As a long-term investor it is our philosophy to improve the performance of all the companies in which we invest. Therefore, it is vital that the integrity of the UK market is strengthened and that standards are upheld in order for it to maintain its long-term attractiveness and its ability to compete against other major markets.
We provided a response to the Financial Services Authority’s (FSA) consultation on amendments to the ‘Listing, Prospectus and Transparency Rules’ in 2012. In this consultation, we highlighted key concerns with newly listed companies that had poor governance standards. We view new company issues as the life blood of the market as they replace companies that have failed or been taken over.
Following this consultation, the FSA submitted a number of proposals to improve the quality of governance for overseas companies that seek a premium listing in the UK market. These include the formal requirement of a relationship agreement to be in place between the controlling shareholder and the company, a majority of independent non-executive directors to be in place where a controlling shareholder exists and also prohibits certain voting arrangements, which lower investor protection. We believe that these guidelines are positive and will improve the governance of overseas companies seeking a listing in the UK market.
We will also be pushing for more accountability of the role of sponsors in the initial public offering (IPO) process and ways we can strengthen the link between sponsors’ fees and the performance of companies.