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Statement in Relation to the Shareholder Rights Directive II


The FCA’s implementation of the revised Shareholder Rights Directive (SRD II) came into force on 10 June 2019. The main rules that impact Promeritum Investment Management LLP (“Promeritum”, or the “Firm”) are as follows:


1. To develop and disclose an “engagement policy” in line with COBS 2.2B.6 that sets out how the Firm integrates shareholder engagement in its investment strategy;


2. To publicly disclose on an annual basis how the engagement policy has been implemented, including a general description of voting behaviour and how votes have been cast (COBS 2.2B.7); and


3. To make additional transparency disclosures on an annual basis to certain institutional investors as per COBS 2.2B.9.


The first two requirements above apply on a “comply or explain” basis. This means that the Firm can choose not to comply with these requirements, but in which case it must instead publicly disclose on its website that it has taken this decision.


The third requirement is mandatory, however this only applies when the types of institutional investors covered by the rule are engaged. Within SRD II the term “institutional investors” has been narrowly defined to cover only UK and EU regulated life assurance companies and occupational pension schemes. This is therefore a narrow subset of the types of investors that would typically be classified as institutional investors under the normal usage of the term.


Promeritum pursues a fixed income strategy with a focus on emerging markets. Since the Firm’s strategy does not generally involve investing in the shares of companies, SRD2 has a limited application to its investment activities.


Promeritum has a voting policy in place, which sets out the circumstances and manner in which the Firm will vote on behalf of clients. The Firm also has a conflicts of interest policy in place to identify the risk of any conflicts of interest arising with or between its clients and has in place procedures to deal with any conflicts that may arise. These policies and procedures are regularly reviewed and updated.


In the event there were concerns regarding governance which might affect the value of its investments, the Firm would consider the most appropriate course of action including exercising its voting power to oppose the board and/or disposing of its investment.


While the Firm generally supports the objectives that underlie the Shareholder Rights Directive, the Firm does not consider it appropriate to publish or commit to adhere to a shareholder engagement policy at this time. If the Firm’s investment strategy changes such the provisions of SRD2 become relevant, the Firm will review and if necessary amend this disclosure accordingly.


For the avoidance of doubt, the Firm does not have any institutional investors, as this term is defined in SRD II. The additional transparency disclosure requirements to such investors are not therefore applicable to the Firm.

Updated March 2021

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