Following a year of public consultation, Hong Kong’s Securities and Futures Commission (SFC) has published new stewardship guidelines for investors with the launch of its Principles of Responsible Ownership.
The principles, which aim to ‘address the void’ in investor engagement initiatives for the Hong Kong market, according to a note from the regulator, set out how institutions should exercise stewardship at the companies they invest in.
Based on a non-binding and voluntary scheme similar to the UK’s comply-or-explain stewardship code, the SFC’s recommendations advocate monitoring and engaging with issuers, having policies on managing conflicts of interest when investing on behalf of clients, and having clear policies on voting, reports Responsible Investor.
The guidelines’ seven action points also include acting collectively with other investors when appropriate, establishing clear policies on when to escalate their engagement activities and reporting to their stakeholders on how they have discharged their ownership responsibilities.
The SFC will also be discussing with the initiatives’ 56 stakeholders ‒ which include major listed firms and global asset managers ‒ issues around ownership responsibility of intermediaries holding retail shareholder interests and whether it should be made mandatory for fund houses to disclose their engagement policies.
‘The Principles of Responsible Ownership describe what we perceive as best practices for share ownership and we encourage investors to adopt them,’ says the regulator’s CEO Ashley Alder in a news release. ‘This can encourage an investment culture where engagement with investee companies is seen as paramount and fundamental, which in turn strengthens corporate governance.’
