Felix Capital Partners LLP (“Felix or the “Firm”)

OCTOBER 2024

Under COBS 2.2.3 of the FCA Handbook, Felix is required to make a public disclosure in relation to the nature of its commitment to the Financial Reporting Council’s (“FRC”) Stewardship Code (the “Code”). Adherence to the Code is voluntary. 

The Code aims to enhance the quality of engagement between asset managers and companies to help improve long-term risk-adjusted returns to shareholders and promote the efficient exercise of governance responsibilities. It also sets out a number of areas of good practice on engagement with investee companies to which the FRC believes institutional investors should aspire. The Code is directed in the first instance to institutional investors by which is meant asset owners and asset managers with equity holdings in UK listed companies. 

UK FINANCIAL REPORTING COUNCIL’S STEWARDSHIP CODE 

FCA COBS Rule 2.2.3R requires FCA authorised firms to disclose the nature of their commitment to the FRC’s Stewardship Code (the “Code”) or, where it does not commit to the Code, its alternative investment strategy. Felix pursues a venture capital investment strategy, and the British Private Equity and Venture Capital Association (‘BVCA’) published a response in March 2019 to the FRC’s proposed revision to the Code in the context of private equity and venture capital firms. The BVCA stated that, in its view, the Stewardship Code is less applicable to private and equity and venture capital firms, hence there would be limited benefit for such firms in adopting it. Furthermore, it would result in duplicate reporting requirements given the existence of other, similar, codes across the private equity and venture capital industry. 

The Firm supports the BVCA’s view and has therefore chosen not to commit to the Code. It should be noted however, that the Firm is a signatory of the Principles for Responsible Investment (“PRI”) which are fully embedded within its ESG Policy and underlying investment processes. Compliance with the PRI Principles forms a key basis for engagement with the Firm’s investors, investee companies and other stakeholders.

Shareholder Rights Directive II (SRD II) Disclosure

Under obligations arising from the revised Shareholder Rights Directive (EU 2017/828) (“SRD II”), a firm which trades shares on regulated and comparable markets, is required to either develop and publicly disclose an engagement policy as prescribed in COBS 2.2B.6R of the Financial Conduct Authority “FCA” Handbook, or disclose a clear and reasoned explanation of why it has chosen not to do so.

Felix does not comply with the requirements of the Shareholder Rights Directive (“SRD II”).

This is because the Firm invests predominantly in unlisted equity and similar private securities as part of an illiquid venture capital strategy. Any investments in shares traded on an EEA regulated market or a comparable non-EEA market accounts for a very small proportion of the Firm’s business activities and any investment in shares traded on an EEA regulated market or a comparable non-EEA market is incidental to the alternative investing activities of the Firm (for example, the Firm’s clients may hold a residual amount of listed securities following an exit of a portfolio company via a listing of that portfolio company on an EEA regulated market or comparable non-EEA market). 

On that basis, whilst the Firm generally supports the objectives of SRD II, it has decided not to adopt a separate engagement policy under SRD II as it does not consider it appropriate given its investment strategy.