UK: the first Stewardship Code published

The Financial Reporting Council has today published the UK Stewardship Code: see here (pdf). Operating on the 'comply or explain' basis, the code contains seven principles and accompanying guidance. For example, Principle 1 provides that "Institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities". The Stewardship Code accompanies the revised corporate governance code published earlier this year.

The purpose of the code, as explained in its preface, is "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". Further information concerning the Code and its implementation is available here (pdf). This document also explains:

... there were a number of significant issues raised by the consultation which are not addressed in the Code and which merit further consideration. These include, for example, whether institutional investors should disclose their policies on stock lending, arrangements for voting pooled funds, and the nature of the information to be disclosed on voting records. The FRC will carry out further work on these issues in advance of the monitoring exercise planned for the second half of 2011".