COBS 2.2 of the FCA Handbook requires Advance Global Capital Ltd (“Advance” or “the Firm” to make a public disclosure demonstrating our commitment to the above Code (published in July 2010 by the Financial Reporting Council (“FRC”)).
The Code aims to enhance the quality of engagement between institutional investors and companies to help improve long-term returns to shareholders and the efficient exercise of governance responsibilities. It sets out good practice on engagement with investee companies and is to be applied by firms on a “comply or explain” basis.
The FRC recognises that not all parts of the Code will be relevant to all institutional investors and that smaller institutions may exercise judgement and proportionality to the rules.
It is possible for some fund managers not to engage with companies, depending on their investment strategy, and in such cases firms are required to explain why it is not appropriate to comply with a particular principle.
The seven principles of the Code are that institutional investors should:
- Publicly disclose their policy on how they will discharge their stewardship responsibilities;
- Have and publicly disclose a robust policy on managing conflicts of interest in relation to stewardship;
- Monitor their investee companies;
- Establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value;
- Be willing to act collectively with other investors where appropriate;
- Have a clear policy on voting and disclosure of voting activity; and 7. Report periodically on their stewardship and voting activities.
Advance does not currently comply with the Code for the following reasons:
The Firm does not regularly exercise voting rights but does actively monitor and engage with the management of its investee companies. Voting requests are assessed on their individual merits and in light of the relevant fund’s objectives at that time as well as the investment manager’s opinion of the situation, whilst always acting in the best interest of the Fund. Advance’s voting policy is not prescribed and it does not report on its stewardship or voting activities.