Corporate Governance in Modern Financial Capitalism
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Corporate Governance in Modern Financial Capitalism

Old Mutual’s Hostile Takeover of Skandia

Markus Kallifatides, Sophie Nachemson-Ekwall and Sven-Erik Sjöstrand

This insightful book focuses upon corporate governance processes, and explores the conditions required for effective corporate governance and control in 21st century globalized and financialized economies. In presenting a comprehensive study of a cross-border hostile corporate take-over process, describing the actors, institutions and events involved, this book examines and questions the current forms of corporate governance and control – both from a national and a global perspective. Using Old Mutual’s takeover of Skandia as a case study, the authors address corporate governance theory, and highlight its two fundamental dimensions: financial and operational flows.
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Chapter 2: The Old Mutual–Skandia Case: Actors and Context

Markus Kallifatides, Sophie Nachemson-Ekwall and Sven-Erik Sjöstrand


A CHANGING CONTEXT AB1 Skandia (Försäkringsaktiebolaget Skandia) had been listed on the Stockholm Stock Exchange (SSE) since 1863, and had been the most important supplier of insurance and life assurance for families and firms in Sweden for more than 150 years. Basically, its revenues had been founded upon the insurance premiums received from its policyholders; that is, its business had been built upon taking care of other people’s money. This capital had been managed by the company staff on behalf of either its policyholders or its shareholders, depending upon the form of association in use (i.e. mutual life insurance – Skandia Life – or incorporated insurance company – Skandia). During those years, it was very difficult for a single investor (or constellation of investors) to get control over the company. Voting rules did not permit any single shareholder to vote for more than 30 shares at the AGMs. This transferred a substantial amount of the power from shareholders to top management, particularly the CEO. In spite of that, a position at the board was seen as most attractive since Skandia’s size and position in Sweden’s business world provided a unique insight into many of the crucial flows of capital on the SSE. This information advantage was predominantly a consequence of particular allocation rules in the law, which regulated Swedish insurance companies (Försäkringsrörelselag) and allowed Skandia to invest only a maximum of 5 per cent of its insurance capital in any particular stock; this ‘forced’ the company to disperse...

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