UK Financial Reporting Council’s Stewardship Code

Under COBS 2.2.3 of the FCA Handbook, the Firm is required to make a public disclosure in relation to the nature of its commitment to the above Code, which was first published by the Financial Reporting Council (‘FRC’) in July 2010 and was then updated in September 2012, and then subsequently the FRC published a new UK Stewardship Code 2020 which took effect from 1 January 2021.  The Code is a voluntary code and sets out a number of principles aiming 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 defines ‘stewardship’ as ‘the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society.’

The Code is directed in the first instance to institutional investors with equity holdings in UK listed companies. The FRC recognises that not all parts of the Code will be relevant to all institutional investors and that smaller institutions may judge some of the principles and guidance to be disproportionate. It is of course legitimate for some asset 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 Firm does not currently comply with the Code because the funds advised by the Firm target investments in unquoted companies.

Shareholder Rights Directive

The EU Shareholder Rights Directive II (“SRD II”) contains various obligations relating to shareholder engagement and transparency. These obligations were implemented in the UK on the 10th June 2019, and those which apply to asset managers are contained in the Financial Conduct Authority’s Conduct of Business Sourcebook. The obligations affect alternative investment fund managers, UCITS managers and MiFID Managers, such as Vision Capital (the “Firm”).

We are required to develop and publicly disclose an engagement policy which complies with the requirements set out in the FCA’s Conduct of Business Sourcebook and publicly disclose on an annual basis how that engagement policy has been implemented in a way that meets the requirements (including disclosure of certain of voting activities in respect of shares in investee companies) or to publish a clear and reasoned explanation of why we have chosen not to comply any such requirements. 

The Firm pursues a strategy that involves investment in private unlisted companies and therefore the Shareholder Right’s Directive is not relevant to the Firm’s activities.