Disclosure

Stewardship Code

BACKGROUND

  1. Ampersand Growth Opportunities Fund Scheme – I (“Fund” or “AGOFS”) is a scheme of a trust, namely Ampersand Capital Trust (“Trust”). The Trust has been constituted as a trust under the Indian Trust Act 1882 and is registered with SEBI as Category III Alternative Investment Fund (“AIF”). Ampersand Capital Investment Advisors LLP is the (“Investment Manager”) of the Fund. AGOFS is an open-ended fund.

INTRODUCTION

  1. Stewardship aims to promote the long-term success of investee companies in a manner that the ultimate providers of capital also prosper. Effective stewardship benefits investee companies, asset managers, investors and enhances the quality of capital markets.
  2. AGOFS – Stewardship Code is approved by Partners of Investment Manager on June 30, 2020. The Stewardship Code is formulated based on the stewardship principles as laid down by the SEBI time to time/ as amended.
  • Principle 1 – Institutional Investors should formulate a comprehensive policy on the discharge of their stewardship responsibilities, publicly disclose it, review and update it periodically.
  • Principle 2 – Institutional Investors should have a clear policy on how they manage conflicts of interest in fulfilling their stewardship responsibilities and publicly disclose it.
  • Principle 3 – Institutional Investors should monitor their investee companies.
  • Principle 4 – Institutional Investors should have a clear policy on intervention in their investee companies. Institutional Investors should have a clear policy for collaboration with other institutional investors, where required, to preserve the interests of the ultimate investors, which should be disclosed.
  • Principle 5 – Institutional Investors should have a clear policy on voting and disclosure of voting activity.
  • Principle 6 – Institutional Investors should report periodically on their stewardship activities.

Principle 1 – Institutional Investors should formulate a comprehensive policy on the discharge of their stewardship responsibilities, publicly disclose it, review and update it periodically

AGOFS, as part of its investment activities, invests in listed equities of various investee companies. This policy aims to define the kind of engagement required to be maintained with the investee companies. Such engagement may be through detailed discussions with management, interaction with investee company representatives, voting in shareholders meetings etc. An illustrative list of engagements on various matters is given below.

  • Take into account the corporate governance practices of investee companies, when undertaking buy and sell decisions;
  • Take into consideration, in the investment process, investee companies’ policies and practices on environmental, social and governance matters;
  • Strategy and Performance of the investee companies (operational, financial, etc.);
  • Industry-level monitoring and possible impact on the investee companies;
  • Risk including environmental, social, and governance (ESG) opportunities or risks;
  • Enhance investor value through productive engagement with investee companies;
  • Vote and engage with investee companies in a manner consistent with the best interests of its investors;
  • Maintain transparency in reporting its voting decisions and other forms of engagement with investee companies;
  • Any other issue that may affect the interest of investors.

The LLP may provide training at regular intervals to the employees involved in implementation of the principles laid in the Code.

Principle 2- Institutional Investors should have a clear policy on how they manage conflicts of interest in fulfilling their stewardship responsibilities and publicly disclose it.

  1. The term “conflict of interest” refers to instances where personal or financial considerations may compromise or have the potential to compromise the judgment of professional activities. AGOFS and Investment Manager shall abide by high level principles on avoidance of conflicts of interest while managing investments of the Fund.
  2. AGOFS may be subjected to certain conflicts of interest relating to the partners, employees, and affiliates in the group. A number of examples of potential conflicts of interest are outlined below. However, the examples listed below are not intended to be exhaustive, and other types of conflicts of interest may arise during the course of business:
    a) the interests of AGOFS in conflict with those of an investor;
    b) AGOFS has obtained confidential information relating to an existing or former investor, which could be of value to other investors of AGOFS;
    c) AGOFS procures the services of related entities in which the partners may have controlling interests or majority ownership.
  3. In accordance with the general principles of dealing with Conflict of Interest, AGOFS shall;
    – at all times maintain high standards of integrity in the conduct of their business;
    – ensure fair treatment of their investors and not discriminate amongst them; 
    – make appropriate disclosure to the investors of possible source or potential areas of conflict of interest which would impair their ability to render fair, objective and unbiased services;
    – the transaction is in compliance with the applicable regulations and is at arm’s-length; 
    – not deal in securities while in possession of material unpublished price sensitive information; 
    – the conflict is disclosed to the management before entering into transaction
    – not to communicate the material unpublished price sensitive information while dealing in securities on behalf of others;
    – not in any way contribute to manipulate the demand for or supply of securities in the market or to influence prices of securities; 
    – not have an incentive structure that encourages sale of products not suiting the risk profile of their investors; 
    – not share information received from investors or pertaining to them, obtained as a result of their dealings, for their personal interest. 

Principle 3 – Institutional Investors should monitor their investee companies

  1. AGOFS shall be responsible for monitoring the investee companies’ performance. AGOFS may consider the investee companies’ leadership effectiveness, succession planning, corporate governance, reporting and other parameters they consider important while making investment decisions.
  2. AGOFS may engage with investee companies as part of the research process that leads to an investment in an investee company, which might include meetings with management.
  3. Once an investment is made, AGOFS may continue to monitor each investee company. As a part of this process, the fund manager/ analysts may, where feasible, attend meetings/Conference calls conducted by the management of the investee company.
  4. While dealing with the investee company, AGOFS shall ensure compliance with the SEBI (Prohibition on Insider Trading) Regulations, 2015.

Principle 4 – Institutional Investors should have a clear policy on intervention in their investee companies. Institutional Investors should have a clear policy for collaboration with other institutional investors, where required, to preserve the interests of the ultimate investors, which should be disclosed

AGOFS may intervene on case-by-case basis if it feels that its intervention is required to protect value of its investment and discharging its stewardship responsibility. The circumstances for intervention may, inter alia, include poor financial performance of the company, corporate governance related practices, ESG risks, leadership issues, litigation, Inequitable treatment of shareholders, Poor business strategy, Non-compliance with regulations etc. The procedure which may be undertaken for intervention is as follows:

a) Engagement: Sending letters to individual investee companies, one-to-one meetings with the management team, engagement with specific teams etc. to resolve any concerns including steps to be taken to mitigate such concerns. 
b) Re-Engagement: In the event the management of the investee company fails to undertake constructive steps to resolve the concerns within a reasonable timeframe, AGOFS may take all reasonable steps to re-engage with the management to resolve its concerns.
c) Collaboration: AGOFS may also consider collaboration with other institutional investors, professional associations, regulators, and any other entities it deems necessary for a collective engagement or joint representation with the investee company. 
d) Escalation: In case there is no progress despite the above three steps, AGOFS may engage with the Board of the investee company (through a formal written communication) and elaborate on the concerns. Further, AGOFS may take appropriate steps to resolve the concerns including exiting its investments. 
e) Voting: AGOFS may vote against or abstain from voting in case the governance practices of the investee company are improper. 
f) Legal Recourse: AGOFS may take a legal recourse against a company if deemed necessary instead of exiting its investment.

Principle 5 – Institutional Investors should have a clear policy on voting and disclosure of voting activity

AGOFS may vote on all shareholder resolutions of all investee companies. AGOFS to make informed and independent voting decisions, applying due care, diligence and judgment across their entire portfolio in the interests of its investors.

AGOFS is entitled to exercise the voting rights attached to the shares of the Investee Company (ies). The shareholders do not necessarily need to be physically present at the site of the Investee company’s annual general meeting / extra-ordinary general meeting in order to exercise their right to vote. It is common for shareholders to voice their vote through an E Voting system provided by entities such as NSDL, CSDL, etc. or by appointing a Proxy.

Voting Procedure:

The decision of the AGOFS/ Investor Manager on voting for shareholders resolution(s) shall be executed by casting votes through the e-voting facility or by physically attending the meeting or voting through proxy. However, in case the e-voting facility is not offered by any Investee Company or the Company is not in a position to cast its vote through e-voting, any of the representatives of the Company or an externally authorised agency such as a custodian would be delegated the responsibility for exercising the physical votes.

AGOFS’s general policy is to abstain from voting proxies unless AGOFS believes the proxy voting will materially affect shareholder value and it is being done in the best interest of the Investors. Proxy votes generally will be cast in favour of proposals that maintain or strengthen the interests of Investors, increase shareholder value, maintain or increase shareholder influence over the issuer’s board of directors and management, and maintain or increase the rights of investors.

AGOFS will monitor the potential conflicts of interest with respect to proxy voting as a result of personal relationships, significant investor relationships or special circumstances that may arise during the conduct of AGOFS’s business. If a conflict of interest is identified, AGOFS will act according to the Conflict of Interest principles stated above.

Principle 6 – Institutional Investors should report periodically on their stewardship activities

AGOFS will disclose all the activities undertaken in regard to the stewardship policy and discharging its responsibilities, on its website or any other suitable means as part of disclosure on an annual basis.