In July 2015, the European Parliament adopted a number of amendments that tone down certain elements of a 2014 European Commission proposal to amend the Shareholder Rights Directive and the Accounting Directive. The proposal aimed to promote long-term shareholder engagement and greater transparency at listed companies. We reported on this previously.

The EP’s amendments are to some extent in line with the text the European Council agreed on in March 2015. The following elements of the Commission’s proposal are toned down in particular:

  • “say on pay” – member states may determine that the shareholders’ vote will only be advisory, not binding
  • related party transactions – member states may determine that approval by the supervisory body of the company is sufficient, without shareholder approval being needed; the possibilities to exempt certain transactions from approval requirements are also extended
  • “loyalty rights” – the proposal to include rules on enhanced voting rights and dividend rights for long-term shareholders has been rejected.

The Parliament has decided to postpone the vote on the proposal itself, and to enter into informal consultation with the Commission and the Council in order to come to a final text, which could then be adopted at first reading. Agreement on this is not expected before the end of 2015. It remains to be seen what the final wording of the directive will be, and how it will be implemented by the member states. We will keep you informed of further developments.