UK's institutional investors to get their own governance code

The UK's corporate governance regulator, the Financial Reporting Council has issued a consultation on how a code of conduct for institutional investors could work.

There are seven principles of investor behaviour open for debate:

Principle 1: Institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities

Principle 2: Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed.

Principle 3: Institutional investors should monitor their investee companies

Principle 4: Institutional investors should establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value

Principle 5: Institutional investors should be willing to act collectively with other investors where appropriate

Principle 6: Institutional investors should have a clear policy on voting and disclosure of voting activity

Principle 7: Institutional investors should report periodically on their stewardship and voting activities

In an unusual departure for a UK regulatory consultation, the FRC has openly admitted that non-UK investors should have an opportunity to make their views about investor behaviour known, specifically "The FRC would welcome any insights on lessons which may be learned from experience outside the UK" pg 10, para 2.18. As it ntoes, the latest statistics show what 40% of UK shares are owned by non-UK investors and "their ability to influence the UK companies in which they invest is potentially significant."
Further Details: http://blog.manifest.co.uk/2010/01/2814.html