LONDON Nov 22 The UK's fund management trade
body has taken the first steps to set up a forum to improve
relations with UK companies, putting into practice a report this
summer aimed at preventing a Barclays-style board implosion.
The Investment Management Association (IMA), trade body for
the UK's 4.2 trillion pounds ($6.7 trillion) asset management
sector, is assessing support among institutional investors for a
forum as proposed by July's government-backed Kay Review.
Economist John Kay's report said fund investors could
improve returns to savers if they engaged collectively with
company boards rather than individually.
The new forum will aim to let investors see if other
shareholders support their calls for change at companies and to
promote longer-term decision-making by company management, the
The Kay Review of UK Equity Markets and Long-Term Decision
Making was commissioned by Business Secretary Vince Cable in
response to the takeover of confectioner Cadbury by U.S. rival
Kraft Foods, which critics said was driven by
short-term investors seeking a quick reward.
The drive to improve relations between companies and
shareholders comes after an investor backlash earlier this year,
dubbed the "shareholder spring", which cost the jobs of
executives such as Aviva boss Andrew Moss and Sly Bailey, head
of newspaper group Trinity Mirror.
When publishing his review John Kay also highlighted
Barclays as a "classic illustration" where collective
engagement would have ensured a more orderly transition for the
board after the bank lost its top three executives in the
fallout from the Libor rate-rigging scandal.
"This is the beginning of a process. Interest has been
expressed but we don't know how widespread it is yet," said an
The IMA said it hopes to include all types of shareholders,
including foreign investors and sovereign wealth funds.
"Whilst it is always the right of an investor to sell
shares, for those who choose or who have to hold shares, high
quality engagement can play a role in better outcomes. In turn,
principled collective action could be effective when engagement
fails," said IMA CEO-designate Daniel Godfrey.