6.1 Principles for shareholder engagement
Carnegie Fonder’s fund management mandate is to act exclusively in the joint interests of the unitholders, and aims to increase the return on the funds’ investments. The management must take place within the framework of each fund’s fund rules. The assets of each fund are owned jointly by the fund unitholders, who can redeem their fund units at short notice. It is therefore important for Carnegie Fonder to ensure broad freedom of action with regard to different investments.
This text is an excerpt from Carnegie Fonder’s guidelines for shareholder engagement
In accordance with Carnegie Fonder’s management philosophy, shareholder engagement is an ongoing aspect of the management, partly through daily monitoring of the financial and non-financial aspects of the portfolio company operations, and partly through the possibility to exercise influence in connection with, for example, general meetings of shareholders.

SHAREHOLDER ENGAGEMENT METHODS
Shareholder engagement is the way that owners exercise influence and control on the board and management of listed companies. Carnegie Fonder’s shareholder engagement should primarily take place in conjunction with general meetings. Carnegie Fonder is not part of any fixed ownership grouping, but collaboration with other owners on certain issues can occur if it improves the opportunities for active and effective shareholder engagement.
Carnegie Fonder’s management organisation analyses and monitors the business strategies of the portfolio companies on a daily basis; both the financial and the non-financial aspects in accordance with the fund management company’s Investment Policy and Internal Rules for Fund Management.
Carnegie Fonder’s management organisation conducts ongoing and ad hoc dialogue with representatives of the portfolio companies. This can be done through email, telephone or in personal meetings.
In case of serious violations in areas such as ESG, issues are raised for discussion in the Carnegie Fonder Responsible Investment Board Responsible Investment Board together with the relevant fund manager. An assessment is then made with regard to which of the available alternatives is in the best financial interests of the unitholders.
There may be situations where Carnegie Fonder has to choose between actively advocating a change in a company or selling the shares. The decision in each individual case should be the alternative that is judged to best meet the goal of a good return for the fund unitholders.
Carnegie Fonder exercises the voting rights for its shareholdings. This applies to all funds. Carnegie Fonder’s representatives participate and exercise the right to vote in person at general meetings when practical and technically possible, otherwise they are represented by proxy.
In the event that Carnegie Fonder’s shareholding is negligible in relation to other shareholders, or the shareholding constitutes only a very small part of the funds’ total portfolios, Carnegie Fonder’s participation and exercise of voting rights may be of little importance to the unitholders. Carnegie Fonder may then deviate from the principle of always voting. The fund management company is able to make use of voting advisors.
When Carnegie Fonder’s shareholding qualifies the company to participate in nomination committee work, this opportunity will be utilised. However, one condition is that Carnegie Fonder’s freedom to trade in shares in listed companies is not affected.
Communication with other stakeholders about the portfolio companies takes place via Carnegie Fonder’s CIO or a person appointed by the CIO.
Any conflicts of interest that may arise in connection with Carnegie Fonder’s shareholder engagement are handled in accordance with the company’s internal rules for managing conflicts of interest. This means, among other things, that the interests of unitholders come first. In matters where there are conflicting interests between unitholders in funds managed by Carnegie Fonder, interests other than the best interests of the unitholders in each fund must not be taken into account.
In cases where the fund manager is involved in ownership matters and, where relevant, comes into possession of related insider information, the situation is the same as when insider information related to other situations exists. This may therefore mean that the fund manager is prevented from conducting business on behalf of the fund. If there is a need to share the information with the company’s CIO or another person, the internal process for sharing insider information with another person is followed.
If shares are lent out, these must be recalled in good time before the registration of voting rights so that Carnegie Fonder can exercise the voting rights.
The assets of each fund are owned jointly by the fund unitholders, who may redeem their units at short notice. There may be situations where Carnegie Fonder has to choose between actively advocating a change in a company or divesting its holding. The decision in each individual case should be the alternative that is judged to best meet the goal of a good return for the fund unitholders provided it is deemed that the action is likely to be successful.
In order not to restrict the freedom of Carnegie Fonder to trade in securities in listed companies, officials of Carnegie Fonder may not be directors of listed companies.
SHAREHOLDER ENGAGEMENT STRATEGY
Carnegie Fonder shall exercise its ownership with the aim of developing the value of the companies and thus the long-term return of the funds in the best way and in the best interests of the fund unitholders. Carnegie Fonder shall act to ensure that the companies in which the funds invest comply with codes and guidelines such as the Swedish Code of Corporate Governance, the OECD Guidelines for Multinational Enterprises and the UN Global Compact.
The right of shareholders to decide on the affairs of a limited company is exercised at the general meeting. Limited companies are led by the board of directors and the CEO. These must not provide exclusive information to, or act on directives from, individual owners of shares in the company.
Given that the board is elected by the shareholders, and that effective and positive leadership starts with a good board, it is especially important to participate in the election of directors and ensure that the board is composed in a manner that is most beneficial to the company. The board of directors has an especially important responsibility to be engaged, informed and proactive in matters relating to business strategies, capital allocation, and remuneration levels that encourage long-term action in financial matters, and environmental and social issues that affect the company.
For Carnegie Fonder, the key issues are:
- Removing barriers for shareholders to exercise their voting rights effectively at the general meeting
- That the board sets the tone for leadership
- That the interests of the board and CEO coincide with the common interests of the shareholders
- That external information from listed companies is transparent and relevant
Carnegie Fonder must therefore reasonably advocate:
- Elimination of differences in voting rights between different types of share
- Elimination of restrictions on shareholders to exercise voting rights at the general meeting
- That notices of general meetings are issued as early as the law permits and contain the proposals for resolutions that are intended to be submitted to the meeting
- That decisions at the general meeting are decided by open voting using modern procedures
- That each individual director is voted on separately and not in groups. The same for other proposals
- That the board is well composed in terms of expertise, versatility, and an even gender distribution
- That directors are also shareholders
- That the number of directors is not too large to ensure that each director is required to be deeply involved in the work of the board, and that deputies are not appointed
- That officers of a listed company other than the CEO may not be appointed to the board
- That all directors should preferably be elected for a period no longer than until the next AGM, but with the possibility of re-election
- That all remuneration to directors is decided by the general meeting
- That remuneration to the CEO contains a significant variable component, calculated in a way that equates the CEO’s interests with the common interests of the shareholders, and that part of the variable remuneration is paid in the form of shares or equity-related instruments in the company, which entails a significant exposure to both positive and negative share price movements
- That pension benefits corresponding to the ITP plan or collective agreement become the norm for the CEO and that any additional pension benefits are reported with an indication of cost, as well as opening and closing capital value, including for benefits that are unearned
- That the CEO can be removed from the company without compensation other than severance pay corresponding to a maximum of two years’ fixed salary (and accrued pension)
- That provisions in the articles of association that make it difficult for the company to be acquired are removed
- That cross-ownership is eliminated
- That resolutions on the issuance of synthetic options and the like are taken by the general meeting
- That the procurement of audit services for the statutory review of listed companies, annual reports, accounts and administration are not handled by the CEO or other officials of the company, other than for administrative purposes
- That the auditors regularly report to the board and present the audit to the general meeting