New FRC code encourages British investors to monitor firms

2 July 2010

Shareholders in the UK have been told they should do more in terms of monitoring firms they have invested in.

A new Stewardship Code has been published by the Financial Reporting Council (FRC), calling on institutional investors to intervene when they have concerns about a company's strategy or performance.

Sarah Hogg, head of the independent regulator, said: "We hope this new code will be a catalyst for better engagement between shareholders and companies and create a stronger link between governance and the investment process."

The FRC code also states that investors with major holdings should attend general meetings of companies, along with quizzing board members about the effectiveness of their governance structures.

Earlier this week, the FRC teamed up with the Financial Services Authority to launch a discussion paper on the subject of how auditors can help to enhance regulation.

The paper is intended to spark a debate about the role of auditors following the financial crisis.

By Tony Aynsley

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