The second Shareholders' Rights Directive EU/2017/828 (SRD II) is due to be transposed into Irish law by 10 June 2019. Amending a 2007 directive of the same title, SRD II promises increased transparency and new policies aimed at promoting shareholder engagement.
SRD II applies where a company has their registered office in a Member State of the European Union and the shares of which are being traded on a regulated market situated within or operating within the territory of the EU.
Defined by MHEIL as 'one who owns shares as a member of a company', shareholders have often been viewed as transient profit-seekers by the common law, who perhaps would prefer a fleeting spike in share prices as opposed to measures which would strengthen the company in the long run.
Therefore, it is fair to say that the area of shareholders' rights has been overlooked somewhat - with the level of protection afforded to shareholders largely being dictated by the class of shares held by the individual or company in question. In seeking to better involve shareholders in the running of companies, SRD II contains the following changes:
- Intermediaries: Companies will have the right to identify and obtain information about their subscribers from intermediaries. MS may tweak this provision to make it subject to the proviso that the shareholder whose information is sought must hold at least 0.5% of the company.
- Remuneration: Shareholders will be entitled to vote on the amount of money paid to directors at least every four years. MS will again have the option to tweak this, as the vote can be made either binding or advisory.
- Institutional Investors: An obligation is placed on asset managers to disclose how their shareholder engagement policy has been implemented.
While this is due to be transposed into law in the next two months, Ireland has not as of yet published draft regulations. It is crucial to note that SRD II does offer a degree of flexibility to MS as regards the specifics of transposition - all of which has been designed to increase the quality of engagement between asset owners, asset managers and investors.
The directive can be accessed in full by clicking the link above. For further reading on the historical development of shareholders' rights, see Samad: Court Applications under the Companies Acts, ch 3.
Note: This article is not intended to be taken as legal advice, particularly as the government have not as of yet drafted an SI to bring this directive into force. Any errors should be notified to the editor and will be dealt with accordingly.