On 19 January 2010 the Financial Reporting Council (FRC) published a consultation paper on the content, operation and oversight of a Stewardship Code that will set out good practice for institutional investors when engaging with the UK listed companies in which they invest. This consultation follows the publication of Sir David Walker’s report into corporate governance in banks and other financial institutions in November 2009. One of his recommendations concerning institutional investors was that a Stewardship Code should be produced to encourage adherence to principles of best practice in stewardship by institutional investors and fund managers.

The FRC is seeking views on:

  • The policy objectives against which the FRC should judge its approach to the Stewardship Code;
  • Whether the code published by the Institutional Shareholders’ Committee in November 2009 can be used as a basis for the Stewardship Code and, if it is, whether any amendments are needed to that code;
  • What content should be specifically included in the Stewardship Code;
  • Whether the Stewardship Code should operate on a “comply or explain” basis and what disclosure should be required, together with what measures should be put in place to monitor compliance;
  • What arrangements should be put in place for reviewing the Stewardship Code
  • Responses to the consultation are requested by 16 April 2010.

(FRC, Consultation on a Stewardship Code for Institutional Investors, 19.01.10)