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Institutional Investors

While the Estonian authorities were not able to provide statistics on the size and profile of institutional investors in Estonia, they did note that institutional investors including banks, pension and insurance funds, tend to invest only very small percentages of their portfolios in local equities and are not generally active on corporate governance issues. The investor community is small, and although there is an Estonian Investor Association that has occasionally publicised best and worst cases addressing corporate governance issues from a minority investor perspective, it seems not to be particularly active.6

Based on a review of the Estonian Central Register of Securities, which makes information available on-line regarding all shareholders, it is apparent that institutional investors, both domestic and foreign, have a significant proportion of minority shares in the local market. A number of Estonian institutional investors interviewed (pension, insurance) suggested that these investments in the local market are too small to justify devoting a significant amount of their management time to active ownership on corporate governance issues. This can be seen as a lost opportunity to influence the market, as banks and insurance companies (amongst others) often hold close to 10 per cent equity in Estonian listed companies. The dominant institutional investors are: Swedish, Finnish, UK-based, Eastern-Europe-oriented equity funds, as well as Estonian-based equity funds and insurance companies. For instance, ING Luxembourg S.A. owns more than 5 per cent of eight of the 14 currently trading companies in Estonia,7 with its highest position at

II. 3 per cent in Harju Elekter.

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