Investors unveil new code for shareholder activism
HEAVYWEIGHT City shareholders yesterday unveiled guidelines designed to counter criticism they do not scrutinise the companies they invest in closely enough.
The code includes pledges to monitor companies, subject boards to closer scrutiny, ensure independent directors are sufficiently powerful and intervene in company management when needed.
The code was set up by the Institutional Shareholders Committee (ISC), whose members collectively manage funds with assets worth around £3 trillion.
The code is voluntary and operates on a comply-or-explain basis, the ISC said in a statement published yesterday, meaning major investors will have to lay out their reasons for not following the guidelines if they choose another route.
The guidelines are a response to mounting pressure on institutional investors from regulators to hold companies’ management to greater account in the wake of the financial crisis.
The ISC comprises the UK’s four main trade associations for institutional investors: The Association of British Insurers (ABI), the National Association of Pension Funds (NAPF), the Association of Investment Companies (AIC) and the Investment Management Association.