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SRD II: Shareholders are empowered

The Shareholders' Rights Directive II (SRD II) was adopted by the European Council in April 2017. It aims to encourage long-term investment by shareholders, enhance transparency between investors and issuers and facilitate the exercise of shareholders' rights.

The scope of the Directive is broad and covers issuers, institutional investors, asset managers and voting advisory agencies in the European Economic Area (European Union, Iceland, Liechtenstein and Norway). It also applies to financial intermediaries, whether in the EU or not, who provide services to shareholders of companies having their registered office in the European Union and whose shares are admitted to trading on a regulated market established or operating in a Member State. The transposition timetable covers 24 months from June 2017. In France, the Loi Pacte, currently being adopted by Parliament, will incorporate most of the provisions of the European directive and its delegated acts.

TWO MAJOR MILESTONES

  • June 2019, for measures relating to transparency in the engagement and voting policy of institutional investors, asset managers and voting advisors. Transparency and control of transactions with related parties will also be affected. Similarly, SRD II submits significant transactions with related parties to transparency measures and shareholder control. These transactions must be published and accompanied, where applicable, by a report assessing the fairness and reasonableness of the transaction.
  • September 2020 for relations between issuers and their shareholders, mainly in the exercise of their rights (general meetings, securities transactions, etc.). The Directive encourages direct communication from issuers to shareholders by improving the transmission of information through the chain of financial intermediaries. To this end, it requires financial intermediaries to provide information on the identity of shareholders to issuers upon request. Issuers will be required to individually convene all shareholders to general meetings, by promoting electronic means of communication.

Finally, the Directive strengthens the “Say on Pay” rule, now based on two shareholder votes: an ex ante vote on the executive remuneration policy and an ex post vote on the remuneration due or granted during the previous financial year.

CACEIS's teams are committed to supporting the implementation of the SRD II directive. They actively participate in the work of the market, bringing together depositary banks, issuers and their agents, central depositories and voting advisory agencies in order to establish European standards that comply with SRD II obligations.