Implementation of the Shareholder Rights Directive (SRD II)
Adoption of legislative package by the Danish parliament.
On 4 April 2019, the legislative package implementing the amendments to the Shareholder Rights Directive in Denmark was adopted by the Danish parliament.
The implementation of SRD II marks a transition to a new phase for shareholders, companies and intermediaries – entailing new rights and obligations. The aim of SRD II is to stimulate shareholders’ long-term engagement, increase transparency in the voting process both in relation to proxy voting and shareholder identification, and to improve the issuer-investor dialogue.
For listed companies the implementation of SRD II implies – among other things – that they will have the right to identify their shareholders and request intermediaries to provide the relevant information about the company's shareholders.
Furthermore, according to the new regulation, listed companies must prepare a remuneration policy and a remuneration report. Compared to existing regulation, the new requirements will in more ways significantly change how listed companies should handle remuneration of the management, and not least how they should report on remuneration. The requirements on remuneration policy and report will apply for annual general meetings convened in fiscal years beginning 10 June 2019 or later. For listed companies with the calendar year as the fiscal year, it means that they will have to vote on the remuneration policy at the annual general meeting in 2020, and that the remuneration report must be presented on the following ordinary general meeting in 2021.
With regard to the exercise of shareholders rights, SRD II and the new Danish regulation state that it must be ensured that intermediaries, such as the nominee account holder, facilitate the exercising of rights by shareholders, including the right to vote at general meetings. However, the current Danish regulatory framework entails a number of constraints on any further significant optimisation of the proxy voting process – as we have described in previous articles on SRD II. In the coming period we will get more insight in how these challenges are handled when implementation and interpretations meet with current practices and related national laws.
VP is proactively participating in and following the implementation of SRD II and we will keep you updated on the progress, as well as we will go into more detail on the specific implications of the new regulation for companies and shareholders.
- 10 June 2019: The legislative package will enter into force (the general implementation deadline).
- September 2020: Rules on shareholder identification and voting will enter into force.
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