The International Investor Relations Federation picks up where regional societies leave off
Learned people have always gathered to discuss their challenges and accomplishments. Once it was around campfires; now it's at conferences. Though tribes, clans and packs have been replaced by federations, societies and institutes, the reason for gathering is still the same: to share common experiences.
Those who make their living in investor relations are no different, and their centripetal instincts have given rise to a worldwide network of investor relations societies. In this, the first of several stories on IR societies, we will look at the broadest, most far-reaching of them all: the International Investor Relations Federation (IIRF).
While the US was the first country to set up a formalized IR society (Niri - the National Investor Relations Institute, established in 1969), today such societies exist all around the world. In 1980 the UK's Investor Relations Society (IRS) was established. Next up was Cliff, the French society, then Dirk in Denmark. In 1990 Niri Canada branched off from its stateside parent, becoming Ciri and, that same year, the Finnish Investor Relations Society (Firs) was established; Germany held the first gathering of what was to become the Deutsche Investor Relations Kreis (Dirk), and the IIRF was also born.
Unlike the other investor relations societies, whose members are individual practitioners, the IIRF's members are themselves local societies - making it the UN of IR. Its ten original members came from Denmark, Finland, France, Germany, Holland, Italy, Spain, Sweden, the UK and the US.
The reason for the federation's formation? To promote the recognition of investor relations and encourage the formation of national IR societies in all countries with active securities industries.
'The federation sees itself as the driving force which encourages less-developed IR regions to take IR seriously, form a trade or professional body, and promote standards of professional excellence,' explains IIRF deputy chairman Fred Stone. 'To a great degree it's a formalized process through which the world's stronger investor relations societies - at least the well-established societies - support those that are fledgling societies just starting out. That's the first aim.'
Today, the federation has membership from 18 countries, including Japan, Korea and newcomer Brazil. According to IIRF administrator Jill Sargeant, several others intend to join. 'We have membership applications pending from Pakistan, Australasia, Ireland, Hong Kong and South Africa. Those are the countries at the moment that have registered their interest in joining, however they have to set up their formal organizations within their countries first.'
Annual conference
The federation also aims to provide a forum for the exchange of best practice, experience and ideas, and that forum takes shape in the IIRF annual conference. The two-and-a-half day event combines formal presentations, workshops and parallel sessions with themes such as 'Investor activism comes to Europe,' 'Is IASC or US Gaap accounting more useful?' and 'National stock exchanges are redundant!' The conference also provides a social backdrop for a more informal exchange which, Stone admits, can be very helpful.
For investor relations officers in countries that have not yet established formalized IR societies, this is the most in-depth industry event they have. 'These IROs are past the early stages of investor relations but they're still looking for guidance in what best practice truly is,' Stone explains. 'At the federation's conference, although a number of UK IROs and US IROs attend, by far the majority are from other European countries and from Asia.'
The annual conference is held in a different country each year. Last year it was London, this year it will be Vienna (September 23-25). That weekend the IIRF will also have its annual board meeting.
Re-rooted
The IIRF was initially domiciled in France but at the end of 2000 it moved its home to the UK. Stone explains why: 'It partly had to do with the complexities of French law. What we wanted was to set up the federation in a similar way to the UK IR Society and establish it as a not-for-profit company. As a result it would be able to carry out commercial transactions and not be hampered by the processes of having to account for taxation and so forth.'
Stone says there was some internal debate about where the federation should locate. The first benchmark was corporate law, and in that regard the UK and the Netherlands were equally favorable. 'What tipped the balance was that the IRS could provide background support for the federation,' Stone observes. 'So part of the advantage was the UK corporate structure; part of it was that the IRS provided a degree of infrastructure on which the federation could piggyback.'
While Stone admits much of the federation's focus over the past couple of years has gone towards the 'back room stuff' - such as its domicile - he believes it is now better positioned to carry out its aims. The loftiest of its aims, to liaise with governmental, regulatory and professional bodies on international issues, is one which it is now beginning to address.
Stone believes it is difficult for local or national IR societies to tackle international issues; they work better focusing on local areas of interest and concern. He cites Niri's advisory activities to the Securities and Exchange Commission and the IRS's stance on the London Stock Exchange's managed news services.
He also believes that as the securities industries become increasingly global in nature, the federation will become a more active voice for international IR. 'If, for example, there were to be standardized disclosure rules across Europe, or if the societies felt that standardized rules would be useful, then the federation could be used to adopt a stance on that.'
Likewise, the IIRF could help raise the ante on fund disclosure requirements. For example, most countries have their own specifications for registering shareholding information, which makes it difficult for companies to gain adequate information on their foreign investors. 'If a number of European countries wanted to adopt new standards and lobby for this, for instance, then they could work through those other societies operating in markets with more transparent shareholding identification systems to discover best practice and use the federation - if they wished - to lobby for that particular style of disclosure. This is where we see the future of the IIRF.'
So how does all this affect the average investor relations officer? Stone says it gives IROs the incentive to conduct cross-border communications in search of best practice. 'What the federation is encouraging you to do is to contact members of outside societies and ask them about their markets. You say, Hey, I'm a member of Niri and I understand you're a member of the IRS. Tell me, should I really be going to Edinburgh to see a group of portfolio managers, or should I concentrate more of my time in London? That is a dialogue that can start long before the annual conference.'
Hands on
The IIRF’s officers are all involved with investor relations: chairwoman Nicole Micheletti is senior vice president, corporate communications and IR of Essilor, a French ophthalmic optical products manufacturer; deputy chairman Fred Stone heads his own IR consultancy, CapitalQuest, and is the former head of Thomson Financial Investor Relations’ Emea (Europe, Middle East and Africa) Region.
Federation secretary David Saltmarsh is also company secretary of Reckitt & Coleman Pharmaceuticals, which he joined in 1967. Yes, 1967.
While new societies continue to join the federation and swell its ranks, Micheletti admits it still suffers from short staffing. ‘That is why,’ she says, ‘it’s fortunate that the people we do have are so committed.’
Seminal ideas
While these words were written by DeWitt Morrill about the National Investor Relations Institute, today they appropriately describe the IIRF: ‘Organizations... have a perverse way of developing like people: slowly, unpredictably, from a few seminal ideas or sensed needs that take their own time to become clearly defined.’
Membership
The International Investor Relations Federation membership is open, by election, to organizations which are: 1) formal groups with principal aims compatible with those of the IIRF; and 2) comprised principally of public companies or their investor relations practitioners, at least some of which must have active international investor relations programs.
The IIRF currently has 18 national member societies from Asia, Europe and both North and South America. Its board of directors has representation from each society. Countries from Africa, Asia, East Europe and the Middle East are in the process of forming national societies and have expressed interest in joining the IIRF.
For more information visit iirf.org