The August 2010 issue of Capital Aberto magazine has an article (in English) about the new UK Stewardship Code, designed to (take a deep breath) “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 by setting out good practice on engagement with investee companies to which the FRC believes institutional investors should aspire.”
Our partner and Head of Investor Relations, Elsen Carvalho, was interviewed and shared our take on the code, and his full comments are inside.
Our view, expressed by Mr. Carvalho, are as follows:
“Companies are committed to the long run and to their entire shareholder base. Attending to an investor’s wishes is not always in the company’s best interests, even if that investor holds a significant stake”, observes Elsen Carvalho, a partner at the Investidor Profissional asset manager. He also raises doubt as to the extent to which increasing the volume of information reported to clients, as suggested by the code, will create a more transparent market. “Good information means useful information”, he assures. He believes that the intentions behind the proposed increase and standardization of accountability are good, but excesses could be harmful. “Ultimately, too much information could be used as a distraction from what really matters.”