Shareholders' Rights Directive
- Strengthening shareholder participation rights and increasing transparency between companies and investors
What is the goal of the Shareholders Rights Directive?
The obligation of a resolution in the AGM on the remuneration policy of the Management Board and Supervisory Board to be published, the annual compensation report as well as the significant Related Party Transactions (RPTs) will increase shareholders' participation rights.
If the shareholder participates only indirectly via an institutional investor (insurance or pension scheme) or an investment management company, they will in future be required to publish information on their investment strategies and their participation policy. If these companies or shareholders transfer their voting rights to a voting manager, they are obliged to submit to a code of conduct based on the principle of "comply or explain" and to grant greater transparency in methodology and working methods.
- Different regulations at EU level
- Issuers do not know their shareholders
- Insufficient communication between issuers and shareholders
- Low exposure of institutional investors
- Strong influence of proxy advisors with simultaneous lack of transparency
- EU listed companies
- Institutional investors and asset managers
- Voting advisor
Strategic challenges for depositaries
Closely linked with this is the analysis of whether this is possible with the existing system landscape or whether technologically new communication channels (internal and external) must be created. Of critical importance is the time factor or the processing speed of the information regarding the adherence to very tight information periods in the communication with the shareholder. For this reason, digitization of communication with the issuer, the shareholders, the institutional investors, the capital collection agencies and the voting authorities is required in parallel.
Finally, the extension of implementation at EU level requires an analysis of the extent to which the impact on the communication channels in intra-European countries is affected. It is to be expected that, analogous to the Implementing Regulation (EU) 2018/1212, the essential aspects will be gradually concretised in the coming years and provided with timelines for implementation.
Important content and timelines of the EU Implementing Regulation 2018/1212 on the Shareholders Rights Directive for intermediaries
Identification of shareholders
- In order to enable direct communication between the issuer and the shareholder, it is necessary that the issuers know their shareholders.
- Therefore, all companies located in the EU will have the right to request information about their shareholders from intermediaries.
Transmission of information
- Intermediaries are obliged to comply with the issuer's identification requests in a timely and standardized manner or to forward them to subsequent intermediaries in a timely manner.
- Intermediaries must ensure that all further information from companies is forwarded in good time to the shareholder.
Exercise of shareholder rights
- Intermediaries must take precautions so that shareholders themselves can exercise their rights or a designated third party.
- At the request of the shareholder, a response must be given to the shareholder that his vote has been effectively recorded and counted by the company.
Operational challenges of the implementing regulation
Why NEXGEN Business Consultants?
Analysis and inventory
Based on years of experience in the implementation of regulatory requirements and the associated expertise, we have developed an analysis methodology that enables us to efficiently identify new requirements and implement them immediately. In addition, we are also able to perform optimizations of existing setups.
In addition, we have extensive expertise in European reporting requirements and in in-depth settlement and product experience.
Project steering and controlling
We place our clients at the centre of our activity through our efficient, fast and solution-oriented action. Here we pay particular attention to professionalism and consistency during the realization. Successfully carried out projects, high expertise and targeted training of our consultants are our basis to successfully complete projects in a structured and transparent manner.
High quality and sustainability
We operate in a highly professional market environment in which we convince our clients through sustainable competence, continuous willingness to change and high service quality. Our quality standards ensure the highest level of service quality. We not only want to satisfy our clients, but to inspire them in the long term.
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