When shareholder engagement is not treated as an enforceable ownership right, citizens are effectively denied a channel to shape the social and economic impact of listed companies, thus undermining shareholder democracy. Reclaiming this right means enabling investors to steer corporate conduct and hold management to account through meaningful AGM participation. Yet engagement is still too often relegated to a professionalised and failing service that is fragmented, slow, and ineffective.
Across the EU, however, retail investors who attempt to vote, ask questions, or be represented still face procedural complexity, missing AGM information, data losses along the intermediary chain, and fees that effectively price engagement out of reach, especially in cross-border situations. The European Commission’s 2024 study on the application of SRD I and SRD II provides a strong stock-take of these barriers and frames potential reforms around five intervention areas: (1) general meeting rights, (2) shareholder identification, (3) transmission of information, (4) costs and fees, and (5) proxy advisors.
This is not a “fine-tuning” issue. Engagement remains costly, fragmented and labour-intensive—making voting a quasi-full-time job for individual investors, despite SRD II’s aim to enable straightforward, efficiently intermediated participation. Cross-border participation exposes these weakest links most starkly: despite SRD II, around half of retail investors report being unable to vote cross-border, and those who try are often confronted with missing services, opaque “voting packages”, and deterrent charges. BETTER FINANCE evidence cited in the Commission study shows fees ranging from EUR 20 to EUR 250, with 64% of surveyed investors reporting cross-border charges imposed by the last intermediary – often the only point of contact a retail investor must reach the issuer and exercise rights.
While the Commission study diagnoses the problem well, its measures remain largely procedural and incremental. From the retail investor perspective, the persistent gap between legal rights and market reality is driven by structural features: excessive intermediation, diffuse liability, weak enforcement, and the absence of a harmonised concept of beneficial ownership that would operationally anchor who may exercise rights – and, critically, how those rights are transmitted, confirmed, and made usable. The Commission study itself recognises that SRD benefits have accrued more to professional investors than to retail investors and identifies priorities that implicitly point toward a stronger reform logic, including more harmonised rules and more reliable, digitalised end-to-end processes.
Here, we substantiate and prioritises the policy options set out in the European Commission commissioned study across the five intervention areas, selecting those most capable of delivering measurable improvements for individual EU cross-border investors. Second, we argue that these options will not fully deliver without a framework enabler: a shareholder engagement architecture that breaks down regulatory silos and is future-proofed for digital voting. In practice, retail investors mostly interact with the last intermediary in the chain; reform must therefore impose clear service expectations and accountability on that interface; enabling voting, confirmation, and workable delegation (streamlined powers of attorney), and/or ensuring that stewardship mechanisms can reflect end-investor preferences rather than treating proxy voting as sufficient.
In short: procedural fixes are necessary, but they must be designed around the beneficial owner and backed by enforceable digital infrastructure to ensure how shareholder engagement can effectively work in practice. A digital shareholder-engagement backbone, alongside stronger stewardship linkages (including in the sustainability context), is decisive for the credibility and uptake of a modern EU shareholder democracy, that is, one that can foster the social link of investing.
As a priority, any SRD reform should seize the opportunity to strengthen a more harmonised EU framework for listed companies by codifying an enforceable AGM baseline. It should make shareholder rights usable by default by anchoring identification in the beneficial owner (through a tightly drafted SRD-purpose functional definition or an EU-wide one) and by treating AGM participation as a rights-enabling post-trade function, so core voting and information flows cannot be obstructed, bundled, or monetised as “packages”. In practice, concentrated meeting “plumbing” and gatekeeper arrangements in the chain have undermined retail participation and cross-border equality.
Retail investors should receive AGM information automatically, vote through smartphone-ready journeys or delegate seamlessly (including reusable e-PoA to trusted third parties such as independent investor organisations and, where feasible, pass-through mechanisms), and obtain end-to-end confirmation that votes were transmitted, recorded and counted – without cross-border discrimination. At the same time, issuers should have a right to identify and reach shareholders via a standardised, reconciled record-date shareholder view and issuer-appointed agents, within an interoperable ecosystem that supervisors can audit and enforce; so intermediaries compete on usability and value-added features, not on access to core rights.
Key Takeaways
SRD II remains a minimal harmonisation; this is no longer sufficient.
To make shareholder engagement a reality within the EU, the SRD review should tackle core corporate-law mechanics, starting with AGM rules for listed companies (proceedings, formats, notice periods, record date, deadlines and publication of results) that ensure equality and increase participation; including via an hybrid AGM normative framework.
Treat shareholder engagement as an enforceable ownership right – not a professionalised, too often failing/costly service: The engagement “pipeline” (convocation → information → voting → confirmation) should not depend on discretionary intermediary processes or paid “packages”. Any revision should end monetisation of core SRD functions (making a right, not a service), with anti-circumvention rules so “transparency” does not legitimise pay-to-vote outcomes.
Digitalisation should be a governance lever, not a compliance add-on: Reform should standardise usable digital AGM workflows for issuers and at the last intermediary for investors (including smartphone-ready voting), ensure end-to-end confirmations, and facilitate digital delegation (reusable e-PoA). Digital tools should also open the ecosystem to competition (registrars/AGM agents), rather than deepen entrenched capturing of voting process by financial intermediaries.
Make beneficial ownership the operational anchor of SRD. Identification and information flows should be designed to reach the ultimate investor (beneficial owner), not merely the registered/nominee holder. The reform should (i) define “shareholder” functionally for SRD purposes, (ii) allocate clear duties and liability for failures (lost votes, delayed/altered messages) across custodians and CSD layers, and (iii) place enforceable responsibility at the last intermediary (bank/broker), which controls the end-user relationship. This also implies addressing nominee/street-name frictions and the opacity created by omnibus accounts.
Streamlined voting is an SRD duty: A credible reform must ensure more direct issuer – shareholder connectivity, including an issuer-accessible reconciled record-date shareholder view (under EU standards, open to competition via issuer-appointed agents), so cross-border voting becomes reliable, scalable, delegable and non-discriminatory.
Beyond Chapter 1a: fix representation and stewardship.
The study under-covers SRD II Chapter 1b: for many citizens, ownership is mediated through funds, so reform must articulate stewardship as a usable representation channel, including pass-through / split voting where feasible, and clearer links to sustainability preference claims (including interaction with SFDR narratives).
Close loopholes from market practices that distort “who votes”.
SRD should not leave key safeguards to voluntary practice. It should address securities lending and title-transfer frictions (recall-to-vote usability, confirmations, and duties for asset managers) to curb empty voting and ensure retail vote intent is not diluted. Custodians should not effectively act on behalf of end investors by default; last intermediaries (banks/brokers) should keep investors informed and enable voting/representation.