Do you know what the Shareholder Rights Directive II (SRD II) is? Hopefully, you do \u2013 one important deadline passed last year.<\/p>\n
SRD II is a revised European Union directive, aimed at strengthening the rights of shareholders, and ensuring that companies make decisions with long-term stability at the forefront. As of 10 June 2019, member states were required to formalise the majority of SRD II\u2019s requirements into national law. However, there were certain key articles with a longer deadline.<\/p>\n
With the final deadline coming due in September, there are many people wondering what exactly they are making changes for, and why it\u2019s necessary.<\/p>\n
Essentially, issuers, investors and intermediaries now have new rules around how information is shared. At its core, it is designed to: encourage long-term shareholder engagement, and streamline investor communication.<\/p>\n
\u00a0<\/p>\n
Ask anyone about SRD II, and the first thing they will tell you is that it is incredibly complex. That\u2019s the thing with nationwide financial compliance regulations \u2013 they\u2019re as complicated as they sound.<\/p>\n
Three main areas where SRD II introduce greater complexity are:<\/p>\n
Not to mention that the revised directive is further reaching. Many companies will have to extend their voting services, while intermediaries outside of the EU \u2013 if they hold shares in EU-based issuers listed on EU regulated markets \u2013 will fall under its jurisdiction as well.<\/p>\n
\u00a0<\/p>\n
SRD II aims to strengthen shareholder rights, and one way it does so is by eliminating any undue delay in companies providing their shareholders with the necessary communications and arrangements.<\/p>\n
This is great for shareholders, but it puts a lot of pressure on companies \u2013 the deadlines are strict and quick. You no longer just need to be accurate and comprehensive \u2013 you need to be accurate and comprehensive and fast.<\/em><\/p>\n SRD II also gives shareholders the right to vote on both the company\u2019s remuneration policy and <\/em>the remuneration report at AGMs. This ensures a stronger link between pay and the performance of the company\u2019s directors.<\/p>\n It also ensures a lot more voting, and the required infrastructure to implement and support that. Companies that already have voting services, will most likely need to expand them. Those that don\u2019t have them already, will need to build them from scratch.<\/p>\n \u00a0<\/em><\/p>\n Under SRD II, the public has access to a full view of how an institutional investors\u2019 equity investment strategy contributes to the performance of their assets \u2013 medium to long-term \u2013 as well as their liabilities. Asset managers, likewise, are subject to transparency and disclosure requirements twice a year.<\/p>\n Transparency is a great thing, for shareholders and the public, as it allows them to see exactly what is happening within the company \u2013 what decisions are being made, and crucially, how those decisions are affecting the company.<\/p>\n It\u2019s also a great thing for companies; the public will trust a transparent company. But transparency doesn\u2019t just happen. Disclosure, communication and transparency are fantastic \u2013 but they are also time and labour-intensive. Keeping people informed is a full-time effort, and it needs to be done internally, as well as externally.<\/p>\n \u00a0<\/p>\n There is, of course, a lot more to SRD II. And there\u2019s definitely a lot more to it, when it comes to implementing it \u2013 there\u2019s a reason there was a gap of a year between deadlines, for a single Article.<\/p>\n There is little upside to managing this yourself. Unless you\u2019re an expert (or, more reasonably, a team of experts) adhering to all the rules internally invites risk, cost and complexity. And SRD II is far from the only change happening \u2013 various standards and regulations constantly change. Simply keeping up means you\u2019re already behind \u2013 you need experts to keep you ahead of the curve, and safe from surprise.<\/p>\n At Global Shares, we share plan experts. We provide practical, clear and cost-effective services, tailored to your company.<\/p>\n For example, EquityAdmin has a full AGM \/ Company Meeting Voting suite, to fully support the directive’s requirement for the company’s employee-shareholders.<\/p>\n With us, this article would be a question \u2013 What is SRD II? <\/em>\u2013 and an answer: Don\u2019t worry. We\u2019ve got you covered.<\/em><\/p>\n That\u2019s it. That\u2019s all you need to know.<\/p>\n Contact Global Shares for a free demo today.<\/p>\nIncreases transparency<\/h2>\n
How to stay compliant<\/h2>\n