetic legs' when he smashed locked toilet door with a bat
Missing Malaysia Airlines flight MH370: ‘Alright, good night’ – last words from cockpit revealed amid growing confusion
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Exclusive: Impact of immigrants on British workers ‘negligible’
Katie Hopkins continues campaign to become Britain's most hated talking head with poorly timed Bob Crow tweet
No EU referendum under Labour: Ed Miliband to reveal that vote on membership is ‘unlikely’ in next Parliament if party wins power
Grace Dent: Who cares if she spells it Barraco Barner? Gemma Worrall is more employable than some bookish arts graduate
Ukraine crisis: Russia pledges to 'retaliate against sanctions' as Ukrainian president says Crimea vote will not be recognised
- 1 Boy George: Bad karma
- 2 Grace Dent: Who cares if she spells it Barraco Barner? Gemma Worrall is more employable than some bookish arts graduate
- 3 First Kiss video: Filmmaker gets 20 strangers to make out on YouTube with awkward results
- 4 Rampaging elephant smashes up house but then 'saves crying baby trapped under debris'
- 5 Ian Wright breaks down in ITV documentary charting his rise to Arsenal and England striker
iJobs Money & Business
£45000 - £55000 per annum + Bonus and Benefits: Harrington Starr: One of the i...
£57000 - £77000 per annum + Benefits: Pro-Recruitment Group: Top 10 Specialist...
£350 - £450 per day: Harrington Starr: Harrington Starr are currently working ...
£40000 - £60000 per annum: Harrington Starr: Application Support - FIX protoco...