The U.K. Financial Conduct Authority on Friday introduced disclosure requirements based on the European Union's Shareholder Rights Directive II, following a January consultation with money managers and insurers about their engagement practices.
The directive, which would take effect June 10, is a revised version of an earlier regulation aimed at clarifying the responsibilities and requirements of shareholders. Under FCA's new policy, asset owners and money managers will disclose their long-term investment strategies, arrangements with each other and engagement with the companies in which they invest.
SRDII also sets out mandatory voting rules and a specific requirement to vote on the pay of top executives of investee companies. According to the FCA, an annual disclosure must include a general description of voting, an explanation of the most significant votes and reporting on the use of the services of proxy advisers.
U.K. money managers will be required to provide information to asset owners, including about how their investment strategies contribute to the medium- to long-term performance of the assets.
To boost transparency and the flow of information across institutional investors, the FCA will require money managers and insurers to make disclosures about their engagement policies through a requirement to publish their engagement policy and annual information on how it has been implemented, or explain publicly why they are not doing so.
An FCA spokesman said the rules will apply in the U.K. even when the U.K. exits the European Union.