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Press Release

Monday 26 April 2010 

IMA RESPONDS ON STEWARDSHIP CODE

The Investment Management Association (IMA) has responded to the Financial Reporting Council's consultation on the Stewardship Code for Institutional Investors.  IMA members are major investors in companies whose securities are traded on regulated markets and therefore they have an interest in the Stewardship Code from their perspective as institutional investors. 

Liz Murrall, Director of Corporate Governance and Reporting at the IMA comments:

"Good governance has an important part to play in ensuring a stable financial system and we recognise that there is a need to improve the stewardship of UK listed companies.  But any new regime needs to remain flexible in its approach. 

"Our members manage holdings amounting to 43 per cent of the UK equity market but are not the ultimate owners, they act as agents and invest money on behalf of their clients. Their aim is to achieve satisfactory returns which they can do in different ways.  Some follow the principles in the Stewardship Code and seek to effect change at investee companies, whereas others send a message to a company's management through selling the shares. 

"It is important that different approaches to investment are recognised and that the Code remains flexible. This is particularly important as regards measures for monitoring and verifying adherence.

"The Stewardship Code was drafted by the Institutional Shareholders' Committee and was based on its Statement of Principles from 2002, as amended.  IMA has monitored adherence through regular surveys since 2003.  These have clearly demonstrated that stewardship activity has evolved and become more transparent over the last few years. 

"With suitable development, and the introduction of independent oversight, we believe the IMA's Survey would provide an effective mechanism for monitoring the application of the Stewardship Code.  We are in discussion with the FRC about how to take this forward with them."

Background

The Walker Review proposed that the Financial Reporting Council (FRC) take responsibility for the Stewardship Code to complement its existing responsibilities for corporate governance and the Combined Code, or UK Corporate Governance Code as it is now to be termed. 

IMA members are major investors in companies whose securities are traded on regulated markets and therefore they have an interest in the Stewardship Code from their perspective as institutional investors.  The IMA is one of the four trade associations that comprise the Institutional Shareholders' Committee (ISC) and was one of the auditors of the Stewardship Code.

Response

Read the IMA's full response on the FRC's consultation on the Stewardship Code for Institutional Investors. 

Notes to Editors

The IMA publishes an annual survey of investment managers' engagement with companies which tracks the extent to which they comply with Institutional Shareholder's Committee's statement of Principles and engage with investee companies.  Click here for the latest survey 

For further information, please contact:

Ginny Broad, Head of Communications, IMA, 020 7831 0898 or 07834 089332
Michèle Lunt, Press Officer, IMA, 020 7831 0898

Email: press@investmentuk.org

About the Investment Management Association

The IMA is the trade body for the UK's £3 trillion asset management industry.  The money its members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.  Its role is to represent the industry and promote high standards www.investmentuk.org  

A photograph of Liz Murrall, Director, Corporate Governance and Reporting is available upon request

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