The UK Stewardship Code (the Stewardship Code) was published by the Financial Reporting Council on 2 July 2010, following its January consultation. The Stewardship Code replaces the engagement principles for institutional shareholders contained in the Combined Code and its replacement, the UK Corporate Governance Code.

The Stewardship Code aims to improve the quality of engagement between institutional investors and companies, so that better long-term returns are delivered to shareholders and governance responsibilities are exercised efficiently.

The Stewardship Code is to be applied on a ‘comply or explain’ basis, setting out good practice for institutional investors when engaging with UK listed companies. The FSA proposes that a UK authorised firm (other than a venture capital firm) that manages investments on behalf of professional clients who are not individuals must disclose on its website the nature of its commitment to the Stewardship Code or explain an alternative business model. However, the FSA does not plan to make commitment to the Stewardship Code mandatory.