Financial Reporting Council

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The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment.

Financial Reporting Council publishes first UK Stewardship Code

The Financial Reporting Council (FRC) today publishes the first Stewardship Code for institutional investors following the publication in May of the updated UK Corporate Governance Code for listed companies.

The Code includes principles on:-

  • The monitoring of investee companies;
  • The escalation of activities taken to protect or enhance shareholder value;
  • Collective engagement;
  • Voting policy;
  • Managing conflicts of interest; and
  • Public reporting and reporting to clients.

The purpose of the Code is to improve the quality of corporate governance through promoting better dialogue between shareholders and company boards, and more transparency about the way in which investors oversee the companies they own.

Introducing the new Code Baroness Hogg, FRC Chairman, said:

“We hope this new Code will be a catalyst for better engagement between shareholders and companies and create a stronger link between governance and the investment process.”

“Disclosures made by institutions under the Code should assist companies to understand the approach and expectations of their major shareholders. They should also assist those issuing mandates to fund managers. Pension funds and other owners may not wish to become directly involved in engagement but they can make a significant contribution by, for example, mandating their fund managers to do so on their behalf.”

“I am grateful to the Institutional Shareholders’ Committee for their substantial contribution to this work. The FRC has adopted the majority of the ISC Code as we believe it is important to maintain momentum. But I would expect the Code to evolve over time as we learn from experience.”

The FRC is encouraging all institutional investors to report publicly on the extent to which they follow the Code. From the end of September 2010 the FRC will maintain on its website a list of all those who have done so.

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