Sweden plans share limit

Press, 9 July 1986, Page 35

Sweden plans share limit

NZPA-Reuter Stockholm Sweden plans to limit the right of companies to distribute shares to executives after a public inquiry into a secret stock issue that benefited some of the top names in industry.

The Acting Finance Minister, Mr Bengt Johansson, said he expected the government to propose new legislation this autumn to regulate, such deals. He emphasised it was necessary to ensure that all shareholders were treated equally. The Issuing of shares at below-market prices to staff, particularly as an incentive for senior executives, was widespread in Sweden. There were 164 such issues for a total of seven billion crowns

(SNZI,9OO million) in 1984 and 1985.

’ But disclosures that leading businessmen, including Volvo’s chairman, Pehr Gyllenhammar, had benefited from a restricted issue of shares in the pharmaceutical firm Leo led to a public uproar, and the government appointed an inquiry last year. In a 138-page report, the five-man commission of inquiry criticised the deal, saying other shareholders had not been duly informed. It described as “dubious” the decision to restrict the stock issue mainly to managers in the companies involved.

The main architect of the scheme, Hans-Eric Ovin, whose conglomerate Wilh. Sonesson took over Leo in 1983, was last year

forced to resign as managing director because of the row.

Gyllenhammar last autumn announced he was selling his Leo shares and donating the profits to charity, but angrily rejected charges by the Swedish Shareholders* Association that he had acted immorally by taking up the directed stock offer.

Sonesson is part of the Volvo group. Last Friday,Sweden’s largest priv-ately-owned drug group, Pharmacia, took over 80 per cent of Leo in a deal worth 217 crowns (5NZ55.50) a share.

Sonesson and Volvo executives were offered Leo stock at 50.65 crowns (5NZ12.95) per share in 1983 and 1984 before the company was floated on

the Stockholm bourse. The report recommended that share issues to executives and employees by listed companies should be made at' market prices and for only limited amounts, linked to individual salaries. It called for such issues to be approved only by a general meeting of shareholders, instead of by a board of directors as at present It also urged legislation to reinforce the influence of shareholders and their right to information.

“This is a good and well-balanced proposal which will help us to avoid such controversies in the future,” Lars Bredln, deputy chairman of the Stockholm bourse, said.