The Financial Reporting Council (FRC) has today announced that is undertaking a fundamental review of the UK Stewardship Code.

The Code is part of the investment stewardship eco-system in the UK, safeguarding the interests of the public and pension holders by promoting transparency and accountability, and is also adopted by global investors.

Having been last reviewed in 2019 with a revision due to take place in 2024, its principles are designed to encourage alignment of incentives through the investment chain for the benefit of the investment beneficiary, the FRC said.

The review will be undertaken in three phases involving:

  • outreach focussed around the four main groups affected by the Code’s principles and application (issuers, asset managers, asset owners and service providers);
  • a public consultation planned to launch after the 2024 annual general meeting (AGM) voting season during the summer months;
  • a plan to most likely publish the revised Code in early 2025.

As part of the review process, the FRC is inviting views from all stakeholders on whether the Code is being used by asset managers, asset owners and other signatories in a way that drives better stewardship outcomes from engagement with issuers across all asset classes.

“Following feedback received during the 2023 consultation to the Corporate Governance Code, it’s clear that now is an opportune moment for a fundamental review process to ensure that the principles of the Code are still driving the right stewardship outcomes for investors while not unduly contributing to reporting burdens,” the FRC stated.

The announcement comes after the FRC increased the number of signatories to the Code following the publication of its updated list earlier this month.

The regulator received 105 applications, of which 88 were successful, taking the total number of signatories to 254, up from 235 in September last year. This includes 179 asset managers, 58 asset owners and 17 service providers.

The additional signatories bring the total assets under management of the list to £46.4trn, up from £40.7trn.

The review will focus on, among other topics, the extent to which the Code supports long-term value creation through appropriate investor/issuer engagement that drives issuers’ prospects and performance.

Approximately one third of the total AUM of signatories are invested in both UK and global listed equity and two thirds in other asset classes. Other assets include fixed income, private equity, real estate and infrastructure and others.

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