In this paper the author examines the approach of institutional shareholders to Corporate Governance in the United Kingdom, in particular the issue of preventive governance according to the Combined Code of United Kingdom. Corporate Governance has been developed to solve the agency dilemma that exists in modern corporations. Plenty of legislation has been issued around the world to prevent the scandals of the past; however business needs flexible principles for reasons of efficiency. An important role is played by institutional shareholders. The main thesis of this paper is that preventive governance is the best way to solve the agency dilemma and institutional shareholders have learned the importance of it.