6 Shareholder rights |
|Committee's decision||Not cleared from scrutiny; further information requested; conditional scrutiny waiver granted
|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
|Document numbers||(35957), 8847/14 + ADDs 1-3, COM(14) 213
Summary and Committee's conclusions
6.1 This proposal amends the existing Shareholders' Rights Directive
(2007/36) by introducing new provisions intended to facilitate
the exercise of shareholders' rights, give shareholders 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.
6.2 The Government have been broadly supportive of
this proposal and have been negotiating with a view to it more
fully reflecting the UK's approach to corporate governance.
6.3 The only matter outstanding from our previous
consideration was an assessment by the Government of the Commission's
power to adopt subordinate legislation. This was first raised
in its Explanatory Memorandum of 1 May 2014.
6.4 The Minister for Employment Relations and Consumer
Affairs and Minister for Women and Equalities (Jo Swinson) now
provides an update on negotiations, and helpfully provides the
current text (on which we are unable to explicitly report as it
remains classified as limité).
She indicates that there are expected to be further working group
meetings of the Council, that other Member States are broadly
satisfied with the current text, that the Latvian Presidency is
only expected to provide an update on this matter, and that the
Legal Affairs Committee of the European Parliament may have difficulty
in adopting its report as scheduled in March as over 300 amendments
to it have been received. Her letter does not provide a Government
view on the provisions for subordinate legislation to be adopted
by the Commission.
6.5 We are grateful for the update from the Minister.
She has asked for clearance from scrutiny, but we consider that
this would be premature. However, given her assessment that the
current Council text "will have a low impact on our current
corporate governance framework" we are prepared to grant
a waiver from scrutiny to enable her to agree a General Approach
in the Council, should the Presidency seek one, subject to the
conditions that (a) any further changes to the text remain within
the bounds of the UK's corporate governance framework, and (b)
that the provisions for subordinate legislation do not change
from the current text.
6.6 Should a General Approach be agreed we ask
the Minister to provide a copy of the text with a commentary as
to the changes from the current text and an analysis of the prospects
for trialogue negotiations with the European Parliament. If not
we ask the Minister to provide an update to the new 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 2 March 2015
6.7 In addition to the matters summarised above,
the Minister assesses the progress of negotiations to date:
"We have achieved the main aims of the negotiation
and, while officials will continue to negotiate in line with the
UK government's agreed position, we consider that the latest text
does reflect our position.
"I am satisfied that this minimum harmonisation
directive will have a low impact on our current corporate governance
framework. The main changes, which we support, will be limited
to measures aimed at increasing transparency amongst institutional
investors, asset managers and proxy advisers. The impact of the
new requirements will be moderated by a 'comply of explain' approach."
Thirtieth Report HC 219-xxix (2014-15), chapter 2,
(21 January 2015); First Report HC 219-i (2014-15), chapter 4,
(4 June 2014).