The Securities and Exchange Commission of Pakistan (SECP) has issued the Stewardship Guidelines for Institutional Investors which are aimed at promoting long-term value creation and the ‘responsible’ engagement of institutional investors with investee companies.
The guidelines apply to the Asset Management Companies, Pension Fund Managers, Private Fund Management Companies, Life Insurers, and Employees Contributory Funds managed by the Investment Advisors with equity holding in the listed companies.
Comprising a set of best stewardship principles, the guidelines provide a comprehensive stewardship framework to steer institutional investors on the effective exercise of their stewardship responsibilities with due regard for both their investors and investee companies
Adopted on a ‘comply or explain’ basis, the stewardship framework emphasizes that institutional investors are responsible to their ultimate long-term investors and beneficiaries, and that their policies on voting, monitoring and engagement, conflict of interest, and sustainability consideration should be designed to protect the interests of these long-term clients and beneficiaries. It further provides guidance on how to implement each principle and the outcome that is expected from applying the principle.
The SECP contemplates conducting orientation sessions in collaboration with key stakeholders to raise awareness of the Stewardship Principles within the institutional investors’ community and also a post regulatory impact analysis in the future to assess the implementation of Stewardship Guidelines.
The guidelines are available on the SECP website.