Research Question/Issue: Institutional investors are facing increased pressure and threats of legislation from the European Union to abandon passive ownership strategies. This study investigates the prerequisites for – and potential dissimilarities in the practice of, active ownership among institutional investors in two Scandinavian countries with diminutive legal and cultural distance in general.Research Findings/Insights: Using data on shareholder proposals from Danish and Swedish annual general meetings from 2006 throughout 2010, we find that institutional investors are approximately a thousand times more active in Sweden than in Denmark. Joint legal and cultural traditions trigger the development of alternative explanations. We study the influence of a local governance mechanism - the shareholder-based nomination committee employed in Sweden, as a potential explanation. This is relevant, as such a setup transfers power from the board to the owners. Presumably, this reduces the impact of free rider and collective action problems, and increases the shareholders’ inclination to make proposals, which is also what we find.Theoretical/Academic Implications: We contribute to literature by investigating the importance of local governance mechanisms – an area where research is scarce. The paper discusses how two classical theoretical dilemmas – free rider problems and collective action problems among shareholders, can be reduced by the implementation of local corporate governance elements.Practitioner/Policy Implications: Regulators should be aware of the impact by local governance mechanisms, and how shareholders react under different legal and practical prerequisites. The paper also highlights legal elements that differ between Denmark and Sweden, and which might affect institutional activism.