(STRASBOURG) – The European Parliament gave its green light Tuesday to a revised EU shareholders’ rights directive, giving shareholders a say on directors’ pay and making it easier for firms to identify their shareholders.
The new tools for shareholders are intended to sharpen the focus of big EU firms on their long-term performance, by fostering their shareholders’ commitment to it.
The agreement is “very positive,” said Parliament’s rapporteur Sergio Gaetano Cofferati MEP: “The measures agreed upon will help to steer investments towards a more long-term oriented approach and will ensure more transparency for listed companies and investors.”
The agreement, informally agreed by Parliament and Council negotiators in December 2016, will empower shareholders to vote on remuneration policy for company directors, thus enabling them to tie it more closely to the company’s performance and long-term interests.
They will also enable companies to identify their shareholders more easily and thus facilitate dialogue with them, as well as making it easier for shareholders to exercise their rights, including the right to participate and vote in general meetings.
In addition, certain potentially prejudicial transactions will have to be publicly disclosed and approved through procedures guaranteeing the protection of the interests of companies and their shareholders.
The rules also introduce new transparency requirements for institutional investors, such as pension funds and life insurance companies, and asset managers, who are often important shareholders of listed companies in the EU. Institutional investors and asset managers will be required to publicly disclose a policy describing how they integrate shareholder engagement in their investment strategies or explain why they have chosen not to do so.
Proxy advisors who provide research and recommendations on how to vote in general meetings to their clients, will have to disclose key information, e.g. the main information sources and methodologies applied, relating to the advice they provide.
Following pressure from the Parliament, the Commission also proposed a specific new legislative proposal on public country-by-country reporting by multinationals on tax matters.
The draft law now needs to be formally approved by the EU Council of Ministers, after which EU Member States will have 24 months from the date of entry into force of the directive to bring the new rules into force.
Revised shareholders' rights directive - background guide
Further information, European Parliament
Adopted text (2014/0121(COD)) will soon be available here (14.03.2017)