The European Commission has recently announced it intends to initiate processes for taking action against EU Member States over implementation of the Shareholders Rights Directive (SRD). The Directive, which was passed in 2007, establishes Europe-wide principles for ensuring certain basic rights of shareholders at European listed companies. These rights relate to improved registration, participation and information rights especially with regard to rights across borders which together are designed to deliver easier participation in shareholder meetings. Member States were given until the 9th August last year to ensure it was implemented, as did the UK Government through the 2006 Companies Act with amendments last August.
However, having reviewed implementation progress, the Commission has identified 9 Member States who, in its view, have not sufficiently implemented the provisions of the SRD (Belgium, Cyprus, Greece, Spain, France, Luxembourg, the Netherlands, Portugal and Sweden). All 9 Member States are now the subject of a ‘Reasoned Opinion’, a mechanism by which the Commission signals its intent to the European Court of Justice of launching proceedings, which may ultimately result in punitive sanctions such as fines, in the absence of satisfactory responses from the Member States named.
On a practical level, the SRD where implemented has been the driver for some success especially with regard to dissemination and availability of meeting materials, although it is widely held that in only using the mechanism of company law, many problems with cross-border voting, such as share blocking and the use of wet signatures, remain outstanding because they continue to occur in the ownership chain.
It is, however, positive to see the Commission taking seriously the issue of implementing such a significant piece of legislation; it will certainly add further weight to the on-going discussions for the upcoming Securities Law Directive later this year.