FAQs

Who are the members of the Best Practices Group?

Any organisation which becomes a signtory of the Principles becomes a part of the Group. The current participants are:

  • Glass, Lewis & Co
  • Institutional Shareholder Services Inc
  • Manifest Information Services Ltd
  • Pensions & Investment Research Consultants Ltd
  • Proxinvest

How were the Principles developed?

Th Principles were developed in response to ESMA’s 19 February 2013 statement on the consultation regarding the role of the proxy advisory industry. The Principles were developed under the guidance of an independent Chairman, Prof. Dr. Dirk Andreas Zetzsche, LL.M. (Toronto), Propter Homines Chair for Banking and Securities Law, University of Liechtenstein (Principality of Liechtenstein), and Director of the Center for Business & Corporate Law, Faculty of Law, University of Duesseldorf (Germany). [link]

The chairman’s report on the Principles Process can be downloaded HERE >>

What is the content of the Principles?

The high-level Principles cover three main areas:

  • Service Quality
  • Conflicts of Interest Management
  • Communications Policy

The Principles are, in turn, supported by detailed Guidance that explains the background and relevance of the Principles and how the Principles should be applied. The Principles and associated Guidance will be applied on a “Comply or Explain or “If Not, Why Not? basis to reflect the signatories individual business model.

How will the Principles be governed and further developed?

The Principles were finalised and released on March 5th 2014.  Signatories were required to have their Principles in operation for the 2015 AGM season. The operation and content of the Principles will be reviewed as described in our Feedback page.

The governance of the Committee of the BPP Group is described in the Membership Guidelines.

How are conflict of interests addressed?

Signatories need to develop and publicly disclose a conflicts of interest policy that details their procedures for addressing potential or actual conflicts of interest that may arise in connection with the provisions of services. Conflict management and mitigation procedures may include a number of different approaches, such as information barriers and ring-fencing, fire walls, division of labour, employee recusal and codes of ethics.

How will the transparency of the industry be ensured?

Signatories will need to publicly disclose their research policy and, where applicable, their house voting guidelines.  In addition, they will also disclose their policy for communication with issuers, shareholders proponents, other stakeholders, media and the public. These robust transparency requirements are designed to foster greater understanding and assurance among all stakeholders about what they can rightfully expect from governance research providers.

How will the signatories ensure their compliance with the Principles?

All signatories will apply the Principles under a robust comply-or-explain regime which is transparent to both clients and the wider stakeholder community. In this way the Principles will enhance and promote understanding through a consistent framework covering key areas of focus.

How can someone provide general feedback on the Principles to the Group?

The working group for the Principles can be contacted collectively through the group email: committee[at]bppgrp[dot]info

How can someone provide feedback to a particular signatory’s Principles Statement?

Please refer to the contact details contained within each signatory’s statement (available on this site or on the vendor’s site). Alternatively, please visit the Signatory Statements page for further information.

Is there a Complaints Procedure?

Yes, there is a detailed Complaints Procedure, please see here for more details

Why Shareholder Voting Research and not Proxy Advice?

In the financial services industry giving Advice or the act of being an Advisor/Adviser has specific legal meaning. Those meanings can vary from market to market. For example, in the USA, the the Investment Advisors Act of 1940, any person or group that makes investment recommendations or conducts securities analysis in return for a fee, whether through direct management of client assets or via written publications. However, in the European regulatory environment which operates under the MIFID framework, there is a distinct difference between investment research, advice and guidance. Investment Research (with or without recommendations) is not considered to be investment advice as this briefing from Slaughter & May explains.

Not all shareholder votes are conducted as “Proxy Votes”. The modernisation of shareholder voting means that shareholders may increasingly vote by remote electronic means without attending the meeting. Voting service providers generally appoint the chairman of the meeting to vote on a poll in accordance with the instructions given on the proxy appointment/ballot card. Not all signatories provide voting recommendations; even where recommendations are provided they are discretionary, that is to say, the service users are not bound to act on the information provided. The use of a shareholder voting service provider does not relieve the investment manager or institutional investor of their own regulatory requirements.

Need more help?

If you require any further assistance with the Principles please contact the signatories directly via email: committee[at]bppgrp[dot]info