This Policy describes the approach adopted by Midmar Capital LLP as an investment manager in relation to industry legislation and guidance related to engaging with shareholders.

EU Shareholder Rights Directive

The EU Shareholder Rights Directive (‘SRD II’) was implemented in the UK on 10 June 2019 and requires asset owners (institutional investors) and asset managers of securities which are traded on EU regulated markets to make disclosures about their long term investment strategies, their arrangements with each other and their engagement with the companies they invest in. The new rules build on previous legislation and seek to improve transparency by enhancing the flow of information across the institutional investment community, and by promoting common stewardship objectives between institutional investors and asset managers.

As a result of this, also from 10 June 2019, the Financial Conduct Authority (‘FCA’) amended its rules at COBS 2.2 rules to implement SRD II for the asset managers it regulates, with the key rule changes at COBS 2.2B as follows:

· New requirements regarding the public disclosure of their shareholder engagement policies, and periodic public disclosure of the implementation of such policies.
· New requirements regarding the disclosure to asset owners of the manager’s shareholder engagement activities.
· For UK companies with shares admitted on a regulated market, requirements regarding the disclosure and approvals required for related party transactions.

The transparency requirements apply to asset managers, including MIFID investment firms, alternative investment fund managers (AIFMs) (excluding ‘small’ AIFMs), UCITS management companies, self-managed UCITS funds and FCA-regulated insurers.

Whilst this may not cover the full universe of institutional investor, the SRD II requirements should also be considered alongside the Financial Reporting Council’s Stewardship Code as described below.

Therefore in accordance with COBS 2.2B, as a UK MiFID investment firm, where Midmar Capital is providing portfolio management services, (but not where it is acting as a small authorised (subthreshold) alternative investment manager under the AIFMD), it is required by the Financial Conduct Authority (FCA) as the UK regulator to disclose on its website either:

(a) an Engagement Policy describing how it conducts and monitors shareholder engagement on behalf of its investee companies, and an annual update on how this policy has been implemented; or

(b) a clear explanation of why it has chosen not to comply with these requirements.

Midmar Capital acts as an adviser and/or investment manager to a number of clients including predominantly collective investment vehicles. These include private equity investment funds where the investments made are normally either loans based or investments in unlisted securities. When doing so, the Firm normally acts as a manager under the Alternative Investment Fund Managers Directive (‘AIFMD’). However on occasions, it will alternatively provide services under the Markets in Financial Instruments Directive (‘MiFID’). But in either case, it will only act for professional clients as defined by FCA rules at COBS 3.5.

Due to the nature of the firms’ clients, which are predominately private equity funds, and where investments are often made in new business start ups, the firm does not advise on or manage any investments relating to any securities which are trading or listed on EU regulated markets.

Therefore whilst the Firm supports the principles and intended outcomes as described under the SRD II, its specific provisions are not deemed to be appropriate or proportionate to the type of investment strategy, vehicles and activities currently undertaken by the Firm. Should this change in the future, the Firm will review its compliance requirements under SRD II and update any disclosures and procedures appropriately.

UK Stewardship Code

Under FCA rules COBS 2.2A.5 and 2.2.3, the FCA requires investment managers to publicly disclose the extent of their commitment to the UK Stewardship Code (‘the Code’). This is a voluntary code which was originally published by the Financial Reporting Council (‘FRC’) in July 2010 and last updated with effect from 1 January 2020. It aims to enhance the quality of engagement between institutional investors and investee companies to help improve long term returns to shareholders and the efficient exercise of governance responsibilities.

For firms that are committed to the Code, this is applied on a ‘comply or explain’ basis. Compliance with this Code is not mandatory and the FRC recognises that not all parts of the Code will be relevant to all institutional investors.

The FCA requires all regulated firms which manage investments on behalf of professional clients (including collective investment vehicles) to disclose the nature of their commitment to the Code or where they do not commit to the Code, their alternative investment strategy.

The 2020 Code focuses on outcomes for investors and defines stewardship as: “the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society”.

It lists the following activities as coming within the meaning of the above term:

• Analysis before investment.
• Monitoring assets and service providers.
• Engaging issuers and holding them to account on material issues.
• Working with others to influence issuers, and with others to manage market-level risks.
• Publicly reporting on the outcomes of these activities.

The 2020 Code has been restructured so that it follows a similar structure to that of the 2018 UK Corporate Governance Code. It is divided into five main sections covering the core areas of stewardship responsibility: (i) purpose, objectives and governance; (ii) investment approach; (iii) active monitoring; (iv) constructive engagement and clear communication; and (v) exercise rights and responsibilities.

The Code follows an ‘apply or explain’ model setting out twelve principles (compared to the previous Code which contained seven) for asset owners and asset managers and six principles for service providers with both sets of principles being supported by reporting expectations.

A link to the most recent Code is attached here including a description of the 12 principles that apply to asset managers and reflecting the activities listed above.

Midmar Capital acts as an adviser and/or investment manager to a number of clients including predominantly collective investment vehicles. These include private equity investment funds where investments involved are often investing in start up businesses and normally involve either loans based investments or in unlisted securities. The firm does not advise on or manage any investments relating to listed securities.

Where the firm acts as investment manager, if relevant, it determines its approach to stewardship generally on a case by case basis, taking into account the actions that will lead to the most favourable outcome for the value of our clients’ investments. It also follows industry standards for investment management. The Firm also has a written conflicts of interest policy in relation to any conflicts that may arise between the firm and its clients and also when relevant between different clients, and this policy is monitored and reviewed regularly and at least annually.

As detailed above, the Firm manages investments in different asset classes including those where shareholder voting rights do not apply. The firm does not have a fixed policy for proxy voting and would only vote where we believe it is in our underlying investor’s interest to do so.

The Firm supports the aims set out within the Code and where relevant to its activities, a number of its Principles. However its specific provisions are not deemed to be appropriate or proportionate to the type of investment strategy and dealing in investments currently undertaken by the Firm. The Firm invests in a variety of different jurisdictions and therefore does not consider it appropriate to commit further to any particular voluntary code of practice relating to individual jurisdictions at this stage. Should this change in the future, the Firm will review its commitment to the Code at that time and make appropriate further disclosure.

June 2024