Parliamentary Search

Written question asked by Lord Myners (Crossbench) on Monday, 10 June 2019, in the House of Lords. It was due for an answer on Monday, 24 June 2019. It was answered by Lord Henley (Conservative) on Wednesday, 19 June 2019 on behalf of the Department for Business, Energy and Industrial Strategy.

Takeovers: Conflict of Interests

Question

To ask Her Majesty's Government, further to the Written Answer by Lord Henley on 20 May (HL15640), whether they have reviewed the decision-making processes in investment institutions which hold equity investments in both the offeror and the offeree in a takeover situation but on behalf of different clients and where a particular outcome might favour one group of clients over another .

Answer

Asset managers act as agents of investors in their funds. They are required to manage their funds in the best interests of all of their fund investors and to appropriately avoid, manage and disclose conflicts of interests that could, and do arise between different investor groups. This is a requirement of Markets in Financial Instruments Directive II (MiFID II).

Asset managers should have policies, procedures and governance in place to effectively manage any conflicts arising from their stewardship obligations.

The FCA has recently published a Policy Statement (PS 19/13) ‘Proposals to promote shareholder engagement: Feedback to CP 19/7 and final rules.’ This sets out final rules to implement requirements of the Revised Shareholder Rights Directive (SRD II). SRD II introduced new requirements to improve shareholder engagement and increase transparency around stewardship. The rules came into effect on 10 June 2019 requiring asset managers to disclose and make publicly available their policies on how they engage with the companies they invest in. They also require asset managers to provide certain information to institutional investors, including occupational pension schemes. The new rules are designed to foster stewardship, and better stewardship should lead to better decision making in relation to mergers and acquisitions.

Secondary information

Type
Written question
Reference
HL16209
Session
2017-19
Related items
Takeovers: Conflict of Interests
Monday, 20 May 2019
Written questions
House of Lords
Subjects
Conflict of interests Financial services Takeovers
Link
View this Written question on www.parliament.uk