Investors given new guidance by FSA

The Financial Services Authority (FSA) has offered investors an update on how Sir Clive Walker’s recent review on corporate governance will impact on activist shareholders.

According to a new letter sent by the regulator to UK trade associations, current rules on the issue will not be affected by the report’s recommendations.

Earlier this year, Sir Clive advocated a strengthening of shareholders’ powers to hold company boards to account.

Private wealth management firms were also urged in the report to take a longer-term view over their share investments.

The FSA said that, in some circumstances, shareholders clubbing together to make trades on the basis of prior discussions about a company would represent ’market abuse’.

However, the letter went on to say that investor groups designed to pressure boards to improve their governance were not against the rules.

Alexander Justham, FSA director of markets, added: ’There is nothing under FSA rules that prevents investors discussing matters when it is for a legitimate purpose.

’Our letter provides clarity to investors that they are free to engage with the boards of companies as Sir David Walker envisaged.’ADNFCR-2318-ID-19322357-ADNFCR