We are setting out changes to our DEPP and EG regulatory guides and processes now that we have new powers to discipline and investigate proxy advisors.
Why we are changing
We consulted in CP19/21 on our proposal to amend our Decision Procedure and Penalties manual (DEPP) and the Enforcement Guide (EG) to reflect the changes introduced by the Proxy Advisors (Shareholders’ Rights) Regulations 2019 (the Regulations).
In the consultation, we asked for your feedback. In this Policy Statement we summarise that feedback, give our response to it and set out the changes we are making.
Who this applies to
This Policy Statement will be of interest to anyone who may fall within the scope of the Regulations, or who uses the services of proxy advisors. This will include proxy advisors, listed companies, their shareholders and intermediaries.
Background to the Regulations
The revised Shareholder Rights Directive (SRD II) sets out new obligations on proxy advisors. They aim to encourage proxy advisors to be more transparent in the way they carry out their work and provide proxy advisor services. To give effect to those parts of SRD II which apply to proxy advisors, the Treasury laid an implementing Statutory Instrument - the Regulations.
The Regulations establish a new regulatory framework for proxy advisors and require them to provide a range of information to their clients and the public, promoting greater transparency. The Regulations confirmed the FCA as the competent authority and gave us powers to investigate and sanction proxy advisors.
The Regulations came into force on 10 June 2019. Proxy Advisors that are subject to the Regulations need to ensure they comply with their obligations.