Shareholder Engagement


Review of the Shareholder Rights Directive: engagement policy by institutional investors

On 9 April 2014 the EU Commission published aProposal for a Directive amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagementand Directive 2013/34/EU as regards certain elements of the corporate governance statement. The Proposal as well as further information such as the Commission’s press release, FAQ and the Impact Assessment are available on the Commission’s website. The review of the Directive is intended to address the lack of shareholder engagement as identified by the EU Commission, as well as to increase transparency.

Chapter Ib “Transparency of institutional investors, asset managers and proxy advisors” is most relevant for occupational pensions. In particular, the Proposal contains very detailed requirements regarding the engagement policy. Institutional investors such as IORPs are supposed to disclose how their equity investment strategy fits the structure of their liabilities to the public. This not only applies to direct but also to indirect equity investments if the corporation is based in an EU Member State. The aba has published a position paper on the issue.

The Proposal for a Directive is currently being discussed in the responsible Council Working Group “Company Law” as well as in the European Parliament (overview). In the European Parliament, the JURI-Committee is responsible, the ECON-Committee is associated (see Nr. 54 of the Rules of Procedure of the European Parliament).

On 19 December 2014 the Draft Report by Sergio Gaetano Cofferati (Rapporteur in the responsible JURI-Committee, Italian Social Democrat) was published. Numerous amendments were subsequently proposed (Amendments 84 – 289; Amendments 290 – 490).

The Opinion of the associated ECON-Committee written by the Swedish Social Democrat Olle Ludvigsson was adopted on 02 March 2015. Regarding the future requirements for institutional investors, the opinion states i.a. the following:

“Basic transparency should not be optional. In order to make sure that the legislation is reasonably efficient and that there is a level playing field, all institutional investors and asset managers should be obliged to develop an engagement policy and to be transparent about its application (Article 3f). This is a very basic demand which can easily be met by all actors which already run a solid and well-organised business operation.” (page 4).  

The vote in the JURI-Committee was originally planned for 24 March 2015, but was postponed to 07 May because of a lack of consensus in many questions.







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