The European Commission is asking stakeholders what updates they want to the Shareholder Rights Directive (SRD).
The Directorate-General for Justice and Consumers announced a call for feedback on Thursday, as it prepares for an overhaul of the long-standing law, which is designed to strengthen the position of shareholders and encourage the long-term stewardship of European companies.
SRD was first adopted in 2007, and revised a decade later to include tougher rules around director pay and shareholder identification.
Now, the Commission wants to address the high costs that investors, issuers and intermediaries face when navigating the EU’s fragmented capital markets.
The consultation document stressed the need to make Europe more competitive on the global stage by simplifying regulation, mobilising retail investment, and becoming more business friendly.
“The general objective of this initiative is to boost the competitiveness of EU-listed companies and simplify procedures for financial market participants,” it stated.
“This will be achieved through two main fields of action: (i) improving corporate governance, especially as regards the use of digital technologies; and (ii) facilitating the flow of information and the exercise of rights between listed companies, intermediaries and shareholders, especially by leveraging digital solutions.”
The Commission suggested intervening to promote shareholder stewardship and address “complex, time-consuming voting processes, particularly in cross-border scenarios”.
“This could involve ensuring that shareholder rights and legal certainty are also respected in the case of virtual participation in general meetings or it could involve streamlining timelines and deadlines in the context of general meetings,” it said.
“In addition, measures could be taken to ensure the quality and reliability of voting recommendations by proxy advisers.”
On strengthening information flows and transparency, the document specifies that it wants to address transparency among “institutional investors, asset managers and proxy advisers”.
It suggests that the EU could provide “common rules to automate the exchange of information, where possible, and explor[e] solutions to enable direct communication between shareholders and companies”.
The final decision on which measures to introduce will depend on the outcome of the evaluation, impact assessment and consultation – the Commission said it may take no action on certain topics, while enforcing existing rules or creating new ones to deal with others.
Member states have different national rules around shareholder rights and voting, making stewardship strategies complicated, and adding to administrative costs for investors.
In 2024, the International Corporate Governance Network wrote to the Commission’s president, Ursula von der Leyen, to ask for a more harmonised approach.
The current consultation is open for the next 12 weeks, and equity investors, listed companies and other financial market participants are invited to participate.
The Commission said it will also conduct interviews, workshops, meetings, and expert group discussions to “ensure that all interested parties are properly involved in the consultation process”.
A formal proposal is expected by the end of the year.
