Corporate governance and voting
We believe that good governance of the companies in which we invest is an essential part of creating shareholder value and delivering investment performance for our clients. Our approach to governance is set out in the Martin Currie Corporate Governance and Proxy Voting Policy and Procedures document ('the MC Corporate Governance policy'), which details the key governance principles and minimum standards that we look for in companies we invest in on behalf of our clients. This policy forms part of our compliance with the Financial Reporting Council's Stewardship Code ('the FRC Code'), which Martin Currie endorses.
The FRC Stewardship Code
The FRC Code is published and overseen by the Financial Reporting Council, the independent UK regulator responsible for promoting high quality corporate governance and reporting. The FRC Code, published in 2010, sets the benchmark in the UK for institutional investors to meet certain obligations in respect of their holdings of UK equities. Martin Currie is in compliance with the FRC Code for holdings of all UK equities and aims to apply the same principles to international holdings. For non-UK holdings, in accordance with the underlying basis of the FRC Code, Martin Currie adopts a 'comply or explain' basis in those circumstances where local law or custom makes full compliance with the principles of the FRC Code impractical or misleading to investors.
Below we provide a summary outline of our compliance with the FRC Code. Further detail on our policy and procedures in relation to the discharge of our stewardship responsibilities is provided in the publicly available MC Corporate Governance policy.
| |
|
| Monitoring and intervention |
We hold regular meetings with the management of the companies in which we invest to discuss strategy and performance, and to review management processes in relation to key governance principles. Where we believe that shareholder value is threatened or is not being realised, we may request that the board takes appropriate action.
In most cases a robust private dialogue with executive management, non-executive directors and company advisors is our preferred way to protect our clients' interests. If we receive an unsatisfactory response, we will usually either sell the shares to protect our clients' assets, contact other shareholders to discuss joint intervention or publicly oppose management who refuse to act on our concerns. We will also consider any departures from the 2010 UK Corporate Governance Code (formerly known as the Combined Code) and raise concerns with management if the explanations provided are inadequate. The effectiveness of this process is ultimately measured through the investment performance we achieve for our clients.
Where the proportion of shares controlled and voted by Martin Currie is only a small fraction of the investee company's capital, a principle of proportionality is applied to our engagement with management to recognise the reduced influence of smaller shareholders. |
| Proxy voting and reporting |
It is the policy of Martin Currie to seek to vote all shares held at all meetings, except where there are onerous restrictions - for example, where trading is restricted prior to a meeting in shares committed to vote (share blocking), Martin Currie has determined that the value of exercising the vote does not outweigh the detriment of not being able to transact in the shares during this period.
Proxy voting is carried out on behalf of Martin Currie by RiskMetrics, which votes on the basis of their research in accordance with agreed guidelines. It is the general principle of these guidelines to support management of investee companies. However, it is our policy to depart from these guidelines to protect the interests of our clients where appropriate.
Proxy voting activity records are publicly disclosed here on a quarterly basis, 3 months in arrears. It is the policy of Martin Currie to disclose voting records for all shares held, except where we believe that to do so would be misleading to investors and/or not in the best interests of either the investee company or Martin Currie. Further detail on the specific circumstances in which we do not disclose voting records is provided within the MC Corporate Governance policy.
Martin Currie intends to seek an audit opinion on engagement (in addition to the opinions already obtained for voting processes) having regard to standards in AAF 01/06. |
| Managing conflicts of interest |
Martin Currie recognises that there is a potential conflict of interest when we vote a proxy solicited by a company with whom we have any material business or personal relationship.
A conflict will not arise where the vote is in accordance with the recommendation from RiskMetrics, in accordance with the agreed guidelines. However, if an investment manager wishes to vote contrary to the guidelines in relation to a company with whom we have any material relationship, the matter is referred to our Risk & Compliance team for independent consideration. |