Kay Review Of Equity Markets Publishes Interim Report

Professor John Kay today published an interim report on his Independent Review of investment in UK equity markets and its impact on company performance and governance.

The Review was announced by the Secretary of State for Business, Vince Cable, in June 2010. It is examining the way investors, shareholders, regulators and the boards of UK quoted companies can best serve the long-term interests of British business and the economy.

This followed concerns that short-term incentives and pressures can have a damaging effect on the way companies are owned and managed in the UK.

Today’s Interim Report provides an overview of submissions received in response to last September’s call for evidence, and reflects the many conversations the review team has had with business leaders and other experts over the last few months.

The comments and proposals discussed in the report signal areas of interest for the final report, but do not represent its provisional conclusions, and Professor Kay is not making any recommendations at this stage.

Professor John Kay said:

“I’m very grateful to all those who have submitted evidence to the review and those who have shared their valuable time and expertise. The report outlines a variety of issues which we will be considering further as we develop our recommendations.”

Business Secretary, Vince Cable said:

“One of the big overriding themes in economic policy has to be generating – in both equity markets and corporate Britain generally – a belief in the importance of the long-term perspective.

“I’m very grateful to Professor Kay for the work he has done so far and I look forward to receiving his final recommendations in the summer.”

The interim report is a balanced, open discussion of a wide range of issues affecting equity markets in the UK submitted to the Review, including:

· The purpose of equity markets, both economically and in facilitating stewardship and corporate governance
· The company and the board, including Directors’ duties, takeovers, voting rights and executive pay
· Performance measurement and the effect of financial reporting
· Market practices and corporate governance standards
· Asset Management, including the role of regulation in driving investment behaviour and the Stewardship Code
· Intermediation in the investment chain

Professor Kay will present his final report, including recommendations for action, to the Business Secretary in the summer.