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UK Stewardship Code

Charles Stanley complies with the UK Stewardship Code. This note explains what this means.

The UK Stewardship Code is overseen and published by the Financial Reporting Council, an independent regulator overseeing financial reporting, accounting and auditing and corporate governance. The Code sets the benchmark for institutional investors to meet ownership obligations in respect of UK companies, and the FRC requires it to be applied on a 'comply or explain' basis, meaning that where a firm chooses not to comply with a particular principle in the Code, it is still compliant with the overall Code where this is properly disclosed and explained. This statement sets out the approach Charles Stanley (including Matterley Asset Management, part of Charles Stanley) takes towards the governance of companies in which our firm invests in on behalf of such clients.

The Code is addressed in the first instance to firms who manage assets on behalf of institutional shareholders such as pension funds, insurance companies, investment trusts and other collective investment vehicles. Charles Stanley, trading as Matterley Asset Management, manages the investments of IM Matterley Investment Funds. Although Charles Stanley primarily manages the assets of retail investors, as required by the rules of the Financial Conduct Authority this policy statement focuses instead on our institutional investor clients where, under our terms of engagement, Charles Stanley is able to exercise voting rights on investments held on such institutional clients' behalf. For such clients, as appropriate Charles Stanley may seek to engage and vote on any issue affecting the long-term value of a company in which we have invested on our clients' behalf.

As a financial services organisation, our primary responsibility is to maximise investment returns to our clients in accordance with our contractual relationships, and in our view this is always best achieved through the consistent identification of quality investment opportunities for our clients' funds, and to dispose of investment holdings where we are dissatisfied with that investment's prospects for growth. In this way, we see stewardship of investee companies as an integral part of the wider investment process.

However, Charles Stanley recognises that the maximisation of client investment returns may sometimes require a greater level of engagement with investee companies, including entering into an active dialogue with investee company management, and the resources used for each such engagement will be managed according to the circumstances of each case. Where the holding controlled and voted by Charles Stanley is a small fraction of an investee company's capital, for example, there will be proportionately less resource applied to engagement, if only to recognise that shareholders with a small fraction of a company's share capital are less likely to have a material influence.

As a long-established UK investment firm, Charles Stanley has frequent opportunities to meet with the management of actual and prospective investee companies. Monitoring occurs around company financial reporting, in conjunction with news and announcements and when, for whatever reason, Charles Stanley might be conducting research into investment ideas. Where a company does not comply with the spirit of the UK Corporate Governance Code, in our opinion, we will consider its explanation and react accordingly.

Where it is identified that a greater level of engagement may be beneficial to our clients' interests, we will vote at shareholders' meetings as we deem appropriate and at our absolute discretion. Although we generally look to support management of investee companies, we may abstain or vote against resolutions where proposals are deemed inconsistent with the interests of shareholders.

Where we deem it appropriate and effective, we will seek to engage collectively with other investors, and to escalate our activites.

Our policy summary regarding conflicts of interest is set out in Our Services and Business Terms. Charles Stanley and Matterley Asset Management vote the holdings of client funds in the interests of clients. Inevitably, conflicts of interest may arise from time to time, for example where there is voting on matters affecting both clients and Charles Stanley itself; where there is such a conflict that in our view cannot be readily resolved, the matter would be escalated to senior management and we would seek to disclose to and obtain prior approval from the client.

It is not the current policy of Charles Stanley, or Matterley Asset Management, to report routinely to clients how we have discharged our responsibilities under the Code. Nor do we publish voting records, whether on this website or elsewhere, as we do not consider that making these records public would always serve our clients' interests; were we to do so it would be at our discretion and after a suitably lengthy delay to ensure that the publication of voting would not influence the outcome of discussions. We are happy to disclose and report such matters in confidence directly to clients on request.

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