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- What stakeholders can expect from our review of the UK Listing Rules for Investment entities.
By Simon Walls
On 3 March 2026, we said we’d bring forward our planned review of the UK Listing Rules for Investment entities, including how they apply to board independence and related party provisions.
Since then, there has been substantial debate over our role in relation to investment trusts, including calls for us to ‘get to grips’ with voting rules ‘that allow a minority shareholder to repeatedly attack an investment trust’.
Much of this debate suggests there are misunderstandings about how investment trusts are governed and where responsibilities sit. We’re concerned this may confuse investors in these trusts. Other calls to action have lacked clear proposals or been based on future hypothetical scenarios for which protections often exist. We want our review to ensure that these rules remain fit for novel circumstances.
This blog reminds participants of their powers and responsibilities, clarifies our role, and sets out what our review will cover.
About investment trusts
Investment trusts are one of the UK’s oldest collective investment vehicles. They are companies with shareholders, and they operate as investment products. Their closed-ended fund structure is particularly suited to holding illiquid assets, and they can borrow to enhance returns.
They are governed by independent boards appointed by shareholders, who can change managers or strategy if they believe performance is not where it should be.
As I highlighted at the Association of Investment Companies (AIC)Link is external conference on 4 March 2026, shareholders’ ability to hold boards and managers to account should be regarded as a feature of investment trusts, not a bug.
Shareholder rights and who sets them
Voting rights are enshrined in law by parliament through the Companies Act, typically on a ‘one share, one vote’ basis, and overseen by the Department for Business and Trade (DBT). The secretary of state for DBT has the statutory ability to apply to court to protect shareholders. By contrast, FCA listing rules apply to issuers, not shareholders.
In recent weeks, some of the language used by boards and managers has implied that certain requisitions for votes are vexatious or not in the best interest of shareholders. The law directly anticipates such concerns and gives boards the ability to set aside resolutions in those circumstances, setting a high bar to appropriately balance shareholder rights. To date, we haven’t seen this used by investment trusts.
As investors and shareholders themselves, most industry participants should be well acquainted with these long-standing rights and powers.
The law also gives companies the ability to design voting arrangements through their articles of association if enough shareholders agree. For example, by tailoring their articles to effectively opt shareholders into specific voting mechanisms and notifications, and by adopting electronic voting options.
Although we don’t govern them, the strong shareholder rights enshrined in law have underpinned many of our recent reforms. We’ve reduced prescription regarding significant transactions and capital raisings because informed shareholders can push for change, or sell out if a company moves in a direction they do not support.
The industry body’s code also encourages directors to stand for re-election at AGMs.
Shareholder participation
For these rights to be effective, it’s important that shareholders are engaged, informed, and able to vote without unnecessary obstacles.
In recent votes, we have been pleased to see turnout reach over 80 percent, which is testament to the collective effort across the value chain to confound negative predictions around retail shareholder engagement.
Although we’re encouraged by this, we think there’s more that the broader ecosystem can do, for example by platforms, with digitisation, and through articles of association to further reduce remaining frictions. While these do not tend to sit in regulation we’re keen to partner with the sector to support shareholder engagement.
A small number of trusts have carried out two requisition votes in the past year, requiring ongoing shareholder attention, and it seems likely there will be more. Against this background, we’re worried that some of the confused messaging could risk having a detrimental impact on engagement. It may give a misleading impression that these votes might be prevented without boards using their legal powers.
Our review and future work
We’re also looking at the interaction between shareholders and investment managers in the context of investment trusts.
Here, our rules are relevant. Alongside company law, they are designed to ensure that conflicts of interests are managed appropriately.
Under the Companies Act, directors have a fiduciary duty to exercise independent judgement, avoid conflicts of interest, and not accept benefits from third parties.
The UK Corporate Governance Code, which applies to listed investment trusts on a ‘comply or explain’ basis, also includes provisions about director independence.
Our rules require boards to be able to act independently of their investment manager. This is essential for maintaining confidence that the governance of investment trusts supports all shareholders in all circumstances.
They also require listed trusts entering into transactions with related parties (such as directors, or controlling shareholders) to obtain board approval, and, importantly, secure written confirmation from independent sponsors that the terms are fair and reasonable to shareholders.
A material change to a trust’s published investment policy would need a further shareholder vote and approval from us.
Our review focuses specifically on whether we need to amend the rules to make it clear that our related party and board independence rules apply to prospective investment managers and directors.
We want to ensure that – whatever the route – minority shareholders have the right protections against conflicts of interest in the terms under which investment managers are appointed.
The broader review that this specific piece of work forms part of examines how our listing rules apply to investment entities. We are considering whether amendments would be beneficial to allow a subset of undiversified investment entities a place to list.
Rebalancing risk
Over the past few years, we’ve been conducting a programme of ambitious reform to UK capital markets.
We’ve sought to rebalance risk and, where possible, replace pre-emptive checks with market disclosure. This work, which is well advanced, is partly about rules but also about predictability of the regime.
Shareholder rights, and the ability to hold company boards accountable and protect minority shareholders, sit at the heart of this.
These principles have sustained investment trusts for more than 150 years and will continue to support the sector’s strength and success.
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- Interim Executive Director of Markets, Simon Walls
