The UK National Association of Pension Funds (NAPF) published (4 December 2012) a revised version of its Corporate Governance Policy and Voting Guidelines for Investment Companies. The guidelines are based on the UK Corporate Governance Code, while utilising the Association of Investment Companies' (AIC) Code of Corporate Governance to set a framework for investment companies which is consistent with the expectations of long-term institutional investors.

The revised guidelines include the following changes from the April 2010 version:

  • Board balance: the NAPF recommends that the board should satisfy itself that plans are in place for orderly succession for appointments to the board, so as to maintain an appropriate diversity , balance of skills and experience on the board and to ensure progressive refreshing of the board.
  • Open-ended investment companies: the guidelines include a new section on board balance for open ended investment companies. The NAPF considers it appropriate for at least a third of the board to consist of independent non-executive directors. To be deemed independent, such directors must be independent of the investment manager and other third party service providers such as the administrator and custodian. Where multiple investment companies exist as part of the same product range, the NAPF acknowledges that the issue of cross directorships is not material to a director's independence. If the board does not consist of at least a third of independent non-executive directors, the NAPF recommends a vote against the re-election of a director, unless clear timelines are in place to address the issue.
  • Policy on tenure: the NAPF recommends that in the absence of a convincing explanation of continued independence of a non-executive director who has served for more than nine years, investors may choose to vote against the re-election of the director.