L_2017132EN.01000101.xml
| 20.5.2017 | EN | Official Journal of the European Union | L 132/1 |
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
(Text with EEA relevance)
THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 50 and 114 thereof,
Having regard to the proposal from the European Commission,
After transmission of the draft legislative act to the national parliaments,
Having regard to the opinion of the European Economic and Social Committee (1),
Acting in accordance with the ordinary legislative procedure (2),
Whereas:
| (1) | Directive 2007/36/EC of the European Parliament and of the Council (3) establishes requirements in relation to the exercise of certain shareholder rights attached to voting shares in relation to general meetings of companies which have their registered office in a Member State and the shares of which are admitted to trading on a regulated market situated or operating within a Member State. |
| (2) | The financial crisis has revealed that shareholders in many cases supported managers’ excessive short-term risk taking. Moreover, there is clear evidence that the current level of ‘monitoring’ of investee companies and engagement by institutional investors and asset managers is often inadequate and focuses too much on short-term returns, which may lead to suboptimal corporate governance and performance. |
| (3) | In its communication of 12 December 2012 entitled ‘Action Plan: European company law and corporate governance — a modern legal framework for more engaged shareholders and sustainable companies’, the Commission announced a number of actions in the area of corporate governance, in particular to encourage long-term shareholder engagement and to enhance transparency between companies and investors. |
| (4) | Shares of listed companies are often held through complex chains of intermediaries which render the exercise of shareholder rights more difficult and may act as an obstacle to shareholder engagement. Companies are often unable to identify their shareholders. The identification of shareholders is a prerequisite to direct communication between the shareholders and the company and therefore essential to facilitating the exercise of shareholder rights and shareholder engagement. This is particularly relevant in cross-border situations and when using electronic means. Listed companies should therefore have the right to identify their shareholders in order to be able to communicate with them directly. Intermediaries should be required, upon the request of the company, to communicate to the company the information regarding shareholder identity. However, Member States should be allowed to exclude from the identification requirement shareholders holding only a small number of shares. |
| (5) | In order to achieve that objective, a certain level of information on shareholder identity needs to be transmitted to the company. That information should include at least the name and contact details of the shareholder and, where the shareholder is a legal person, its registration number or, if no registration number is available, a unique identifier, such as the Legal Entity Identifier (LEI code), and the number of shares held by the shareholder as well as, if requested by the company, the categories or classes of shares held and the date of their acquisition. The transmission of less information would be insufficient to allow the company to identify its shareholders in order to communicate with them. |
| (6) | Under this Directive, the personal data of shareholders should be processed to enable the company to identify its existing shareholders in order to communicate directly with them, with a view to facilitating the exercise of shareholder rights and shareholder engagement with the company. This is without prejudice to Member State law providing for processing of the personal data of shareholders for other purposes, such as to enable shareholders to cooperate with each other. |
| (7) | In order to enable the company to communicate directly with its existing shareholders with a view to facilitating the exercise of shareholder rights and shareholder engagement, the company and the intermediaries should be allowed to store personal data relating to the shareholders for as long as they remain shareholders. However, companies and intermediaries are often not aware that a person has ceased to be a shareholder unless they have been informed by the person or have obtained that information through a new shareholder identification exercise, which often takes place only once a year in relation to the annual general meeting or other important events such as takeover bids or mergers. Companies and intermediaries should therefore be allowed to store personal data until the date on which they have become aware of the fact that a person has ceased to be a shareholder and for a maximum period of 12 months after becoming aware of that fact. This is without prejudice to the fact that the company or intermediary may need to store the personal data of persons who have ceased to be shareholders for other purposes, such as ensuring adequate records for the purposes of keeping track of succession in title of the shares of a company, maintaining necessary records in respect of general meetings, including in relation to the validity of its resolutions, fulfilling by the company of its obligations in respect of the payment of dividends or interest relating to shares or any other sums to be paid to former shareholders. |
| (8) | The effective exercise of shareholder rights depends to a large extent on the efficiency of the chain of intermediaries maintaining securities accounts on behalf of shareholders or of other persons, especially in a cross-border context. In the chain of intermediaries, especially when the chain involves many intermediaries, information is not always passed from the company to its shareholders and shareholders’ votes are not always correctly transmitted to the company. This Directive aims to improve the transmission of information along the chain of intermediaries to facilitate the exercise of shareholder rights. |
| (9) | In view of their important role, intermediaries should be obliged to facilitate the exercise of rights by shareholders, whether shareholders exercise those rights themselves or nominate a third person to do so. When shareholders do not want to exercise the rights themselves and have nominated the intermediary to do so, the latter should exercise those rights upon the explicit authorisation and instruction of the shareholders and for their benefit. |
| (10) | It is important to ensure that shareholders who engage with an investee company by voting know whether their votes have been correctly taken into account. Confirmation of receipt of votes should be provided in the case of electronic voting. In addition, each shareholder who casts a vote in a general meeting should at least have the possibility to verify after the general meeting whether the vote has been validly recorded and counted by the company. |
| (11) | In order to promote equity investment throughout the Union and to facilitate the exercise of rights related to shares, this Directive should establish a high degree of transparency with regard to charges, including prices and fees, for the services provided by intermediaries. Discrimination between the charges levied for the exercise of shareholder rights domestically and on a cross-border basis is a deterrent to cross-border investment and the efficient functioning of the internal market and should be prohibited. Any differences between the charges levied for the domestic and the cross-border exercise of shareholder rights should be allowed only if they are duly justified and reflect the variation in actual costs incurred for delivering the services by intermediaries. |
| (12) | The chain of intermediaries may include intermediaries that have neither their registered office nor their head office in the Union. Nevertheless, the activities carried out by third-country intermediaries could have effects on the long-term sustainability of Union companies and on corporate governance in the Union. Moreover, in order to achieve the objectives pursued by this Directive, it is necessary to ensure that information is transmitted throughout the chain of intermediaries. If third-country intermediaries were not subject to this Directive and did not have the same obligations relating to the transmission of information as Union intermediaries, the flow of information would risk being interrupted. Third-country intermediaries which provide services with respect to shares of companies that have their registered office in the Union and the shares of which are admitted to trading on a regulated market situated or operating within the Union should therefore be subject to the rules on shareholder identification, transmission of information, facilitation of shareholder rights, and transparency and non-discrimination of costs to ensure the effective application of the provisions on shares held via such intermediaries. |
| (13) | This Directive is without prejudice to national law regulating the holding and ownership of securities and arrangements maintaining the integrity of securities and does not affect the beneficial owners or other persons who are not shareholders under the applicable national law. |
| (14) | Effective and sustainable shareholder engagement is one of the cornerstones of the corporate governance model of listed companies, which depends on checks and balances between the |
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