The UK Stewardship Code

9 Dec, 2014



Daiwa SB Investments (UK) Ltd. (“DSBI (UK)”) is authorised and regulated by the Financial Conduct Authority (“FCA”) in the UK as an investment manager and provides discretionary investment services of global fixed income and equity products to institutional investors in Europe, Middle East and Far East.  As such, under COBS 2.2.3 R the Firm is required by the FCA to disclose clearly on its website:

  1. the nature of its commitment to the Financial Reporting Council (“FRC”)’s Stewardship Code (“the Code”); or
  2. where it does not commit to the Code, its alternative investment strategy.

The following statement is thus intended to describe DSBI (UK)’s approach to the Code.

The Code was published by the FRC in July 2010, the United Kingdom’s independent regulator responsible for promoting high quality corporate governance and reporting in order to foster investment.  A revised Code was published in September 2012. The Code aims to enhance the quality of engagement between institutional investors and companies they invest in.  Engagement includes pursuing purposeful dialogue on strategy, performance and the management of risk.

DSBI (UK) is a wholly owned subsidiary of Daiwa SB Investments Ltd. in Tokyo, Japan (“DSBI”).  Daiwa Securities Group Inc. and Sumitomo Mitsui Financial Group Inc. are two major shareholders of the parent company, each holding 44%.

DSBI (UK) supports the principles underlying the Code and believes firmly in the importance of corporate governance driven by strong boards and executive leadership and sound governance policies that protect and enhance long term shareholder value.

However, although DSBI (UK) acts as investment manager to a global equity fund which may have holdings in UK listed companies, investment decisions have been delegated to an affiliate. In any case, executing voting rights are prohibited by the underlying funds themselves and thus this entity will not do so, nor otherwise engage with investee companies on its behalf.

We have set out below the approach taken to the Code principles and explained the approach taken where we consider it not appropriate to our business.

Should you require further information on the firm’s approach to the Code please contact Mr Katsumi Nishihara, Chief Administration Officer on:

020 7597 7026


The UK Stewardship Code Principles

Principle 1

Institutional Investors should publicly disclose their policy on how they will discharge their stewardship responsibilities.

We support the purpose of the UK Stewardship Code and believe regular dialogue with investee companies is a key component of investment process and helps develop knowledge of the investee’s business strategy, future prospects, and attitude to risk, corporate governance and board cohesion.

DSBI (UK) believes that this ongoing dialogue, as well as proxy voting activities, are the principal fundamental measure for communicating with corporate management.  Therefore, we aim to discharge our stewardship responsibilities by ensuring that our affiliated companies who conduct proxy voting on our behalf have clear voting policies and standards.


Principle 2

Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed.

The firm is authorised and regulated by the Financial Conduct Authority, which requires firms to identify, and mitigate any conflicts of interest between itself, its clients, and between clients that may result in a loss to them.  We maintain a conflicts of interest policy and register to satisfy this requirement, which is subject to regular management review.

When a conflict of interest arises, such as voting in respect of our ultimate holding companies, our affiliated companies delegate its function to third-party proxy voting service vendors as appropriate in order to remain impartial in the exercising of such proxy voting rights.


Principle 3

Institutional investors should monitor their investee companies.

We are of the firm opinion that continuous monitoring of investee companies is a fundamental responsibility of an asset management firm.  Our affiliate companies actively engage with investee company management as appropriate as part of proxy voting exercises, and they monitor a comprehensive range of information from financial analysis of publicly available information, market intelligence from peers, broker research, fundamental analysis and meetings with companies.


Principle 4

Institutional investors should establish clear guidelines on when and how they will escalate their stewardship activities.

DSBI (UK) does not actively engage with investee company management, but our affiliated companies may, on a case by case basis, engage with investee companies’ management as part of their fundamental investment processes which seek to optimise investment returns. No prescriptive basis for this engagement is considered necessary.


Principle 5

Institutional investors should be willing to act collectively with other investors where appropriate.

DSBI (UK) does not actively engage with investee company management, the situation does not arise where we would act collectively with other investors.


Principle 6

Institutional investors should have a clear policy on voting and disclosure of voting activity.

As noted above, DSBI (UK) delegates the exercising of proxy voting rights on behalf of its clients to affiliated companies which each have a clear policy on voting and disclosure of voting activity.


Principle 7

Institutional investors should report periodically on their stewardship and voting activities.

We report periodically on our stewardship and voting activities in accordance with our client requirements by incorporating the results from our affiliated companies. This will include information on voting and rationale behind decisions taken.



Daiwa SB Investments (UK) Ltd.

PO Box 18304
5th Floor
5 King William Street
United Kingdom


Prepared as at 29 December 2015