The Stewardship Code is a part of
UK company law
The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary legal ...
concerning principles that institutional investors are expected to follow. It was first released in 2010 by the
Financial Reporting Council
The Financial Reporting Council (FRC) is an independent regulator in the UK and Ireland based in London Wall in the City of London, responsible for regulating auditors, accountants and actuaries, and setting the UK's Corporate Governance an ...
('FRC'), and in 2019 the FRC released an updated edition of the Stewardship Code.
The UK Stewardship Code (“Code”) is a voluntary code for asset managers (investment managers), asset owners, and service providers (such as proxy advisers, investment consultants, and data providers). Its stated aim is to encourage active and engaged monitoring of
corporate governance in the interests of beneficiaries. Specifically, the Code aims to promote the responsible allocation, management, and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment, and society. In late 2019, the FRC substantially updated the original 2010 Code introducing new principles for different signatory groups as well as introducing new thematic issues centered on environmental, social, and governance (ESG) factors. The FRC also introduced a new reporting process.
Preface
The Code sets stewardship standards for asset owners and
fund managers (asset managers), and for service providers that support them.
[Stewardship Code 2020]
The Code comprises a set of ‘apply and explain’ Principles for asset managers and asset owners, and a separate set of Principles for
service providers (
RC Stewardship Code The information is also sent to the
Financial Reporting Council
The Financial Reporting Council (FRC) is an independent regulator in the UK and Ireland based in London Wall in the City of London, responsible for regulating auditors, accountants and actuaries, and setting the UK's Corporate Governance an ...
, which links to the information provided to it. From March 2021, organisations applying to become signatories to the Code are required to submit an annual stewardship report to the FRC which details how signatories have applied the Code over a 12-month period detailing both their stewardship activities and the resulting outcomes. Unlike the previous edition, the new Code covers all types of investments, not just equities.
The compulsion to, at the very least, explain non-compliance with the Code follows from the
Financial Services and Markets Act 2000
The Financial Services and Markets Act 2000c 8 is an Act of the Parliament of the United Kingdom that created the Financial Services Authority (FSA) as a regulator for insurance, investment business and banking, and the Financial Ombudsman Serv ...
section 2(4) and the
Listing Rules
The Listing Rules (LR) are a set of regulations applicable to any company listed on a United Kingdom stock exchange, subject to the oversight of the Financial Conduct Authority (FCA). The Listing Rules set out mandatory standards for any company wi ...
.
The 2020 Principles
The updated Principles for Asset Owners and Managers are:
The new Principles for Service Providers are:
See also
*
UK company law
The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary legal ...
*
UK Corporate Governance Code
The UK Corporate Governance code, formerly known as the Combined Code (from here on referred to as "the Code") is a part of UK company law with a set of principles of good corporate governance aimed at companies listed on the London Stock Exchang ...
*
Say on pay
*
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
Notes
{{Reflist, 2
References
*BW Heineman,
A "Stewardship Code" for Institutional Investors (18 January 2010) Harvard Business Review blog
*M Johnson,
(18 October 2010)
Financial Times
The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Nik ...
*E McGaughey, 'Do Asset Managers and Banks Control Share Voting Rights on Your Money?' (5 June 2017
Oxford Business Law Blog*E McGaughey, 'Does Corporate Governance Exclude the Ultimate Investor?' (2016
16(1) Journal of Corporate Law Studies 221
;Government reports
*
Myners Report
''Institutional Investment in the UK: A Review'' (the ''Myners Report'') was a report to HM Treasury in March 2001 on institutional investors. It was delivered by Paul Myners.
Government was concerned that institutional investors were giving insuf ...
(2001), ''Institutional Investment in the United Kingdom: A Review'' on institutional investors, Pdf fil
hereand ''Review of Progress'' Repor
here*
Myners Review (2004) ''Myners principles for institutional investment decision-making: review of progress'
.pdf here*
Walker Review (2009) in response to the financial crisis, and focusing on institutional investors
.pdf document
External links
The Stewardship Code 2020The Stewardship Code 2012
Corporate governance in the United Kingdom
2010 in the United Kingdom