Shareholder Rights Directive II Disclosure

The revised Shareholder Rights Directive (“SRD II”) applies to EU asset managers, including MIFID investment firms, alternative investment fund managers (AIFMs), UCITS management companies and self-managed UCITS (“Asset Managers”). Under SRD II, Asset Managers are required to adopt on a “comply or explain” basis an engagement policy describing how it integrates in its investment strategy shareholder engagement relating to shares traded on a regulated market in the EEA as well as ‘comparable’ markets outside the EEA.


Under FCA COBS 2.2.B.5R, we are required to:


1. Develop and publicly disclose an engagement policy that meets the requirements of COBS 2.2B.6R; and
2. Publicly disclose on an annual basis how our engagement policy has been implemented in a way that meets the requirements of COBS 2.2B.7R; or
3. Publicly disclose why we have chosen not to comply.  
The engagement policy must describe how a firm:
1. Integrates shareholder engagement in its investment strategy
2. Monitors investee companies on relevant matters, including: a) strategy; b) financial and non-financial performance and risk; c) Capital structure; and d) social and environmental impact and corporate governance;
3. Conducts dialogues with investee companies;
4. Exercises voting rights and other rights attached to shares;
5. Cooperates with other shareholders;
6. Communicates with relevant stakeholders of the investee companies; and
7. Manages actual and potential conflicts of interests in relation to the firm’s engagement.


On an annual basis, the firm must disclose a general description of voting behaviour, an explanation of the most significant votes and reporting on the use of services of proxy advisors.  The disclosure must include how votes have been cast unless they are insignificant due to the subject matter of the vote or to the size of the holding in the company.


Working Capital firmly believes in the importance of effective stewardship and long-term decision making, involving transparency of engagement policies between institutional investors and the investee companies.  The Firm does not predominantly hold large positions in equity securities of listed issuers or pursue an activist strategy.  As such, the Firm does not currently maintain and will not publish an engagement policy as specified by the Directive.  The Firm shall periodically review its investment strategies to determine whether its investment activities have changed to the extent that the Firm should adopt an engagement policy under SRD II.