The European Commission is seeking to speed up the introduction of a new Shareholders Rights Directive and expects to table new legislation with the European Parliament as early as next summer, according to Jeroen Hooijer, head of corporate governance and social responsibility at the EU.
With the revised Directive, the Commission has sought to identify and encourage active shareholding, as well as improve the level of advice provided by proxy voting agencies.
It also wants to give shareholders more influence over the remuneration policy of board members and large related-party transactions.
Hooijer, speaking at the Eumedion symposium in Utrecht, said he expected the identification of shareholders “would not be too complicated”, and that tackling the issue would be a matter of costs – “and who is going to foot the bill”.
However, he said he expected to encounter obstacles on proposals to increase transparency on related-party transactions, “as EU member states tend to already have their own, different rules, with which they’re already comfortable”.
Hooijer said the review of the Shareholders Directive fit within the Commission’s overarching plan to harmonise Europe’s capital markets – including rules for the listing of companies.
He said this would be necessary if Brussels wanted to increase the attractiveness of long-term investing and active shareholding.
Responding to a question from the audience, Hooijer pointed out that a recent survey of investors had found that higher dividends or increased voting rights did little to encourage long-term investment.
He added that the Commission had not yet worked out how voting agencies would report back to their clients about their voting behaviour.
Hooijer also announced that the Commission was drawing up a report on best practice in ESG investment.
Meanwhile, Edith Siermann, governance and active ownership manager at Robeco, pointed out at the symposium that the link between active ownership and long-term investment was “not always clear”.
“It is probably difficult to encourage passive investors to become active shareholders,” she said, adding that a distinction for investment style, such as sustainability, would be a better approach.
She also warned that implementing new rules on voting agencies would be a challenge due to the large number of players involved.
“Currently, nobody is responsible for the voting chain,” she said, before warning that the power of voting agencies must not be increased.
Proposals for a revised Shareholders Rights Directive are now with the European Parliament and the Council of the European Union, Hooijer said.