Broadridge Financial Solutions has called for a proactive industry response to shape common guidelines and implementation standards around the revised Shareholder Rights Directive (SRD).
In a new white paper, Broadridge examines the secondary legislation and the new requirements, impacts and implications on participants in the shareholder communications chain.
The revised SRD is an amended version of the original 2007 legislation. The new measures will require financial institutions and intermediaries—including custodians and institutional investors—to use a new mechanism to exchange shareholder information in every EU/European Economic Area market throughout the proxy voting lifecycle.
These institutions will also be required to adhere to significantly more stringent processing deadlines and mandatory processes such as shareholder identification.
SRD is set to come into force through national laws by 3 September 2020.
Broadridge’s white paper focuses on three key themes in regards to the revised regulation: shareholder identification, agenda distribution and voting by intermediaries, and vote confirmation.
It found that while Implementing Regulation 2018/1212, published by the European Commission in September 2018, “offers welcome clarification in several areas, there are areas of flexibility that could be deemed more open to interpretation”.
The SRD is a driving force for greater transparency in corporate governance and improved shareholder engagement, according to Broadridge.
“The regulation remains in keeping with these goals. The regulation has moved to address many of the inadequacies of the meeting notification and voting process through the intermediary chain.”
The whitepaper added: “There remains, however, some scope for implementation divergence by member states.
Intermediaries should act now to ensure that they are part of implementation discussions. Lobbying for a harmonised approach, either directly or through their professional associations, will be critical to ensure the most efficient processes are implemented.”
“Custodians and other intermediaries should examine their product offering to identify areas where change will be needed to ensure their compliance with the regulation. Clear opportunities exist for forward-looking, well-prepared firms to develop and manage solutions for the industry.”
Demi Derem, general manager of investor communication solutions international at Broadridge, said: “With greater clarity over how the Directive must be implemented, member states will now start planning for implementation into their national law.”
He added: “But with flexibility in implementation, timing is critical in shaping guidelines for how the Directive should be applied in each EU member state.”
“Inaction during this critical window could result in a missed opportunity for local and pan-European shareholder communication intermediaries to help drive harmonisation of processes across Europe.”
