Yesterday on Monday the 3rd of April, the European Council adopted the final text of the Shareholders’ Rights Directive (2007/36/EC).
The Action Plan on European Company Law and Corporate Governance adopted at the end of 2012 by the European Commission aimed to tackle long-term shareholder engagement. The text has since been revised with a view to ensuring that shareholders have timely access to the complete information relevant to general meetings and facilitate the exercise of voting rights by proxy, towards the enhancement of long-term financing commitment.
Under the new rules, remuneration policy should contribute to the business strategy, long-term interest and sustainability of the company and should not be linked to short-term objectives.
Companies are able to identify their shareholders and obtain information regarding their identity from any intermediary in the chain that holds the information.
In their turn, intermediaries will have to facilitate the exercise of the rights by the shareholder, including the right to participate and vote in general meetings.
The new directive means a new opportunity for institutional investors and asset managers to be more transparent in their approach to shareholder engagement. Through a comply or explain approach, they will disclose their policy on shareholder engagement and their approach.
Companies will also have to announce publicly material transaction at the time of the conclusion of the transaction at the latest, with all the information needed to assess the fairness of the transaction.
The new directive will be published in the EU’s Official Journal. Member states will have up to two years to incorporate the new provisions into domestic law.