Articles

Proposal to amend the Shareholder Rights Directive

Proposal to amend the Shareholder Rights Directive

Proposal to amend the Shareholder Rights Directive

08.07.2014 NL law

On 9 April 2014, the European Commission (‘EC’) published a proposal (COM 2014/213) to amend the Shareholder Rights Directive (2007/36/EU).

On 9 April 2014, the European Commission (‘EC’) published a proposal (COM 2014/213) to amend the Shareholder Rights Directive (2007/36/EU). With this proposal, the EC aims to enhance effective and long-term shareholder engagement within listed companies. Furthermore, it is envisaged that listed companies will benefit from identifiable shareholders that are engaged and use their voting rights in a well-informed manner. 

The key elements of the proposal are:

  • Identification of shareholders, transmission of information with shareholders, and facilitation of the exercise of shareholder rights

Intermediaries will be required to offer listed companies the option to identify their shareholders. Furthermore, listed companies will be required to provide intermediaries with standardized information aimed at the shareholders in a timely manner. Also, the listed companies will be required to confirm the votes cast in general meetings by or on behalf of shareholders.

  • Transparency and shareholder engagement of institutional investors

Through the use of several transparency requirements, institutional investors and asset managers will be encouraged to exercise an equity investment strategy aligned with the medium to long-term performance of their assets. They will need to comply with a number of requirements such as preparing and disclosing a shareholder engagement policy. This engagement policy should relate to the exercise of supervisory and voting rights, the conduct of a dialogue with the company, the use of proxy advisors, and how to manage actual or potential conflicts of interest.

  • Improving reliability, transparency and quality of proxy advisors’ recommendations

The preparation and quality of the voting recommendations of proxy advisors will be audited. Proxy advisors will be required to publicly disclose certain key information related to the preparation of their voting recommendations on an annual basis, specifying whether and how they engaged in a dialogue with the company in preparing the recommendation.

  • Influence of the general meeting on the remuneration policy for managing directors

The general meeting will be authorised to vote on the remuneration policy for the managing directors. This already exists in the Netherlands. A new element is that the remuneration policy should be submitted to the general meeting for approval every three years. Listed companies must prepare a remuneration report with an overview of the remuneration awarded to each individual managing director. The general meeting is authorised to vote on the report annually. The Dutch government has already indicated that it supports the increase of the general meeting’s influence on the remuneration policy for managing directors, but noted that it does not consider it appropriate for the general meeting to also vote on the execution of the remuneration policy.

  • Improving transparency and influence of shareholders on related party transactions

Shareholder approval will be required for significant transactions with related parties. Significant transactions are those that either represent more than 5% of a company’s assets or potentially have a significant impact on a company’s turnover or profits. All related party transactions with a value of more than 1% of the company’s assets, must be disclosed at the time the transaction concludes. Such disclosure must be accompanied by a statement from an independent expert (the ‘fairness opinion’) providing insight into the conditions of the transaction. At present, the Dutch government considers – without further explanation – the proposals disproportionate given that it is not certain whether related party transactions pose a problem.

For more information we refer to our Corporate Update of 8 May 2014.

 

Team

Related news

03.10.2019 NL law
The ACM has to pay: moral damages awarded to real estate traders

Short Reads - The Dutch Authority for Consumers and Markets (ACM) needs to cough up a total of EUR 120,000 in moral damages to three real estate traders. The Dutch Trade and Industry Appeal Tribunal (CBb) agreed with the real estate traders that the annulment of the ACM's cartel decisions against them was insufficient compensation for the harm they suffered as a result of the length of the procedure and the press coverage of their cases.

Read more

03.10.2019 NL law
Margrethe Vestager to play matchmaker between enforcement and regulation

Short Reads - Current Competition Commissioner Margrethe Vestager may face even greater challenges in the next European Commission. President-elect Ursula von der Leyen has not only nominated Vestager for a second term as Commissioner for Competition, but has also asked her to coordinate the European Commission's digital agenda. As a result, Vestager may soon be tackling digital issues through competition enforcement whilst also proposing additional regulation to deal with these (and related) issues pre-emptively.

Read more

03.10.2019 NL law
It's in the details: HSBC fine quashed for insufficient reasoning

Short Reads - The General Court annulled the EUR 33.6 million fine imposed on banking group HSBC for its participation in the euro interest rates derivatives cartel. Full annulment was granted based on the Commission's failure to provide sufficiently detailed reasoning for the first step of the fine calculation, establishing the value of sales. As the value of sales could not be established in a straightforward way, the Commission used a proxy. When doing so, the Commission needs to properly explain its reasoning to allow the companies fined to understand how it arrived at the proxy. 

Read more

03.10.2019 NL law
The postman will no longer ring twice: Minister unblocks postal merger

Short Reads - The Dutch Authority for Consumers and Markets (ACM) recently blocked postal operator PostNL's acquisition of its only national competitor, Sandd, because this would create "a monopolist on the postal delivery market". However, the Dutch Minister of Economic Affairs and Climate Policy has overruled the ACM's decision on grounds of public interest. Invoking industrial policy or public interest reasons for merger clearance seems to be catching on.

Read more

Our website uses functional cookies for the functioning of the website and analytic cookies that enable us to generate aggregated visitor data. We also use other cookies, such as third party tracking cookies - please indicate whether you agree to the use of these other cookies:

Privacy – en cookieverklaring