UK institutional investors issued new guidelines have to strengthen shareholder activism, stepping up the pressure on under-fire company boards.
The Institutional Shareholders Committee, whose members collectively hold more than £1.5 trillion in assets, wants investors to combine forces to drive change on major corporate governance issues.
The guidelines are designed to feed into the current Walker Review of corporate governance in banks and into the Financial Reporting Council's review of the Combined Code on corporate governance.
Institutional investors have come under fire from regulators and politicians for failing to demand greater accountability from companies, especially banks, in the aftermath of the financial crisis.
"Shareholders have got to be more purposeful. They should demonstrate their intent by approaching boards collectively and if that fails, by voting against appropriate resolutions at general meetings or even by laying down motions of their own," Daniel Godfrey, director general at the Association of Investment Companies said.
The AIC is a member of the ISC, along with the Association of British Insurers, the National Association of Pension Funds and the Investment Management Association.
The ISC's new proposals could see company chairmen face annual votes for re-election if support for key committee chairmen dropped below 75 per cent.
"This will make boards more accountable. If company chairmen are under pressure to resolve issues between boards and shareholders, that means we cannot be in situations where we sometimes have been where boards just refuse to listen," said Peter Montagnon, director of investment affairs at the ABI.
The ISC also urged regulators to clarify rules on acting in concert and the treatment of inside information to enable that to happen.
"It is important that there are no regulatory impediments, real or imagined, to the development of collective dialogue," it said in a statement.
"Uncertainty about the rules on acting in concert can be a deterrent to such initiatives."
The ISC also suggested improvements to the Combined Code, calling on greater emphasis on the planning for executive succession.
In a bid to secure greater discipline among members, the ISC said its statement of principles on shareholders' responsibilities will be re-designated as a more formal code.
Investors will be able to sign up to this and report publicly on how they apply it. The ISC will also publish a list of signatories.