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Review of the Shareholders Rights Directive

Following its consultation on company law and the Green Paper on Corporate Governance in Listed Companies, the European Commission (EC) published its Action Plan: European company law and corporate governance in December 2012.

The plan includes initiatives aimed at enhancing transparency between companies and investors, encouraging long-term shareholder engagement and improving the framework for cross-border operation of companies.

The most comprehensive legislative proposal is expected to be the review of the Shareholders’ Rights Directive – these proposals are likely to be published in Q3 /Q4 2013.

Main areas

The main areas that are likely to be addressed in review of the Shareholders’ Rights Directive include:

  • proposals on disclosure of voting records by institutional investors
  • requirements to enhance transparency on remuneration policies and individual remuneration of directors (including shareholders’ right to vote on the remuneration policy and remuneration report)
  • provisions on the control over related party transactions,
  • possibly, a review of the one share one vote system
  • possibly, provisions on proxy advisors 

Recent work on the review of the Shareholders’ Rights Directive

The ABI remains in close contact with the EC ahead of the publication of the review proposals. Most recently, the ABI met the Head of Unit in charge of the file and Michel Barnier’s Cabinet.

The main messages delivered by ABI included:

  • The review of the Shareholders Rights Directive must take the form of a minimum harmonisation directive
  • The one share-one vote system must be maintained
  • Any provisions on disclosure of voting records by institutional investors should not be over-prescriptive, and remain voluntary
  • Binding votes should be restricted to (prospective) votes on remuneration policy. Binding shareholder votes on individuals’ actual remuneration awarded under an approved policy was not sensible or workable
  • Any provisions on enhanced dividends must be very carefully considered as they could distort the market (for instance, share prices)
  • Comply or explain is the best regulatory framework.

Prior to this, on the day of the publication of the Action Plan, the EC’s Head of Unit in charge of the Action Plan spoke at the ABI Investment Conference, outlining the key themes of the action plan. Before the publication of the Action Plan, the ABI submitted responses to the EC consultations on the reform of corporate governance and company law, and met the European Commission, various MEPs, BIS, FSA and HMT to discuss the papers and the reform agenda.

Here are some useful links related to the review of the Shareholders’ Rights Directive:


Last updated 01/07/2016