UK: FRC announces new Stewardship Code signatories

The Financial Reporting Council has, today, published an updated list of signatories to the UK Stewardship Code. The updated list includes 74 new signatories, from 105 applications made at the end of October 2021. The total number of signatories is now 199. 

Perhaps more interestingly, the FRC has stated - at the bottom of its press release announcing the new 74 signatories - that following "wide engagement with stakeholders" it no longer plans to tier or differentiate signatories to the Code from 2022. Signatories were not tiered last year, but in March 2021 (see here, pdf, para. 39) the FRC said that it "may in future consider introducing mechanisms to differentiate the quality of signatories' reports". The reason given by the FRC today (to quote from the press release): "Asset owners, investment consultants and investment managers felt that standard to become a Stewardship Code signatory is already high and that the FRC should focus on encouraging more of the market to reach this standard". 

UK: Purposeful Company Task Force publishes its final report

The Purposeful Company Task Force was formed within the Big Innovation Centre under the direction of the Purposeful Company Steering Group. It was set up to consider how the UK governance and capital markets environment could be improved to support the development of value generating companies, acting with purpose to the long-term benefit of all stakeholders. The Task Force has published its final report - see here (pdf) - and this contains 22 recommendations within six policy areas: (i) company law and reporting; (ii) accounting for purpose; (iii) repurposing the investment management industry; (iv) blockholding; (v) finance for purpose; (vi) and executive remuneration.

In area (i) it is, for example, recommended that directors should be required to report on how they fulfill their obligations under section 172 ("Duty to promote the success of the company") of the Companies Act 2006. In area (iii) it is said that investors' responsibilities concerning stewardship should be clarified and oversight strengthened (and, more specifically, it is recommended that the FRC should set-up a review to investigate mechanisms for independently reviewing stewardship quality, to build upon the current tiering activities in relation to the Stewardship Code).

UK: Exploring the intermediated shareholding model - BIS research paper

The second BIS research paper for 2016 was published yesterday. Titled 'Exploring the Intermediated Shareholding Model', the paper presents the results of important and interesting research concerning the chains of ownership and voting between individual and institutional investors and the companies in which they have invested. The research found, for example, that interest in attending and voting at the annual general meeting was low amongst individual shareholders. A copy of the paper is available here (pdf).

UK: investment management group seeks "radical simplification" of executive pay

The Investment Association - a trade body representing UK investment managers - has set up a working group and asked it to develop proposals for the "radical simplification" of executive pay: see here. According to the Investment Association, there are concerns that the complexity of pay structures had led to a lack of clear incentives for executives to act in the best long-term interests of companies and their shareholders. The working group's proposals are expected in the spring next year.

UK: FCA consults on changes to its rules and guidance concerning the use of dealing commission

The Financial Conduct Authority has published a consultation paper setting out proposed changes to the use of dealing commission rules in the Conduct of Business Sourcebook (COBS 11.6): see here (pdf). The FCA is proposing, amongst other things, that investment managers should not pay for corporate access with dealing commissions. Further information is available here.