On April 9 the European Commission unveiled its proposals for the review of the Shareholders Rights Directive in order to adopt measures to improve the corporate governance of around 10 000 companies listed on Europe’s stock exchanges. Internal Market and Services Commissioner Michel Barnier said that the last few years had shown “how short-termism damages European companies and the economy”.
A different approach to corporate governance could go a long way in addressing this issue. The Commissioner said he believes the proposals would “encourage shareholders to engage more with the companies they invest in, and to take a longer-term perspective of their investment”. To that end, shareholders need to have the right to exercise proper control over management, including a binding "say on pay".
The proposal to revise the existing Shareholder Rights Directive address corporate governance shortcomings relating to listed companies and their boards, shareholders (institutional investors and asset managers), intermediaries and proxy advisors (i.e. firms providing services to shareholders, notably voting advice). According to the European Commission, it is aimed at making it easier for shareholders to use their existing rights and enhancing them where necessary, thereby ensuring shareholders engagement and allowing them to better hold the management of the company to account and act in the long-term interests of the company.
BETTER FINANCE generally strongly supports the Commission’s proposals for amendments to the Shareholders Rights Directive regarding long-term Shareholder engagement. However, it can still be improved upon and in this light BETTER FINANCE presented its related requests.
Read the BETTER FINANCE press release here.