In Short: Informal Agreement Reached on Revised Shareholder Rights Directive
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A proposal to revise the existing
Shareholder Rights Directive (2007/36/EC)
has been agreed at EU level. The 2007 Directive sought to improve corporate
governance in companies traded on an EU regulated market by ensuring that
shareholders could exercise their voting rights and rights to information
across borders.
The revisions to the
Directive were proposed to tackle
perceived corporate governance shortcomings in listed companies in the EU and
to further encourage transparency and shareholder activism.
Key aspects of the
revised Directive include:
- The introduction of a "say on pay" and the
requirement to publicly disclose the remuneration policy of the
directors
- Measures to assist companies in identifying
their shareholders
- New obligations on intermediaries (i.e.
firms that provide services of safekeeping of shares,
administration of shares or maintenance of securities accounts) to facilitate the exercise of rights by
shareholders
- Transparency requirements for institutional
investors, asset managers and proxy advisors
- A requirement for
material related party transactions to be approved by the shareholders and be
announced publicly
The new Directive
will shortly be formally adopted by the European Parliament and Council. It
will then be published in the Official Journal of the European Union, after
which Member States will have two years to transpose the provisions into
domestic law.
Contributed by Aoife
Kavanagh
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