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.
Introduction to Vision Capital LLP
This document is designed to meet the disclosure obligations of Vision Capital LLP (“Vision” or the “Firm”).
Vision is subject to the prudential requirements of the Investment Firms’ Prudential Regime (“IFPR”) It is required to publish disclosures regarding its remuneration policy and practices in accordance with the provisions and guidance outlined in MIFIDPRU 8.6 of the Financial Conduct Authority (“FCA”) handbook. Vision is categorised as a small and non-interconnected investment firm (“SNI Firm and) as such is subject only to the core requirements of the Regime.
The disclosures below are made pursuant to these requirements. The Firm issues these at least annually. Unless otherwise stated, all information is provided as at 31 December 2022.
Remuneration Disclosure Requirements
Objectives of the Firm’s Financial Incentives
The Firm’s remuneration policies and practices aim to establish and create a culture that promotes sound and effective risk management whilst enabling it to attract, motivate and retain experienced and knowledgeable staff who are able to deliver high-quality service to its clients. The Firm’s remuneration structure is reviewed regularly to ensure its continued alignment with relevant regulatory requirements and business objectives. The remuneration structure is designed to align individual and team contributions with performance objectives in a manner that:
Vision is committed to excellence, teamwork, ethical behaviour and customer outcomes. Its remuneration is determined through the assessment of various factors that relate to these values, and by making considered and informed decisions that reward effort, attitude and results and take account of the objectives of the Firm’s clients and its capital resource requirements under MIFIDPRU.
Key Characteristics of Remuneration Policies and Practices
The Firm has adopted a Remuneration Policy which:
1. has been prepared in line with the Firm’s business strategy, objectives, values and interests, including consideration of the Firm’s risk appetite and strategy, the Firm’s culture and values, and any long-term effects;
2. is designed to ensure that the Firm maintains and applies a sound and prudent remuneration process which does not impair compliance with any of its obligations; and
3. is intended to identify and manage any conflicts of interest and promote sound and effective risk management and prudent risk-taking.
Criteria Pertaining to the Firm:
Criteria Pertaining to Individual Business Units:
Criteria Pertaining to Individuals:
Remuneration is set by the Partners. As an SNI Firm Vision is not required to have a remuneration committee.
Qualitative Remuneration Disclosures
Remuneration is set in line with market competitiveness at a level to attract and retain skilled staff. It takes into account a staff member’s professional experience and organisational responsibility as set out in the staff member’s job descriptions and terms of employment and is pre-determined, non-discretionary, non-revocable and not dependent on performance. Remuneration is reviewed annually by the Firm’s Board. Partner remuneration is fully variable based on a proportion of the Firm’s profit.
Partners and employees who have been instrumental in the growth and success of the business benefit from interests in founding partner carry vehicles.
Quantitative Remuneration Disclosures
Due to its size the Firm has chosen not to disclose quantitative information on the grounds that disclosure could result in individual identification.