Stewardship Code
UK Stewardship Code Disclosure Statement
Under COBS 2.2.3R of the FCA Handbook, Tages Capital LLP (“the Firm”) is required to include on its website a disclosure about 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 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.
Effective from 1 January 2020, the Code has been substantially updated to be applicable to a broader range of investment strategies, other than purely listed equity, such as fixed income bonds, real estate and infrastructure. It also reflects the growth of environmental factors, particularly climate change, as well as social and governance factors (together, “ESG”) as material issues for asset managers to consider when making investment decisions and undertaking stewardship.
In the 2020 version, the Code 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 Principles of the Code
There are twelve Principles of the Code that apply to asset owners and asset managers.
The 12 principles of the Code consist of the following:
- Purpose, strategy and culture;
- Governance, resources and incentives;
- Conflicts of interest;
- Promoting well-functioning markets;
- Review and assurance;
- Client and beneficiary needs;
- Stewardship, investment and ESG integration;
- Monitoring managers and service providers;
- Engagement;
- Collaboration;
- Escalation; and
- Exercising rights and responsibilities
The application of these principles by a particular asset management company will depend upon the extent to which their business activities are subject to the Code.
At the present time, although the Firm endorses the principles of the Code, it does not comply with the detailed requirements of the Code.
The Firm’s primary business activity is to act as investment manager to funds that have alternative investment strategies. From time to time, the funds may invest in or become the owner of listed securities in the UK, however, these or the other assets in scope do not form a material part of their assets under management. In addition, the Firm’s approach in relation to engagement with issuers and their management, is determined on a global basis. A consistent global approach is taken to engagement with issuers and their management in all of the jurisdictions in which the Firm invests and, consequently, the Firm does not consider it appropriate to commit to any particular voluntary code of practice relating to any individual jurisdiction and feels that the Code is not appropriate to the Firm’s business model.
However, whilst the Firm has not made a formal commitment of compliance with the Code, its alternative investment strategy as set out above, is generally supportive of the spirit and aims of good stewardship as contained within the Code. As such, in practice, the Firm would take into consideration the principles as set out in the Code.