UK Stewardship Code ‘Has had Positive Effect’, Says FRC

The UK’s Stewardship Code has been a catalyst for greater engagement between companies and their shareholders in 2012. Introduced in 2010, there are now over 250 signatories to the Code, including most major institutional investors.

This is among the conclusions in the Financial Reporting Council’s (FRC) annual report on its monitoring of developments in corporate governance.

The FRC also found strong take-up by companies of the recommendations introduced to the UK corporate governance code in 2010. Ninety-six percent of FTSE 350 companies now put all directors up for re-election every year, and the majority of those companies will have the effectiveness of their board independently reviewed at least every three years. Overall compliance with the Code among listed companies of all sizes remains high.

“Companies and investors have responded positively to the changes we introduced in 2010, as they have done consistently in the 20 years since the first corporate governance code was published, said FRC chairman Baroness Hogg. “In response to further consultation, the 2012 Code focuses on the role of the audit committee – its selection of auditors and how it reports – and asks companies to articulate their policies on boardroom diversity, which many are doing even in advance of the new Code taking effect. 

“Meanwhile changes to the Stewardship Code ask investment managers to explain what use they make of proxy advisers, and ask asset owners such as pension funds to reflect their stewardship policies in the mandates they award to managers.”

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