In January 2010, the Financial Reporting Council (FRC) published its consultation paper on a Stewardship Code for Institutional Investors.

By way of background, the Walker Report on the corporate governance of banks and other financial institutions published in November 2009 recommended that the Combined Code on Corporate Governance be split into a UK Corporate Governance Code for companies and a Stewardship Code for institutional investors. The Walker Report further suggested that the Code on the Responsibilities of Institutional Investors, published by the Institutional Shareholders' Committee (ISC) in November 2009 should be ratified by the FRC and should operate as the Stewardship Code on a comply or explain basis (see our December E-Bulletin article: Institutional Shareholders' Committee publishes code on responsibilities of institutional investors).

At the request of the Government, the FRC has agreed to take responsibility for oversight of the proposed Stewardship Code.

The FRC is now seeking views on:

  • whether the Code on the Responsibilities of Institutional Investors published by the ISC provides a suitable basis for the Stewardship Code in its current existing form or whether amendments should be made;
  • the information that should be disclosed by institutional shareholders and their agents;
  • which institutional investors and agents should be encouraged to apply the Stewardship Code on a comply or explain basis, what they should be asked to disclose and to whom, and the monitoring arrangements that should be put in place;
  • whether foreign investors would be willing voluntarily to commit to the Stewardship Code on a voluntary basis;
  • what arrangements should be put in place to monitor how the Stewardship Code is applied;
  • the arrangements for reviewing the operation and content of the Stewardship Code.

Any comments or views should be submitted by 16 April 2010. It is currently intended that the outcome of the consultation will be published in May or June 2010.

View the FRC consultation (39 page pdf).