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Corporate Governance – portrayed in the individual cultural and legal framework, from the standpoint of equity capital.

VIPsight is a dynamic photo archive, sorted by nations and dates, by and for those interested in CG from all over the world.

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Buhlmann's Corner

From Xi to Hu – the next decade knocks

Until yesterday his name was Hu Jintao; from tomorrow he will be called Xi Linping. China’s leadership has new heads and will need new content and concepts.

The country is not only “too big to fail”, but also the nation with the most degrees of freedom. Just re-elected, Barack Oba is instead stuck with the familiar budget limits, to be rolled over for the umpteenth time in a compromise. China on the other hand can and will provide more than just advice.

Munich Re recently increased its forecast for 2012 from 2.5 billion profit, because on 30 September they already had €2.7 billion in hand. Deutsche Telekom, on the other hand, must and will, despite billion-loss statements, pay an unchanged dividend because it promised that 3 years in advance. In reality, they even promised more, but hardly anyone remembers that. The Deutsche Telekom share buybacks promised 3 years ago saw more breach than observance – they were implemented in just one year, forgotten for two.

Just as China and MunichRe now have degrees of freedom, so for America and Telekom things are tight. And this is precisely because of old bad investments in America: Ron Sommer’s last board action was the purchase of VoiceStream for an adventurous 35 billion, of which, although increased by investments, only a residue can now be found. So that’s the bracket: Ron Sommer head of Telekom 1995-2002, watchdog on the Supervisory Board Board in the board of MunchRe from November 1998 until today. Who decided all this?

In the USA there were elections – or did Sandy blow the result in?

In China, a Party Congress is held – discussion over.

In Telekom and MunichRe there are general meetings at which the macro-management is decided and appraised. Is that true?

Firstly, although general meetings are attended by many people (in Germany), the real numbers throughout Europe for shares present are around 60% (Germany 2012: 58.2%) – only in Spain are record levels of over 100% capital presence achieved. In the Netherlands and Germany we also see physically present shareholder votes not making it to the vote – but there may be good or even strategic reasons. It may also happen, though, as with INFINEON or MAN and others, because of reinterpreting by the chairman, in Chinese abundance of power.

And the shareholders? They do not know. Does it interest them? Probably not – as indicated by the successes of i-share and blackrock. Shareholders want cheap solutions rather than responsible ones. Many want to remain anonymous wherever possible.

Let’s say you ask people on the street: “Have you any shares? ” Most will say no, not knowing that a portion of their pension is invested in equities.

If you ask the few that answered “yes” who manages their stocks and how, in turn most will be silent. This confirms what nobody wants to admit: joint-stock companies are owned either by the board (alone) or by no one. For those who have shares usually do not know, and if they do they usually lack information, and those who know more get no answers to their questions. Owners the listed company in any case does not have....

America is now saying that from next season end-to-end voting confirmation should be possible. Let’s wait and see.

In China it’s easier because there are not such diffuse channels: the country belongs to individual State budgets and now Xi sits on top just as Hu did earlier – and he’s got the say.