The Association of Investment Companies (AIC) has welcomed the publication of the Financial Reporting Council’s Stewardship Code giving greater powers to governance agencies to act on behalf of investors.

The investment trust trade body said the code meant governance agencies would play a more significant role  in improving the role of engagement between investment trusts and investors.

Ian Sayers, director general of the AIC, said the code was an “important step” in rebalancing obligations between investors and companies.

He said: “Effective engagement should increase the understanding between companies and shareholders and ultimately help secure better long-term returns.

“This will only be possible where both boards and investors are prepared to enter into a constructive dialogue.”

Sayers said agencies would play an important part in deciding whether a company had made a reasoned judgement when departing from accepted practice.

He added: “Today’s developments should make a ‘tick-box’ approach to governance a thing of the past.  I hope agencies will be prepared to play their proper part in achieving this.”