Origins of the UK Stewardship Code
In his report on the governance of banks and other financial institutions, published in November 2009, Sir David Walker recommended that the FRC’s remit should be extended to cover the development and encouragement of adherence by institutional investors to best practice in stewardship of UK listed companies; that the FRC should ratify and regularly review the Code on the Responsibilities of Institutional Investors issued by the Institutional Shareholders’ Committee (ISC); and that this Code should operate on a 'comply or explain' basis with appropriately independent monitoring.
Following a request from the then Government that the FRC take responsibility for a stewardship code, the FRC consulted in January 2010 on whether it should accept oversight of the ISC Code in its current form, or whether amendments should be made before the FRC does so. Views were also sought on which institutional investors and agents should be encouraged to apply the code, what they should be asked to disclose and to whom, and the monitoring arrangements that should be put in place.
The consultation document issued in 2010 and its responses can be read here. In July 2010, the FRC published the UK Stewardship Code (PDF) and a report (PDF) summarising the actions taken and explaining how the Code was intended to operate.
A revised version of the Code (PDF) was published in September 2012. Changes included the clarification of the respective responsibilities of asset managers and asset owners for stewardship, clearer explanations on conflicts of interest and for greater assurance of stewardship activities to be provided.
For further information please see the following:
Consultation Paper and Appendix (April 2012) (PDF)
The public response letters
Feedback Statement (September 2012) (PDF)