ESMA and the EBA assess the implementation of the revised Shareholder Rights Directive and identify areas for progress

ESMA and EBA have collaboratively conducted an assessment of the implementation of the revised SRD II within the EU. SRD II is designed to enhance shareholder engagement, improve corporate governance practices, and bolster transparency within the financial markets.
The assessment report, prompted by a request from the EC, zeroes in on two crucial dimensions: proxy advisors and the investment chain. Proxy advisors play a pivotal role in corporate decision-making by providing analysis and recommendations to shareholders, often influencing voting outcomes at general meetings. The analysis reveals that the existing framework for proxy advisors is generally resilient. However, there is room for enhancement, particularly concerning conflicts of interest. ESMA introduces the idea of instituting an EU-wide registration mechanism for proxy advisors to ensure greater transparency and accountability.
Within the investment chain, ESMA underscores the significance of establishing a shared definition of the term „shareholder,“ aligning with Action 12 of the EC’s Capital Markets Union Action Plan. This move aims to harmonize shareholder identification across EU jurisdictions, streamlining the process and bolstering shareholder rights. Furthermore, the report recommends technical refinements to enhance communication efficiency along the investment chain. It calls for improved transparency regarding charges levied by intermediaries, providing investors with a clearer understanding of the costs incurred.
The report’s conclusions serve as a foundation for the EC’s future deliberations on SRD II, potentially leading to further refinements and enhancements in shareholder rights, corporate governance, and financial market transparency within the EU. The central thrust of the report underscores the need for well-defined standards, increased transparency, and harmonization across the investment landscape to foster more robust shareholder engagement and corporate accountability.