The Investment Association (IA), on behalf of the UK’s investment management industry, has today written to the Chairs of all FTSE 350 companies, expressing the industry’s commitment to supporting British business during the extraordinary economic circumstances caused by the COVID-19 pandemic.

Investors stand with British businesses during this time of crisis.

That’s why today, we’ve written to the Chairs of the FTSE 350 outlining how investment managers will support them during this crisis, and keep corporate Britain working.

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— The Investment Association (@InvAssoc) April 8, 2020

The IA, whose members collectively own a third of UK plc, has set out the ways in which shareholders will look to keep corporate Britain working and support companies, through:

• Engagement and communication. Shareholders will support management teams and boards where possible by allowing them to focus on the most business-critical issues to ensure their long-term sustainable future. Companies should look to maintain an open dialogue over the coming months with shareholders and stakeholders to help facilitate this.
• AGMs. Shareholders will support companies during the AGM season by focusing on the most material issues facing businesses. Investment managers welcome the Governance Institute and City law firm guidance on how AGMs can proceed under the ‘Stay at Home’ measures, and encourage firms to consider how they can continue to engage flexibly and effectively with shareholders instead of via normal AGM meetings.
• Dividends. Dividends are an important income stream for many savers, pensioners and institutional investors, including pension funds and charities. Shareholders ask companies to take into account the suitability and sustainability of a dividend payment in light of current uncertainties. Shareholders expect companies who do decide to suspend dividend payments to restart them as soon as it is prudent to do so. Ultimately, shareholders expect companies to be transparent about their approach to dividends, particularly, if they are seeking additional capital.
• Executive pay. As part of shareholders’ focus on the long-term success of companies, executive pay should continue to be aligned to company performance. If a company cancels dividend payments or makes significant changes to their workforce’s pay, IA members support boards and remuneration committees that demonstrate how this should be reflected in their approach to executive pay.
• Financial reporting. Shareholders welcome the FCA’s call for companies and auditors to take the necessary time to prepare and audit a company’s preliminary results, annual reports and accounts, allowing an additional two months to prepare accounts if needed.
• Additional capital. Shareholders will look to support companies seeking additional capital from their shareholders during this time of crisis. Shareholders support the Pre-emption Group Guidelines on pre-emption rights and believes the current regime offers companies necessary flexibility. The industry supports efforts to speed up providing companies with this vital additional capital and welcome the Pre-emption Group’s additional flexibility.

Chris Cummings, Chief Executive of the Investment Association, said:

“Businesses in the UK and around the world are facing unprecedented challenges. The response to the COVID-19 pandemic has caused real strain across the economy and so it is right that investors help steady the ship.

“We are trusted by millions of pension savers to invest their money wisely and that means taking a long-term view, backing companies that do the right thing, and holding those that don’t to account. That’s why today, the investment management industry is showing its support for British business.

“The measures announced today will help company boards focus on leading their business through the crisis, looking after their employees, suppliers and customers, in the knowledge that their investors expect them to take a long-term approach to running their business. Investment managers want to see the businesses they invest in do well in the months and years ahead.”

Source: IA