Shareholder engagement on the increase but more to be done

The Investment Management Association (IMA) has published its fifth Fund Managers' Engagement Survey, looking at how fund managers engage with the companies in which they invest.

It is clear that, over the last five years, fund managers have increased their engagement and also become increasingly transparent.

The survey looks in detail at examples of seven particularly contentious issues between companies and shareholders, examining the degree of interaction that went on. It found that, for example, 21 firms had a total of 59 separate meetings with the Royal Bank of Scotland about its rights issues in 2008. Also in 2008, 14 firms had a total of 28 meetings with Bradford & Bingley, including 17 with the Chairman, about its financing.

Richard Saunders, Chief Executive of the Investment Management Association, said: "The survey demonstrates a widespread commitment among fund managers to engagement and transparency, and to putting the framework in the Institutional Shareholders' Committee's Principles into practice. It reveals for the first time the extent of the activity which goes on with individual companies, much of which takes place in private.

However, it is also very apparent that corporate governance failings in banks, and the unwillingness of bank boards to engage with investors in scrutiny and challenge of strategy, were factors that contributed to the crisis. There are lessons for both boards and investors from this experience, which is why we are now engaged with our ISC colleagues in a review of the framework."