Shareholder Rights Directive (SRD II)

The revision of the Shareholder Rights Directive (SRD I) is part of the European Commission’s Corporate Governance Action Plan 2012. The revised directive aims at stimulating long-term engagement of institutional investors and asset managers with companies, promoting long-term growth of companies and increasing investment and voting transparency.

SRD II includes requirements for institutional investors and asset managers on the publication of an engagement policy, which discloses how their investment strategy is aligned with the long-term profile of client liabilities and performance of assets, key elements of their contracts and portfolio turnover. It also includes provisions on shareholder influence on the company directors’ remuneration and material transactions with related parties. 

SRD II is an amending Directive, which requires transposition into each Member State’s national law. Implementation by member states must occur before 10 June 2019. 

2019
2020
2021
2022
2023
2024
3
4
1
Implementation / enforcement 12/2012 - 04/2014
2
Discussion / consultation 04/2014 - 05/2017
3
Implementation / enforcement 05/2017 - 06/2019
4
In effect 06/2019 -

STATUS
Implementation by member states must occur before 10 June 2019.

Some of the requirements are already addressed in UCITS, AIFMD and MiFID, and the majority of items that require disclosure are likely to be part of a discussion taking place between institutional investors and asset managers. However, the revised directive could have a significant impact on the relationship between institutional investors and asset managers. Institutional investors and asset managers should reflect on the way they want to integrate shareholder engagement into their investment strategy. They should readdress their relationship and engage with each other in order to make efficient arrangements covering the disclosure requirements. 

Further information:
European Commission: Corporate governance

author
Lennart Cattel Partner
Categories: Transparency