As part of this review, we will also conduct targeted work to assess how our rules, in the context of company law, ensure that boards support strong shareholder rights and engagement and manage conflicts of interests.”
This review also takes place against the backdrop of Saba’s repeated activist campaigns aimed at a number of investment trusts and the directors of those investment trusts, raising growing concerns that its objectives may not be aligned with those of the wider shareholder base.
In its March 2026 blog, the FCA emphasised that:
- Shareholder voting rights are set by law, not the FCA
- Existing legal and regulatory protections are already in place
- The review is targeted and clarificatory, not a rollback of shareholder rights
No immediate changes to the UK Listing Rules have been proposed at this time. The FCA is expected to issue a consultation on their proposals and to complete the work by the end of 2026.
Shareholder Rights
At the core of the FCA’s message is a reaffirmation of the investment trust model; that shareholder rights are a fundamental strength. The FCA’s position is clear, shareholder voting rights are set out in law through the Companies Act, generally on a ‘one share, one vote’ basis, and are overseen by the Department for Business and Trade.
Strong shareholder rights underpin confidence in UK markets and have informed the Regulator’s approach to reducing unnecessary prescription around significant transactions and capital raisings.
The statutory framework already anticipates concerns about inappropriate or detrimental shareholder actions. It provides boards with limited powers, subject to a high threshold, to set aside resolutions in exceptional circumstances (resolution must be one which may "properly be moved" and cannot be defamatory, frivolous or vexatious or proposed for improper purposes – Companies Act section 292(2)). The Regulator notes that it has not seen investment trusts make use of these powers to date.
Companies also have the ability, with shareholder approval, to shape voting arrangements through their articles of association, including the use of tailored voting mechanisms and electronic voting.
Shareholder Participation
For shareholder rights to operate effectively, it is essential that investors are engaged, well-informed and able to vote without unnecessary barriers.
According to the FCA’s blog, recent shareholder turnout levels have exceeded 80% which is testament to the collective effort across the value chain to confound negative predictions around retail shareholder engagement.
While this is positive, the Regulator does see scope for further improvement, such as greater digitisation, enhanced platform functionality and the use of articles of association to streamline voting processes. These measures largely sit outside regulation, but the FCA is keen to work with the sector to support continued improvements in shareholder engagement.
Board independence and conflicts of interest
The FCA’s role, as a regulator, will consider the Listing Rules that apply to issuers on the matters of board independence and related-party provisions. In this context, the Regulator will examine the interaction between shareholders and investment managers in the context of investment trusts, with a particular focus on how conflicts of interest are managed given that a significant shareholding could force the replacement of some, or all, of a trust’s board, who have the power to appoint a new investment manager.
Under the Companies Act, directors are subject to clear fiduciary duties, including the obligation to exercise independent judgement, avoid conflicts of interest and not accept benefits from third parties. These legal requirements are reinforced by the UK Corporate Governance Code, which applies to listed investment trusts on a ‘comply or explain’ basis and includes specific provisions relating to director independence.
The Listing Rules further require investment trust boards to be able to act independently of their investment manager which is fundamental to maintaining confidence that investment trusts are governed in a way that supports the interests of all shareholders in all circumstances.
- The rules also include protections around transactions with related parties, such as directors or controlling shareholders, requiring board approval and written confirmation from an independent sponsor that the terms are fair and reasonable to shareholders.
- In addition, any material change to a trust’s published investment policy must be approved by shareholders and receive FCA consent, providing an important further layer of protection.
As part of its UK Listing Rules review, the Regulator will consider whether amendments may be needed to make it explicit that board independence and relatedparty provisions apply not only to existing arrangements, but also to prospective investment managers and directors. The objective is to ensure that minority shareholders have appropriate protections against conflicts of interest, regardless of how investment management arrangements are structured.
Rebalancing Risk
Over recent years, the FCA has undertaken a programme of reform to strengthen the UK’s capital markets. This work has focused on rebalancing risk and, where appropriate, moving away from preemptive regulatory checks towards enhanced market disclosure.
At the core of these reforms are strong shareholder rights, including the ability to hold boards to account and protect minority shareholders. These principles have underpinned the success of investment trusts for more than 150 years and remain central to the sector’s continued resilience and longterm success.
The FCA’s blog is available here: Investment trust votes, conflicts of interest, and our role | FCA
About the author:
Karen O’Donnell is Governance & ESG Knowledge Manager at Equiniti, where she provides expert insight on regulatory developments, corporate governance and shareholder engagement to support issuers navigating an evolving market landscape.