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.<br /><br />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.<br /><br />The code was set up by the Institutional Shareholders Committee (ISC), whose members collectively manage funds with assets worth around &pound;3 trillion.<br /><br />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.<br /><br />The guidelines are a response to mounting pressure on institutional investors from regulators to hold companies&rsquo; management to greater account in the wake of the financial crisis.<br /><br />The ISC comprises the UK&rsquo;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.