13 February 2024

ICGN Statement on High Standards of Corporate Governance and Investor Protections as Pre-requisites for UK Capital Market Competitiveness an

ICGN is concerned by recent UK announcements..detrimental to corporate governance standards and shareholder protections...undermining UK’s economic growth and attractiveness as a global financial centre,...potentially significant implications for pensioners, insurance and retail investors’ savings.

The International Corporate Governance Network (ICGN) is concerned by recent announcements in the UK which may be detrimental to corporate governance standards and shareholder protections, thereby undermining the UK’s economic growth and attractiveness as a global financial centre, and with potentially significant implications for pensioners, insurance and retail investors’ savings.
ICGN members include global institutional investors responsible for assets under management of USD $77 trillion, 77% of whom are based outside of the UK. Our concerns are shared by the co-signatories to this letter - investors, and associations who represent institutional investors in their respective jurisdictions around the world.
The UK’s reputation for high quality listing and governance standards and resultant overseas investor confidence is both a competitive advantage and a positive differentiator for the UK market in a global context. According to the census from UK’s Office for National Statistics, the proportion of shares in UK companies listed on the London Stock Exchange (LSE) held by overseas investors increased to a record high of 57.7% of the value of the UK stock market in 2022, up from 53.3% in 2020. For such companies, being listed on the UK premium segment is a powerful signal that the company adopts the highest governance standards and is well-placed to thrive over the long-term. In the quest to grow and attract company listings, market integrity is something that must be preserved, and not diluted.
The UK’s advanced corporate governance standards, under the direction of the Financial Reporting Council (FRC), have inspired regulators worldwide in their own governance reforms and investors have used them as a gold standard when commenting on other markets’ governance and listing requirements, as well as in their direct engagement with investee companies. Robust governance structures, high-quality corporate reporting, and strong investor protections are pre-requisites for a competitive market which safeguards corporate resilience, long-term value creation and ensures economic growth.
Commensurately, the UK’s leadership with the FRC’s Stewardship Code has led to a proliferation of similar codes in over two dozen markets around the world. ICGN’s own Global Stewardship Principles complement this effort by emphasising the importance of investors taking a responsible approach to the allocation and management of capital on behalf of underlying beneficiaries, thereby contributing to long-term corporate value, impacting sustainable economies and social prosperity. Importantly, this includes the expectation that investors will make considered use of their votes and enter into constructive dialogue with companies in respect of long-term corporate performance...

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