FRC consults on Stewardship Code for Institutional Investors

by Financial Reporting Council, January 19, 2010.

The FRC has today begun consultation on the content, operation and oversight of a stewardship code that will set out good practice for institutional investors when engaging with the UK listed companies in which they invest.

The FRC agreed to take on responsibility of oversight of the proposed code at the request of the Government, following Sir David Walker’s report on the corporate governance of banks and other financial institutions in November 2009.

Announcing the consultation Sir Christopher Hogg, Chairman of the FRC, said:

“The benefits of a code which can help to bring about more effective engagement between companies and shareholders are potentially significant. They should lead to sustainable and enduring improvements in the governance and performance of UK listed companies and greater clarity in the respective responsibilities of asset managers and asset owners, which will assist the ultimate owners to hold to account those acting on their behalf.

“To deliver those benefits the code must set standards of stewardship to which mainstream institutional investors should aspire, and maintain the credibility and quality of these standards. It must foster a proper sense of ownership amongst institutional investors in the interests of their clients, and its success should be based on more effective communication between shareholders and the boards of the companies in which they invest.”…(continue reading)

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