The proposal to revise the existing Shareholder Rights Directive would tackle corporate governance shortcomings relating to listed companies and their boards, shareholders (institutional investors and asset managers), intermediaries and proxy advisors (i.e. firms providing services to shareholders, notably voting advice).

Objective

The proposals would both make it easier for shareholders to use their existing rights over companies and enhance those rights where necessary. This would help ensure shareholders were more engaged, better hold the management of the company to account and act in the long-term interests of the company.

The Review shall:

• contribute to the long-term sustainability of EU companies,
• create an attractive environment for shareholders,
• enhance cross-border voting by improving efficiency of the equity investment chain,
• contribute to growth, jobs creation and EU competitiveness,
• create a better link between pay and performance of company directors,
• enhance transparency and shareholder oversight on related party transactions,
• ensure reliability and quality of advice of proxy advisors,
• improve shareholder identification,
• facilitate transmission of cross-border information across the investment chain,
• increase transparency of costs, and
• increase engagement of asset owners and asset managers.

Time line

11 July 2007: the Directive on the Exercise of Certain Rights of Shareholders in Listed Companies (2007/36/EC) of the European Parliament and of the Council

9 April 2014: European Commission Proposal for a Directive amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement  and Directive 2013/34/EU as regards certain elements of the corporate governance statement

17 May 2017: The final text of the revised Shareholders’ rights directive has been published in the EU Official Journal. The directive entered into force on 11 June 2017 and member states had until 10 June 2019 to transpose the new rules into laws. 

2019: The political negotiations procedure in Brussels regarding the revision of the Shareholder Rights Directive (SHRD) has been completed.

The law regarding the SHRD’s transposition into national (German) law (the so-called ARUG II) was finally passed by the German Federal Council (Bundesrat) on 29 November and has thus concluded the parliamentary procedure. The law was published in the Federal Law Gazette (Bundesgesetzblatt) on 19 December and has thus entered into force.

SHRD: the highlighted parts of the value chain are affected