Conduct of Business Sourcebook rule 2.2.3R requires Working Capital Advisors (U) Ltd. (“the Firm”) to include disclosure on its website stating the nature of its commitment to the UK Financial Reporting Council (“FRC”)'s Stewardship Code (the "Code") or, where it does not commit to the Code, its alternative investment strategy.
The Code was first publishesd by the FRC in July 2010 and was updated in September 2012. Subsequently, the FRC published the new UK Stewardship Code 2020 (“2020 Code”), which took effect from 1 January 2020, and consists of 12 Principles for asset managers and asset owners, and six Principles for service providers.
The Code sets out twelve principles to enhance the quality of engagement between institutional investors and companies and promote efficient governance. The principles require institutional investors to:
1. Disclose and explain how their purpose, investment beliefs, strategy, and culture enable stewardship that creates long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society
2. Disclose and explain how their governance, resources and incentives support and promote stewardship
3. Manage conflicts of interest to put the best interests of clients and beneficiaries first
4. Identify and respond to market-wide and systemic risks to promote a well-functioning financial system
5. Review their policies, assure their processes and assess the effectiveness of their activities
6. Take account of client and beneficiary needs and communicate the activities and outcomes of their stewardship and investment to them
7. Systematically integrate stewardship and investment, including material environmental, social and governance issues, and climate change, to fulfil their responsibilities
8. Monitor and hold to account managers and/or service providers
9. Engage with issuers to maintain or enhance the value of assets
10. Where necessary, participate in collaborative engagement to influence issuers
11. Where necessary, escalate stewardship activities to influence issuers
12. Actively exercise their rights and responsibilities.
Compliance with the Code is voluntary but where investors choose not to comply with one or more of the principles, they must publish on their websites statements justifying their non-compliance and setting out their alternative investment strategy.
Although the Firm generally supports the principles of the Code, it has decided that it would not be appropriate to commit to it. The Firm provides investment management services to Cayman Island domiciled funds, investing in long/short equities and equity-like instruments globally, including the UK. It must, therefore, apply a consistent global approach when engaging with issuers and their management in all the jurisdictions in which it invests. It would not be appropriate for it to commit to a voluntary code of practice that applies to a specific jurisdiction.
For further information on the Firm’s investment and governance approach, please contact the Firm’s Compliance Officer at partnerservices@working-cap.com.