STEWARDSHIP CODE

Information for Asset Managers: Published in July 2010 by the Financial Reporting Council (FRC), the UK Stewardship Code aims to enhance the quality of engagement between institutional investors and companies to improve long-term returns to shareholders.

It also aims to improve the efficient exercise of governance responsibilities by setting out good practice on engagement with investee companies.

The FSA intends that this Code should be implemented on a ‘comply or explain’ model.  There are 7 principals which state that investors should:
 

• Publicly disclose their policy on how they will discharge their stewardship responsibilities
• Have a robust policy on managing conflicts of interest in relation to stewardship and that this policy should be publicly disclosed
• Monitor their investee companies  
• Establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value
• Be willing to act collectively with other investors where appropriate
• Have a clear policy on voting and disclosure of voting activity
• Report periodically on their stewardship and voting activities

The full text of the code is available at from the FRC website.

Asset Owners and Service Providers are also encouraged to sign up to the code, on a voluntary basis.

For more information on the Stewardship Code and how TCC can help you please call 020 3008 6020 or email info@theconsultingconsortium.com.