Following years of drafting the revision of the Shareholder Rights Directive (SRD II) by the European Commission (EC), the EU presidency and the EU Parliament (EP) finally agreed on the final version of the new SRD on 9 December 2016. Whereas BETTER FINANCE welcomed the overhaul of the new SRD, it unfortunately had to note that this final version only provides limited improvements in shareholders rights.
Important barriers to cross-border shareholder engagement within the EU virtually remain in place, since intermediaries will by and large still be able to charge higher fees to shareholders wanting to exercise their cross-border voting rights (admittedly subject to certain conditions) and beneficial owners of shares in nominee and omnibus accounts will still not have any voting rights (with the exception of very large shareholders), to name but two of the remaining issues.
Now - with the revision of SRD moving into the final stretch - is the last chance to limit the damage. With the implementation deadline of June 2019 looming, the EC put together an expert group - of which BETTER FINANCE expects to be part - to produce the technical standards, due to be published in September 2018 to guide national regulators in the implementation of the directive. This process will be crucial in ensuring that the rights of EU citizens as individual shareholders are at least somewhat taken into account.
To this end BETTER FINANCE insists that the implementing acts must ensure:
- that new information technologies are taken into account vis-à-vis provisions for the setting of deadlines, allowing to impose a same-day processing obligation for intermediaries in order for shareholders to have sufficient time to decide on their vote;
- in particular, that the last intermediary in the chain can simply issue a confirmation of entitlement before the “record date”, that the shareholder may then simply email to his issuer;
- a swift communication flow between issuer and beneficial owner (the one who owns the shares and gets the dividends as opposed to the nominee shareholder) without delays through the chain of intermediaries.
More information:
• Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement
• Lexology: EU Directive 2017/828 - cornerstone of increased shareholder engagement?
• BETTER FINANCE Press Release (14/12/16): Presidency and Parliament agree on review of Shareholders Rights Directive: limited improvements for shareholders