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Stewardship Code: Principles

The UK Stewardship Code was published in July 2010.  It aims to enhance the quality of engagement between institutional investors and companies to help improve long term returns to shareholders and the efficient exercise of governance responsibilities by setting out good practice on engagement with investee companies to which the Financial Reporting Council (FRC) believes institutional investors should aspire.

Institutional 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 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; and
• report periodically on their stewardship and voting activities.

Author: Georgina Jones