The revised Shareholder Rights Directive (2007/36/EC) recognises that shareholders often exert short-term pressure on investee companies, at the expense of longer term value creation and ESG issues.

The Directive seeks to mitigate this by addressing some principal agent problems in the investment chain.

At a glance

INSTITUTIONAL INVESTORS ASSET OWNERS PROXY ADVISORS COMPANY DIRECTORS 
  • Establish and publicly disclose an engagement and voting policy. Publicly disclose how they implement the policy on an annual basis.
  • Publicly disclose how their equity strategies align with the profile and duration of their liabilities, particularly long-term liabilities, and how they incentivise and monitor asset managers to do the same.
  • Establish and publicly disclose an engagement and voting policy. Publicly disclose how they implement the policy on an annual basis.
  • Disclose to institutional investor clients how their equity strategy aligns with long-term liabilities.
  • Publicly disclose compliance with a code of conduct, to be determined by the Member State.
  • Publicly disclose key elements of how they prepare research, advice and voting recommendations.
  • Establish a clear remuneration policy in line with the long-term interests and sustainability of the company. Submit the policy to vote at least every four years. Member states may make this vote binding or advisory.
  • Provide a clear, understandable remuneration report, including explaining how remuneration contributed to the long-term performance of the company. The report is subject to an advisory vote at the annual meeting.

In general, institutional investor, asset manager and proxy advisor requirements are on a comply-or-explain basis. Requirements for company directors are mandatory.

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    Policy briefing: EU shareholder rights directive

    February 2017