New rules aim to make investors vote and take responsibility

PIRC, the largest independent European provider of corporate governance and proxy voting  advisory services also welcomed the unveiling of the code's principles, hailing them a significant step forward in matters linked to improving corporate governance and forecast that other countries would follow suit.

PIRC’s managing director Alan MacDougall said he agreed with the FRC that all institutional investors should adhere with the guidelines as without widespread uptake, fund managers would send out a weak signal regarding the need to take ownership responsibilities seriously.

However MacDougall went on to add that while the group supported some of the council's policies - such as compliance monitoring - there were some disappointments in the guidance note issued.

‘We would have proffered the FRC to take the opportunity presented by the code to push further on voting disclosure,’ MacDougall said.

‘This is an area where “comply or explain” has patently failed.  The current approach of the investment management industry would be better described as “comply or ignore”.

‘However we welcome the commitment that FRC has given to look at voting disclosure, alongside voting in pooled funds and stock stock-lending.’

The FRC also said that its first major review of monitoring compliance would take place next year.

MacDougall said advanced warning of the review would give institutions more than enough time  to consider whether and to what extent they planned to comply, adding the FRC’s first assessment would mark a milestone in this area.

Prior to the code's unveiling fears had been expressed it could be inflexible.  But it was welcomed by a broad spectrum of groups following its release this morning.