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June 23, 2008

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"...one simple reform proposed by the New America Foundation: limit (or prohibit) SWFs from exercising their voting rights when they purchase shares."

I'm trying to conceptualize how this would work in practice. I guess that depending on whether SWFs tend to acquire their investments in private placement transactions or in open-market transactions, the proposal might have to be enacted by amending the state corporate statutes (which, of course, has happened before, like when states amended their fiduciary duty statutes to allow corporate boards of directors to consider constituencies other than shareholders in considering takeover situations), or through the federal securities laws (like Section 13(d)-- but the federal laws tend to merely impose disclosure requirements rather than directly affecting voting rights).


Do SWFs tend to acquire their investments in private placement transactions or in open-market transactions? If the former, I guess that the transaction documents would contain representations and warranties

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