Blackrock warns stewardship code could prevent UK listings

Blackrock, the world’s biggest asset manager, has warned that proposed changes to disclosure rules could deter companies from listing in London.

Responding to a Financial Reporting Council (FRC) consultation on its stewardship code the New York-headquartered firm said heightened disclosure rules could prevent private discussions that are “necessary to support effective dialogue”.

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The company warned that instead of improving transparency across the market the move could result in companies choosing not to list in the UK.

“If such companies believe that, were they to become a public company, any attempts to engage on difficult issues with shareholders will become the next case study in those shareholders’ public disclosures, there is a real risk not only that they will be disinclined to have those conversations, but also that they will not put themselves in the position of having to hold the conversations in the first place,” Blackrock said in its response.

The FRC, which is set to be abolished and replaced by a new regulator following a string of high profile corporate failures, is consulting on improvements to the UK Stewardship Code following instances of “poor governance practice, poor decision-making and underperformance”.

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The revised changes to the code include implementing more rigorous reporting requirements and improving environmental, social and governance (ESG) policies.

Allianz Global Investors and Jupiter Fund Management were among those warning that overly prescriptive rules could weaken their impact.