The European Parliament (EU Parliament) has approved amendments to the Shareholders' Rights Directive that would provide shareholders with stronger rights and require improved disclosure by companies and institutional investors. The new rules will apply to listed companies on European Union (EU) regulated markets, regardless of their industrial sector. The total capitalisation of the affected companies is approximately €8tn.
The most significant changes to the Shareholders’ Rights Directive include:
- Say on pay: shareholders will have the right to vote on remuneration policy for company directors
- Facilitation of cross-border voting: intermediaries between shareholders and companies will be required to advise shareholders or companies of information received from each to the other so that shareholders living in another EU nation can participate in companies’ general meetings
- Transparency: institutional investors and asset managers will be required to disclose a policy describing how they integrate shareholder engagement in their investment strategies or provide reasons for not having such a policy. Proxy advisors will be required to disclose key information
- Related party transactions: company disclosure and submission for approval to shareholders of material related party transactions.
After formal approval from the European Council of Ministers, the directive will enter into force two years after its publication in the official journal.
The press release from the EU Parliament on this matter is available on this link.
A Fact Sheet from the Commission’s is available on this link.
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