For individual investors, a reviewed European shareholder rights framework (moving from SRDII towards an SRDIII, or best, in part as an SRR regulation) must finally make AGM participation – or related representation – workable and democratic; not a full-time job. It should aim for maximum harmonisation of core AGM procedural rules and set genuine European standards for the corporate governance of listed companies, including common procedures for voting. We are in the view that shareholder engagement should be treated as an enforceable ownership right, not as a costly, failing cross-border intermediary service controlled by the (antiquated processes of) custody chain.
BETTER FINANCE’s priorities are clear: a common shareholder definition anchored in beneficial ownership (and not attached to an intermediary nor custody-tied); direct issuer-shareholder communication as the true standard; harmonised and equal hybrid AGM rules, record dates, deadlines and proof-of-entitlement standards; enforceable end-to-end duties, liability and ESMA oversight; a workable representation framework (i.e. with digital powers of attorney); and no retail charges for voting or exercising their shareholder rights.
Further, digitalisation should become a governance lever for retail investors to receive AGM information automatically, vote through smartphone-ready journeys, and delegate seamlessly to trusted third parties, shareholder organisations or civil society organisations. Issuers should be able to support such representation at scale, instead of paying high costs merely to identify shareholders through the chain.
In fact, direct issuer-shareholder communication should be recognised as a corollary of both shareholders’ rights and issuers’ right to identify and reach their shareholders. Issuers should have access to an EU-reconciled record-date shareholder view through interoperable registrar, CSD and custodian data, including via issuer-appointed AGM agents. The objective is to stop intermediaries acting as gatekeepers of core rights and to foster competition on usability, representation and value-added services.
Hybrid AGMs should be the norm, with live participation rights and post-meeting recordings provided as a transparency tool for sound corporate governance of publicly listed companies. Finally, the review should modernise fundholder stewardship, by introducing common EU rules enabling split voting to enable, in turn, pass-through voting. Additionally, attention should be paid to securities-lending loopholes and other practices: no default lending, effective recall rights, and no voting without an explicit beneficial-owner mandate – to prevent empty voting or capture induced by transparency, liability and rights gaps.
** Read & Downaload the Consultation **