2 Shareholder rights
| Committee's assessment
| Legally important |
| Committee's decision | Not cleared from scrutiny; further information requested; drawn to the attention of the Business, Innovation and Skills Committee
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| Document details | Directive amending Directive 2007/36 as regards the encouragement of long-term shareholder engagement and Directive 2013/34 as regards certain elements of the corporate governance statement
|
| Legal base | Articles 50 and 114 TFEU; ordinary legislative procedure; QMV
|
| Department | Business, Innovation and Skills
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| Document numbers | (35957), 8847/14 + ADDs 1-3, COM(14) 213
|
Summary and Committee's conclusions
2.1 This proposal amends the existing Shareholders' Rights Directive
(2007/36) by introducing new provisions intended to facilitate
the exercise of shareholders' rights, give them a greater say
over directors' remuneration and increase transparency in respect
of: the strategies of institutional investors and asset managers;
the activities of proxy advisors; directors' remuneration; and
related party transactions. Further details are set out in our
Report of 4 June 2014.
2.2 When we previously considered this proposal last summer we
noted that the Government was broadly supportive of the proposal;
shared its concerns that the proposal regulated matters currently
covered by the voluntary stewardship code and the code of conduct
for proxy advisors; and looked forward to the Government's further
consideration in relation to charging by intermediaries, related
party transactions and the Commission's power to adopt subordinate
legislation.
2.3 The Minister for Employment Relations and Consumer Affairs
and Minister for Women and Equalities (Jo Swinson) now updates
the Committee.
2.4 We are grateful for the update from the Minister which
indicates that all the concerns raised by the Government on the
original draft have been addressed save for that concerning the
Commission's power to adopt subordinate legislation. This proposal
now reflects the UK's approach to Corporate Governance.
2.5 As the proposal is still under discussion at working group
level, we should be grateful for a further update on this last
mentioned issue and any further amendments to the text in good
time before any prospective general approach.
2.6 In the meantime we hold this matter under scrutiny and
draw it to the attention of the Business, Innovation and Skills
Committee.
Full details of the documents:
Proposal for a Directive amending Directive 2007/36/EC as regards
the encouragement of long-term shareholder engagement and Directive
2013/34/EU as regards certain elements of the corporate governance
statement (35957), 8847/14 + ADDs 1-3, COM(14) 213.
The Minister's letter of 18 December 2014
2.7 The Minister updates the Committee on the matters
of concern:
"The measures around transparency of
institutional investors and asset managers, which in the UK
are mainly subject to the Stewardship Code, are far less prescriptive
now that a 'comply or explain' approach applies throughout. Requirements
on proxy advisers have also been mitigated to take into account
the Code of Principles, developed by the sector, following an
analysis and report by the European Securities and Markets Authority
(ESMA).
"Measures on the transparency of fees
charged by intermediaries have been amended, so that the UK
regime, where these are not allowed, will not be impacted.
"With regards to related party transactions,
the presidency has proposed a text focused more on principles
than details, to ensure agreement from member states. The latest
draft has introduced greater flexibility, therefore limited impact
on the UK Listing Rules.
"We have clarified that the final compromise
text will need to address any relevant requirements. Any remaining
aspects will be left to member states' authority and addressed,
as appropriate, during implementation."
2.8 She assesses the progress of the negotiation:
"Overall, I am satisfied that the proposal
strikes the right balance between legislative requirements and
best practice, a confirmation that the UK approach to Corporate
Governance is a model of excellence."
Previous Reports
First Report HC 219-i (2014-15), chapter 4, (4 June
2014).
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