The Shareholder Rights Directive will not result in an endless list of disclosures with which to comply but rather seek to limit the amount of prescription required, according to a senior European Commission figure.
Jeroen Hooijer, head of the corporate governance and social responsibility unit, also stressed that the directive’s most important role would be to bring clarity to the investment chain.
He added that a 2012 report by UK academic John Kay had been very influential in Brussels.
Hooijer, speaking at a conference organised by the UK’s National Association of Pension Funds, also stressed that he was keen to strike a balance between principles-based guidance, such as the UK Stewardship Code, and prescriptive regulation.
“The transparency requirements should not only be principles-based – or very high-level principles that show us how you engage, or be transparent about what your strategy is,” he said.
“We have to go down to a certain level of prescription but be careful not to end up in an endless list of little things you have to show in your report – because then you get these reports of dozens and hundreds of pages.”
His comments came after a speech by Win Bischoff, chairman of the Financial Reporting Council, who said that while the UK body supported the Commission’s work on stewardship, it was concerned about the potential level of prescription.
“We don’t believe owners should be compelled to adopt any one particular approach to stewardship,” Bischoff said.
“If it’s forced on them, it will only create more work for advisers and intermediaries.”
However, the former Lloyds Banking Group chairman warned that asset owners needed to scrutinise asset managers’ stewardship activities if they wished to maintain the principles-based, ‘comply or explain’ approach of the Stewardship Code.
“If our principles-based system is found wanting, we will only have ourselves to blame if European legislation takes its place,” he said.
Bischoff also expressed reservation’s about Hooijer’s unit moving away from the single market commission to fall under the directorate general Justice (DG Justice) as a result of Jean-Claude Juncker’s reorganisation of Commission portfolios.
He said he hoped DG Justice would have contact with Jonathan Hill, the UK commissioner appointed to the financial services brief, “rather than trying to reinvent [the Directive]”.
Bischoff said there was a risk the new home for the Directive meant there was a “danger of [it] being prescriptive”.
“I really hope and I do expect there to be a dialogue, rather than Justice going off on its own,” he said.
“The more our own system of principles-based works, the more people will sign up – we’ve only got ourselves to blame, or partially ourselves to blame, if it works the other way.”