Shareholder Rights Directive
Updated: June 2015
In the EU trialogue, the European Parliament should increase the practicality and feasibility of the proposed directive. There is need for modification of Article 3a and 3b in a way that complies with practical needs, such as CSD involvement, longer storing periods for data on shareholders, and easier information transmission. Art. 3d should allow intermediaries to charge fees for their service. At least, the term "cost" in the European Parliament proposal should be replaced by "price." Regarding Article 9a, provisions must allow Member States to create a legal framework that complies with existing national legislation and is in line with national needs.
Specifics on ESBG Position
Identification of shareholders (Art. 3a): ESBG supports the Council's position that Member States may establish that companies having a registered office on their territory can only request identification with respect to shareholders holding more than 0.5% of shares or voting rights. For practical reasons and to protect privacy, at least for minority shareholders, such a threshold should to be added to the regulation. This is also much more feasible in view of rapidly changing share portfolios. Furthermore, following the Parliament's suggestion Member States should be able to assign the collection of data to central securities depository (CSD) to ensure a centralised data collection process. For reasons of practicality, longer storing periods for companies regarding information on shareholder identity should be included as foreseen in the proposals of Council and Parliament.
Transmission of information (Art. 3b): Direct transmission of information from an intermediary to a company as included in the Council and Parliament proposal should be added to the directive to make the transmission process more efficient.
Transparency on costs (Art. 3d): The Commission's clarification that intermediaries are allowed to charge non-discriminatory and proportionate charges for their service has been replaced in the proposal of Parliament and Council, by a provision that leaves the decision of whether companies can charge costs/fees to Members States. ESBG thinks that intermediaries should be allowed to charge reasonable fees for their services as those services can be significant and are carried out on behalf of third parties.
Right to vote on the remuneration policy (Art. 9a): Member States should be able to provide that the general meeting's vote on the remuneration policy is advisory (and not binding). Therefore, ESBG supports the Council's position regarding the remuneration policy, which allows Member States to take into account national differences such as the key role of the supervisory board in dualistic systems.
Transparency and approval of related party transactions (Art. 9c): The scope of the regulation should be limited as it has been taken into account in the Council and Parliament proposal. Transactions entered into in the ordinary course of business and concluded on normal market terms should be out of scope to not hinder small-scale transactions.
In April 2014, the European Commission presented a proposal for the revision of the Shareholder Rights Directive, which was transposed into Member States’ law in 2009. The background for the revision of this directive is that the crisis has shown the risk of shareholders supporting managers’ excessive short-term risk-taking and not monitoring closely the companies they invest in. With this proposal the Commission now wants to tackle corporate governance shortcomings relating to listed companies and their boards, shareholders (institutional investors and asset managers), intermediaries, and proxy advisors (that is, firms providing services, such as voting advice, to shareholders).