A group representing the U.K.’s four main institutional investor bodies has published proposals aimed at giving shareholders a stronger voice in corporate governance issues.

The Institutional Shareholders’ Committee (ISC) accepted that the financial crisis showed a need for investors to engage with companies more effectively. Such shareholders have been criticized by U.K regulator the Financial Services Authority for giving companies an easy ride prior to the credit crunch.

But the ISC said the FSA should make it easier for investors to work together in putting pressure on companies if one-to-one talks are not getting anywhere. There should be “no regulatory impediments, real or imagined, to the development of collective dialogue,” argued a paper setting out its proposals.

The ISC also said individual investors should be allowed to receive price-sensitive information when talking to companies about governance changes and other concerns, provided that it is ring-fenced.

The aim should be to resolve problems, but where dialogue fails institutional investors “should be prepared to use the full range of their powers including voting against resolutions and follow-up afterward,” the ISC said. Investors have sometimes been too reluctant to act in this way, it conceded.

Specifically, it said the chairs of key board committees should stand for re-election every year and if one of them fails to win more that 75 percent of all votes cast—including abstentions—the chair of the full board should have to stand for election the following year. “This would ensure that boards respond to investor concerns and creates a strong incentive for boards to address them in a timely manner.”

The ISC said it will send its ideas to the Walker Review, which is looking at corporate governance standards in U.K. banks, and to the Financial Reporting Council, which is reviewing the Combined Code on Corporate Governance, which applies to all U.K.-listed companies.

The ISC’s four member bodies are the Association of British Insurers, the Association of Investment Companies, the Investment Management Association, and the National Association of Pension Funds.

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