On 9 April 2014, the European Commission published a proposal to amend the Shareholder Rights Directive.
The proposal includes provisions under which, briefly:
- companies must disclose their remuneration policy and the individual remuneration of directors. Shareholders will have the right to approve the remuneration policy and vote on the remuneration report and, subject to a limited exception in case of new board members, companies may only remunerate directors in accordance with the policy approved by shareholders;
- related party transactions (defined by reference to international accounting standards) representing more than 5% of company assets, or transactions which could have a significant impact on profits or turnover, will be subject to shareholder approval. Smaller related party transactions representing more than 1% of assets must be publicly announced at the time of conclusion, with the publication of an independent third party report. Member states may exclude transactions entered into with wholly-owned subsidiaries, and may also provide that companies may seek shareholder approval for an exemption from the requirement to provide an independent third party report for certain clearly defined types of recurrent transactions with an identified related party for a period of no longer than 12 months;
- proxy advisors must adopt measures to guarantee that their voting recommendations are accurate and reliable, based on a thorough analysis of all available information and unaffected by any existing or potential conflict of interest or business relationship. They must also publicly disclose certain key information relating to the preparation of their voting recommendations and, to their clients and the companies concerned, information on any conflict of interest that might influence their voting recommendations;
- intermediaries must offer companies the right to have their shareholders identified, rapidly transmit information relating to shareholders and facilitate the exercise of shareholder rights; and
- institutional investors and asset managers must, on a comply-or-explain basis, disclose their voting and engagement policies and certain aspects of asset management arrangements.
The proposal will be forwarded to the Parliament and the Council under the ordinary legislative procedure. The draft provides that member states will be required to implement the directive 18 months after its entry into force.
The proposal is available at:
http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=COM:2014:213:FIN&rid=5
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