Ireland: Shareholder Rights Directive Changes To Bring Enhanced Rights

On 3 April 2017, the European Council announced that it had adopted, without debate, a directive which will amend the existing Shareholder Rights Directive. This will affect more than 8000 listed companies on EU regulated markets capitalising around €8 trillion. The enhanced transparency and shareholder engagement provisions in the directive will be of interest to shareholders and directors of listed companies, listed companies and institutional investors.

The amendment to the existing Shareholder Rights Directive (Directive 2007/36/EC) will enter into force following its publication in the Official Journal of the EU (the "Directive"). Member States will then have two years to transpose the Directive into national law. The purpose of the new rules is to improve the long-term sustainability of listed EU companies, enhance the efficiency of the chain of intermediaries and to encourage shareholder engagement. The authors were motivated by perceived shortcomings in corporate governance of listed companies, highlighted by the financial crisis.

The main changes outlined in the Directive are as follows:

Directors' Remuneration

Shareholders will have two opportunities to influence director's remuneration, which should encourage a stronger link between pay and performance. Shareholders will have:

  • the ability to vote on the directors' remuneration policy. The policy will set out the criteria, which should be both financial and non-financial in nature, pursuant to which remuneration can be paid to directors.  The outcome of the vote will be binding, unless the member state opts for an advisory vote when transposing the Directive; and
  • the ability to vote on the remuneration report, to ensure that the implementation of the remuneration policy is in line with the policy. This report will set out a comprehensive overview of what the directors were paid in the most recent financial year. This vote will be advisory only. Member states will have discretion to enable small and medium-sized companies to replace this vote with a discussion on the remuneration report at their AGM. Where the shareholders vote against the remuneration report, the company should explain in the next report how the vote of the shareholders was taken into account.  Likewise, if a discussion takes place at a company's AGM concerning the remuneration report, the company should explain how the matters discussed were taken into account in the report.

The new rules stipulate that the directors' remuneration report and the directors' remuneration policy should be publicly disclosed 'without delay' after the shareholders' vote at the AGM. 

Institutional Investors and Asset Managers

The Directive will require institutional investors and asset managers to be transparent in how they invest and how they engage with listed companies. 

The new rules, if implemented in their current form, will:

  • require institutional investors to disclose how they take the long-term interests of their beneficiaries into account in their investment policies and how they incentivise their asset managers to do the same;
  • require asset managers to report to the institutional investor on how they take the long-term interests of their institutional investors' beneficiaries into account; and
  • adopt a "comply or explain" approach in respect of disclosing certain information. For example, institutional investors and asset managers will have to publicly disclose a policy on shareholder engagement or explain why they have chosen not to do so.

Proxy advisors will also be subject to similar transparency rules. 

Shareholder Identification, Exercise of Shareholders' Rights and Facilitation of Cross-Border Voting

The Directive is designed to facilitate shareholders' exercising their rights and aims to make it easier for shareholders resident in a different EU country to the listed company to participate and vote in general meetings of such companies.  Notable changes are as follows:

  • intermediaries will be obliged to pass certain information (including voting information) from the company to the shareholders, and vice versa;
  • companies will be required to confirm the votes cast at the request of a shareholder; and
  • companies will have the right to identify their shareholders and to obtain information on shareholder identity from any intermediaries that hold that information.

Related party transactions

The new rules will require companies to ensure that material related party transactions are approved by their shareholders or by an administrative or supervisory body according to procedures that prevent the related party taking advantage of its position and provide adequate protection for the interests of the company and the shareholders, including minority shareholders

The new rules will require companies to publicly announce material related party transactions, and any other information that is necessary to assess the fairness of that transaction, no later than the conclusion of the transaction. 

Conclusion 

The proposed amendment to the Shareholder Rights Directive will further strengthen shareholders' rights in companies registered in the EU and listed or traded on a regulated market in the EU. Shareholders will be able to hold management accountable for their decisions and ensure that they take into account the long-term interests of the businesses. It is expected that the Directive will be published in the Official Journal of the EU shortly.  Ireland will have 2 years from the date of the publication to adopt the Directive into Irish law. The Directive and its transposition into national law will be of interest to shareholders and directors of listed companies, listed companies and institutional investors.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
14 Nov 2018, Seminar, Dublin, Ireland

We will host our commercial litigation seminar on Investigations and White Collar Crime on Wednesday 14 November in our offices on Barrow Street, Dublin 4.

Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions