New forum aims to give investors stronger voice in British business
LONDON Dec 3 (Reuters) - British shareholder groups are setting up a forum with foreign investors, who own an increasingly large slice of UK business, to coordinate pressure on boards to push for stronger corporate governance.
Corporate behaviour in areas such as salaries and takeovers became a hot debate in Britain after the financial crisis, leading to accusations that shareholders were failing to promote good management and nodding through decisions.
The proportion of shares in the UK stock market in British hands has dwindled in recent years and foreign investors were estimated to hold more than half at the end of 2012, according to Britain's Office for National Statistics.
The "Investor Forum" is being set up in response to a government-backed report, by economist John Kay, which criticised short-termist corporate culture and recommended that disparate ranks of shareholders collaborate to give them a stronger, more unified voice.
"I think this represents an acknowledgement that we need to internationalise what we're doing," said James Anderson, head of the working group with the job of setting up the forum.
"We'd got to a position where the ownership of British companies had been transformed into being truly global in their register but the corporate engagement had not followed suit."
The working group published its own report on Tuesday which said the forum would be set up by June.
It is backed by the Association of British Insurers, the Investment Management Association and the National Association of Pension Funds. The British organisations represent funds which are worth hundreds of billions of pounds and hold a large proportion of shares in Britain's FTSE 100 index.
The working group also includes investors from the Netherlands and the United States.
Anderson told Reuters he was also attempting to get on board sovereign wealth funds, whose influence in the UK stock market is growing rapidly.
The Kay Review was published in July 2012. Business Secretary Vince Cable, who commissioned the review, welcomed the working group's report and urged "immediate and concrete action to make the forum a reality".
Anderson said that it was important to take a long-term approach in assessing the impact of the forum. "We will really only know whether this has worked or not in five or 10 years."