Effective Date: May 2019
Under COBS 2.2.3 of the FCA Handbook, Monterone Partners LLP ("Monterone") is required to make a disclosure in relation to the nature of its commitment to the Stewardship Code ("The Code"), which was published by the Financial Reporting Council in July 2010 and updated in September 2012.
Stewardship aims to promote the long term success of companies in such a way that the ultimate providers of capital also prosper. Effective stewardship benefits companies, investors and the economy as a whole.
The Code sets out the principles of effective stewardship by investors, and assists asset owners and asset managers, collectively "institutional investors", to exercise their stewardship responsibilities. The Code is applied on a "comply or explain" basis.
Monterone supports the principles underlying the Code. This document describes the extent to which Monterone has applied the seven Principles of the Code.
Institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities
Monterone's Stewardship Compliance Statement is set out here and is available on the Monterone website.
Stewardship activities include monitoring and engaging with companies on matters such as strategy, performance, risk, capital structure, and corporate governance, including culture and remuneration. Monterone is an FCA regulated alternative investment manager that employs a long/short concentrated equity strategy with a focus on Western Europe. Monitoring and engaging with companies is seen as a key part of the investment strategy.
Monterone will engage or vote in a manner that best serves its clients and their underlying investors (together "clients"), with the aim of enhancing and protecting their value.
Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed
All Partners and employees of Monterone are under a duty to report to the Compliance Officer any potential conflict of interest of which they become aware regarding voting proxies for client accounts. Upon any such report being made, the Compliance Officer will determine how the conflict or potential conflict of interest is to be resolved.
The Compliance Officer will consider all potential conflicts of interest relating to proxy voting brought to its attention and will determine whether there exists a material conflict of interest. A conflict of interest will be considered material if the Compliance Officer determines that it has the potential to influence Monterone’s decision-making in voting the proxy.
Monterone’s duty is to act in the interests of its clients. The obligation is set out under Principle 8 of the FCA Handbook, and more specifically in SYSC 10 of the FCA rules which requires a firm to take all reasonable steps to identify, record, manage and disclose conflicts that may arise in the course of its business. As such Monterone has a robust policy in place and is committed at all times to managing conflicts and potential conflicts fairly between both Monterone and its clients, and between once client and another client.
Institutional investors should monitor their investee companies.
Effective monitoring is an essential component of stewardship.
Comprehensive and continuous research and monitoring of investee companies is essential to Monterone's investment process. Monterone utilizes various research tools to support this process, plus in many cases will directly engage with the companies.
Monterone, tries to identify problems at an early stage to minimize any loss of shareholder value. If it has concerns it seeks to ensure that the appropriate members of the investee company's board are made aware of them.
Monterone normally does not wish to be made an insider. It expects investee companies and their advisers to ensure that information that could affect Monterone's ability to deal in the shares of the company concerned is not conveyed to it without its agreement.
Institutional investors should establish clear guidelines on when and how they will escalate their stewardship activities
Monterone's initial discussions take place on a confidential basis. However, if a board does not respond constructively, then Monterone will consider whether to escalate its action, for example by:
Holding additional meetings with management specifically to discuss concerns;
Expressing concerns through the company's advisers;
Meeting with the chairman, senior independent director, or with all independent directors;
Intervening jointly with other institutions on particular issues;
Institutional investors should be willing to act collectively with other investors where appropriate
Subject to regulatory restrictions and conflicts of interest, Monterone may communicate with other shareholders regarding a specific proposal if it considers it to be in the best interests of its clients to do so or at times when risks posed threaten to destroy significant value in the investee company.
A shareholder wishing to discuss such a situation should contact Phillip Chapple, Partner, Monterone Partners LLP via firstname.lastname@example.org
Institutional investors should have a clear policy on voting and disclosure of voting activity.
Monterone will review proposals on a case by case basis. It is Monterone's philosophy that actively exercising voting rights enhances the long-term sustainable value of the companies in which Monterone invests. As such, Monterone considers all proposed resolutions, received in good time. Monterone votes on all securities where it is able to do so.
Monterone will generally vote by proxy and in a manner that serves what it determines to be in the best interests of its clients. Monterone may not automatically support the board of the investee company. It may abstain from voting if it determines that this is in the best interest of Monterone's clients. In making such a determination, Monterone will consider various factors including costs associated with the exercise of the proxy and any legal restrictions on trading resulting from the exercise of a proxy.
Institutional investors should report periodically on their stewardship and voting activities
Monterone maintains records of its Stewardship and voting activities.
Due to underlying client confidentiality and investment or engagement strategy reasons, it may not always be appropriate to disclose voting actions.
Upon request, or as required by law or regulation, Monterone will disclose to a client or client's fiduciary the manner in which Monterone exercised voting rights on behalf of the client.
Monterone will not normally disclose its voting intentions or make public statements to any third party, except electronically to our proxy vote processor or regulatory agencies
For further information, please email Phillip Chapple - email@example.com
The EU Shareholder Rights Directive (‘SRD’) took effect on 10 June 2019. This aims to promote effective stewardship and long term investment decision making.
We are currently considering our response to SRD including the potential development of a publicly disclosed ‘engagement policy’.