Long-term shareholder engagement: Commission urges SEVEN Member States to notify measures taken to transpose Shareholder Rights Directive

The Commission decided today to send reasoned opinions to seven Member Statesforfailing to communicate partially (Bulgaria, Greece, Romania,and Spain) or entirely (Cyprus, Portugal and Slovenia) on the measures taken to implement the amended Shareholder Rights Directive (Directive 2017/828/EU).

Member States had to transpose part of this Directive into their national law by 10 June 2019 and communicate to the Commission the measures taken in the field covered by its relevant provisions. Long-term engagement of shareholders with the companies they invest in is essential to ensure that companies are well-governed and sustainable in the long term.

Under the Directive, institutional investors and asset managers have to publish information on their investment strategies and engagement policies. In addition, the Directive increases transparency of directors’ remuneration and enables shareholders to have a “say on pay”. It also introduces safeguards with regard to material transactions concluded between related parties (typically the company and its director or controlling shareholder).

In July 2019, the Commission sent letters of formal notice to these six Member States for failing to transpose EU rules into national legislation. Bulgaria, Romania, Greece and Spain notified certain measures declaring the transposition of the Directive to be still partial, Cyprus, Portugal and Slovenia have not yet notified any transposition measures.

The seven Member States have now three months to respond to the reasoned opinions and take the relevant actions by notifying the full transposition of the Directive into their national laws; otherwise, the cases may be referred to the Court of Justice of the EU.