The Shareholder Rights Directive, explained.
SRD II lets a listed company find out who owns its shares. It also sets what the company owes those shareholders in return.
Why it changed
The first significant European rules on governance for listed companies came with Directive 2007/36/EC of 11 July 2007, on the exercise of certain rights of shareholders in listed companies. It set minimum rights for those shareholders.
Then came the financial crisis. The European Commission concluded that shareholders had often backed excessive short-term risk-taking by managers, and that institutional investors were too little involved in oversight and long-term strategy. Governance and performance suffered.
In 2014 the Commission proposed a revision. It became Directive 2017/828 of 17 May 2017, known as SRD II, written to strengthen the relationship between companies and their shareholders and to make both more accountable.
Belgian transposition
The Belgian parliament adopted the transposing law on 16 April 2020. Most provisions took effect immediately, with two exceptions.
- Shareholder identification took effect on 3 September 2020.
- Remuneration policy and report applied first to reports for financial years starting after 30 June 2019. Where the financial year starts after 31 December 2019, the rules applied from the spring 2021 general meeting.
Scope
SRD II applies to companies in the European Union whose shares trade on a regulated market in an EU member state.
What SRD II changes
Dialogue between company and shareholder
Companies gain the right to identify their shareholders, which makes direct communication possible for the first time.
Transparency of institutional investors
Intermediaries pass on what shareholders need to exercise their rights. Institutional investors and asset managers publish an engagement policy. Proxy advisers publish a code of conduct and report on it every year.
Remuneration policy and report
Executive pay policy goes to a shareholder vote and must explain how it supports long-term strategy. Belgian law adds the ratio between the highest and lowest pay to the report.
Related-party transactions
Stricter rules for transactions with shareholders, directors or executives, to limit conflicts of interest and protect company value.
What it means for you
If you run a listed company
You can request shareholder contact details from the intermediaries that hold them. That list is where direct communication starts: convocations that reach the right people, results in your own words, and a general meeting where you know who is in the room.
If you are a shareholder
The company can find out that you hold its shares, and it can write to you directly. Information comes straight from the company, and it gets easier to vote at the general meeting.
This page explains the directive in general terms. For your own situation, ask your legal adviser.
SRD II gets you the list. We get your message to it.
The Finvictum platform requests your shareholder list, then sends your convocations, results and updates to the people on it.