A new British code of practice aimed at getting big investors to challenge companies more effectively on governance issues has achieved “critical mass”, according to the head of the regulator that produced it.

But Baroness Hogg, chair of the Financial Reporting Council, said getting investors to sign up to its Stewardship Code was just a “first step”, albeit an important one.

Hogg said she wanted to see evidence that the shareholders that had signed up to the Code were making better links between their views on governance and their investment decisions. “Actions will speak louder than words,” she said.

Hogg added: “The continuing success of the Code will depend on how effectively investors deliver on their commitment to adopt it. The FRC will be monitoring the degree to which today’s public statements of support are implemented in practice”.

A total of 68 institutional investors have said they will implement the Code, which the FRC launched in July.

The Code is meant to reduce governance "box-ticking" and produce more active discussions between company boards and investors on the quality of governance and long-term company performance.

It sets out a series of principles investors should follow. They cover issues such as how investors should challenge companies and how they should work with other shareholders if they have concerns.

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