Stewardship Code to face a final hurdle

Marion Dakers
THE GOVERNMENT’S new best practice rules for shareholders face a crucial period this week, as the last batch of institutional investors declare their support for the guidelines.

The Financial Services Authority (FSA) is also due to report on its two-month consultation into the Stewardship Code, which aims to help institutional shareholders keep a closer eye on company leadership.

The Financial Reporting Council (FRC) published the code in July, and has given institutions until the end of the month to publicly endorse the rules.

No-one at the FRC could comment yesterday on the level of support received so far from fund managers and other institutional shareholders.

Peter Montagnon, senior investment adviser to the FRC, urged investors to endorse the code last week. He said collective support for the rules would put the UK “in a strong position to push back on more radical alternatives” currently being mulled over by the European Commission.

EU rules “would almost certainly involve more direct regulation of companies and also of the markets,” Montagnon warned at a conference.

The FSA set a 6 September deadline for asset managers to voice concerns about the “comply or explain” rule in the code, which encourages investors to declare they will follow the rules, or explain why they will not.

A spokesperson for the FSA could not confirm yesterday when the results will be published.

● The Financial Reporting Council published the code in July, in response to the Walker Report on corporate governance

● The code encourages institutional investors to monitor companies more closely