This Policy describes the approach adopted by Euronova Asset Management UK LLP ('Euronova' or 'the firm') as a regulated investment manager in relation to industry legislation and guidance related to engaging with shareholders. This Policy will be reviewed on a regular basis and at least annually.

Euronova is an independent Investment Manager which currently has two clients. It provides investment management services to two collective investment scheme funds as follows:

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:

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 Euronova 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.

Euronova's Position under the SRD II

As Euronova is acting as AIFM to the ESCF, these activities are out of scope of the SRD II disclosure requirements.

With regard to its activities for the VEMSCF, these activities are within the scope of SRD II.

Euronova is committed to integrating Environmental, Social and Governance factors ("ESG") into the investment processfor the VEMSCF. We believe an effective identification of material ESG risks (and opportunities) requires thorough analysis and continuous monitoring. We exercise voting rights at the annual meetings of companies whose shares we hold in the VEMSCF and engage in active dialogue with them. To be able to do this efficiently, we work with Institutional Shareholder Services, Inc. ("ISS", a leading service provider in the field of voting rights) which has been engaged by Vontobel to provide research services.

Euronova will vote in respect of the stock, typically by proxy, in a manner which it reasonably believes to be in the best interest of the client and in line with any specific legal or regulatory requirements in different jurisdictions or markets that may apply. ISS provide us with their recommendation on how they intend to vote. If the portfolio managers disagree, which may occasionally happen if the standard recommendation does not match the portfolio managers’ in-depth knowledge of a company and its management, the portfolio manager can change the vote by contacting the Vontobel ESG team. The portfolio manager notifies their final proposal to vote in writing and by providing justification for any choices that deviate from those recommended by the engaged proxy-voting service provider. Portfolio managers will usually engage with companies before casting votes against management.

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:

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.

Euronova's Position under the Stewardship Code


With regard to the Stewardship Code, the investment objective of the ESCF is to achieve capital growth by investing in smaller capitalisation European companies. Euronova draws upon the extensive experience of its investment team to build a portfolio of fundamental positions, both long and short. The dedicated stock picking is based on knowledge and information obtained by means of extensive company contact and in depth fundamental analysis. We seek to generate Alpha for the ESCF from long and short positions, whilst using index futures to reduce both long and short net exposure, when appropriate.

The ESCF invests in a number of different asset classes, including in Contracts for Differences (CFD's) where voting rights do not apply.

Otherwise we do not have a fixed policy for proxy voting for the ESCF and would only vote where we believe it is in our underlying investor's interest to do so. The ESCF has often voted by proxy via its Custodian, but would not normally vote on a collective basis with other investors


The investment objective of the VEMSCF is to achieve capital growth by investing in smaller capitalisation European companies. Euronova draws upon the extensive experience of its investment team to build a portfolio of investments, all long. By applying active bottom-up stock-picking in smaller, high quality growing companies the managers aim to identify clear investment opportunities, with high returns on capital employed (ROCE) strong cash flow generation that are under-valued & under-researched.

VEMSCF invests primarily in equities.

Euronova is required under its management contract to follow the proxy voting policy of Vontobel Asset Management, and as such does not have its own proxy voting policy.

Therefore Euronova determines its approach to stewardship on a case by case and client by client basis, taking into account the actions that will lead to the most favourable outcome for the value of our client(s) investments.

We have a robust 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. We monitor investee companies on a regular basis and carry out appropriate due diligence prior to investing. This will normally include meeting the management of the company prior to investment. It may also include discussing the investee company with other investment analysts. Records are kept of any such due diligence including findings on the detailed research carried out on each investee company.

Therefore, although Euronova supports the aims set out within the Code and certain of its Principles and also supports good corporate governance of investee companies, specific provisions of the Code are not deemed to be proportionate to the type of investment strategy and trading currently undertaken on behalf of its clients. We arrange for investments in a variety of different jurisdictions and therefore we do 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, we will review our commitment to the Code at that time and make appropriate further disclosure.