Page 19 - Dittmar Quarterly Q1 2019

What’s the proposal about?
SHRD II amends the contents of EU’s First Shareholder Rights Directive 2007/36/EC, which was released a few months before the financial crisis of 2007 began to unleash. Like other directives based on EU’s Financial Services Action Plan, the Directive is designed to address systemic risks identified by European regulatory authorities in the aftermath of the financial crisis. These issues included, among others, excessive short-term risk-taking by corporate managers and an inadequate level of monitoring by institutional investors and asset managers.
The Directive attempts to address these risks by introducing new rules meant to encourage long-term shareholder engagement and to enhance transparency between companies and investors.
The subject matter of the proposal is divisible into four main themes: director remuneration, related party transactions, identification of shareholders and transmission of information and transparency requirements for institutional investors, asset managers and proxy advisors. This Article describes and analyses the contents of the proposed changes under these themes and concludes with our recommendations.
-120 Years of Thinking Ahead-