The Railways Pension Trustee Company Limited is the corporate trustee of the UK railway industry pension funds with assets exceeding £16 billion and as a major institutional investor is committed to ensuring good corporate governance in respect of all of its holdings.
The Railways Pension Trustee Company first adopted a corporate governance policy nearly ten years ago at the time of the Cadbury Report into corporate governance. We have had an active voting policy since 1992 when we first instructed our fund managers to vote at all meetings of UK listed companies in which we have a holding in accordance with our policy.
The policy, which is monitored by RAILPEN Investments, the Trustee Company's investment monitoring subsidiary, covers the need to ensure that the Trustee acts as a responsible shareholder in the companies that it invests in and develops its commitment as a major institutional investor to ensuring good corporate governance in respect of all of its holdings.
We believe that corporate governance has a vital part to play in bringing about sustained performance. The Trustee is a long term investor with a long term commitment to pay pensions and has an obvious interest in the long term performance of UK companies. Active voting and engagement makes investee companies take notice of shareholders and stakeholders.
We strongly support the UK Combined Code on Corporate Governance as a model of best practice. We expect companies to explain and justify any reasons for non-compliance with the Combined Code, and to outline their plans for compliance in future. We have adopted the Combined Code in our own policy document which is intended to deal with issues that are either not covered by the Code, require greater emphasis or are specifically left open for shareholders to resolve with company boards.
The Trustee Company is considering whether to introduce active voting in overseas markets. We hope that best practice in corporate governance will develop worldwide and, in future, separate policies may be developed for different countries or regions as appropriate although we see our UK-based policy as the starting point. We certainly wish to encourage improvements in global standards of corporate governance and will look to apply these policies to international investments where appropriate.
The Trustee Company currently has investments in Hong Kong with a market value of US$175 million in nearly 30 companies. This is a significant market for us and it follows that we wish to encourage greater transparency in corporate governance in Hong Kong.
We at RAILPEN Investments support in principle the HAMS proposal to establish an authoritative body to represent and advance minority shareholder's interests in Hong Kong listed companies. We feel this will facilitate corporate governance reform, encourage companies to make more notice of minority shareholders and persuade the Hong Kong government to continue to give its tacit support to better corporate governance.