UK regulator the Financial Services Authority has published guidance aimed at making it easier for shareholders to push companies to raise their governance standards.
Institutional shareholders have been accused of not challenging companies about their corporate governance practices in the run up to the financial crisis. But they in turn have argued that gray areas in the FSA’s rules can make it hard for them to lobby boardrooms privately for governance reform.
The FSA has now written a letter to shareholder organizations telling them that its rules on insider dealing and market abuse do not prevent “legitimate activity of this nature.”
The guidance also says that ad hoc discussions between investors on governance issues would not normally trigger UK and European rules that require shareholders to make certain disclosures if they start working together or “acting in concert.”
Alexander Justham, FSA director of markets, said: “There is nothing under FSA rules that prevents investors discussing matters when it is for a legitimate purpose.”
No comments yet