Database on German and European Economic Law

 Directive 2017/828/EU

I. Description

Revision of the Shareholder Rights Directive

The proposal to revise the existing Shareholder Rights Directive (Directive 2007/36/EC) 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). Too often, as the crisis showed, shareholders supported managers’ excessive short-term risk taking and did not monitor closely the companies they invested in.

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. A longer term perspective creates better operating conditions for listed companies and improves their competitiveness. Key elements of the proposal include stronger transparency requirements for institutional investors and asset managers on their investment and engagement policies regarding the companies in which they invest as well as a framework to make it easier to identify shareholders so they can more easily exercise their rights (e.g. voting rights), in particular in cross-border situations (44% of shareholders are from another EU Member State or foreign). Proxy advisors would also have to become more transparent on the methodologies they use to prepare their voting recommendations and on how they manage conflicts of interests.

For the first time, a European "say on pay" would be introduced. Today, there is an insufficient link between management pay and performance and this encourages harmful short-term tendencies. The proposals would oblige companies to disclose clear, comparable and comprehensive information on their remuneration policies and how they were put into practice. There would be no binding cap on remuneration at EU level but each company would have to put its remuneration policy to a binding shareholder vote. The policy would need to include a maximum level for executive pay. It would also need to explain how it contributes to the long-term interests and sustainability of the company. It would also need to explain how the pay and employment conditions of employees of the company were taken into account when setting the policy including explaining the ratio between average employees and executive pay.

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II. General Information

Title

Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement

Status
Existing
Directive
2017/828/EU
Source
O.J. EU No L (Legislation), Edition 132, Year 2017, p.1
Adoption
05/17/2017
Promulgation
05/20/2017
Character
Regular Act
Legal Basis
Art. 50, 114 AEUV
Legislative Procedure
Codecision procedure
Background

III. Versions and Legislative History

1. Versions

Titel
Allg. Daten
Textfassung

Original Text :
Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement

  2017/828/EU

Beschluss:
05/17/2017 (A)
Verkuendung:
05/20/2017 (P)
(A) Adoption | (P) Promulgation

2. Legislative History

Datum
Typ / Titel
Textfassungen
07/08/2015
Report of the European Parliament - 1st reading
10/28/2014
Opinion of the European Data Protection Supervisor
O.J. C/2014 417/8
07/09/2014
Opinion of the European Economic and Social Committee
O.J. C/2014 451/87
04/09/2014
Proposal
COM(2014) 213 final

3. Comments

Datum
Stellungnahme
Textfassungen
07/31/2014
Gemeinsame Stellungnahme der Bundesvereinigung Deutscher Arbeitgeberverbände, des Bundesverbands der Deutschen Industrie und des Deutschen Industrie- und Handelskammertages (BDA, BDI, DIHK)
Comment on: Kommissionsvorschlag
07/02/2014
Wirtschaftsprüferkammer (wpk)
Comment on: Kommissionsvorschlag
09/2014
Bundesrechtsanwaltskammer (BRAK)
Comment on: Kommissionsvorschlag

4. Legal Impact

Auswirkungstyp
Richtlinie
Textfassungen
Amendment
  Directive 2013/34/EU
Amendment
  Directive 2007/36/EC

Legend

Legislative Act Status

Documents

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Overview

I. Description
II. General Information
III. Versions and Legislative History
1. Versions
2. Legislative History
3. Comments
4. Legal Impact