The Implementation of the Shareholder Rights Directive 2017/828
On 17 May 2017, the Shareholder Rights Directive II 2017/828 (“SHRD II”) was adopted, amending the Shareholders’ Rights Directive 2007/36/EU (or “SHRD”) as regards the encouragement of long-term shareholder engagement. The “SHRD II” must be implemented by 10 June 2019, with the exception of the provisions concerning the identification of shareholders, the transmission of information and the facilitation of the exercise of shareholder rights, whose transposition deadline is set to 3 September 2020.
The purpose of the “SHRD II” is to improve the governance of companies with shares admitted to trading on a regulated market, strengthening their competitiveness and long-term sustainability through greater involvement of shareholders in corporate governance. The greater involvement of shareholders in corporate governance, according to the recital 14, is one of the levers that can help improve the financial and non-financial results of these companies.
With the law n. 163 of 2017 (European delegation law 2016/2017) the Italian Parliament delegated the Government to adopt inter alia the legislative decree for the implementation of the “SHRD II”. The Council of Ministers, on 7 February 2019, issued on a preliminary basis the text of the “Legislative Decree Scheme” or simply decree (on which this news is based). On 8 May 2019, the decree was finally approved and it is currently awaiting publication in the Official Journal.
Pursuant to the “SHRD II” the greater involvement of shareholders in corporate governance can be implemented primarily by ensuring that shareholders can effectively exercise the rights attributed to them by article 3-bis. According to such article, shareholders who hold more than 0.5% of the share capital with voting rights, shall be identified by the company. That identification has been introduced by paragraph 4 of article 2 of the decree amending the Consolidated Law on Finance (TUF) where the identification was not compulsory.
Furthermore, the “SRHD II” identifies some measures to guarantee the information flow between shareholders and issuer, including those aimed at ensuring that the shareholder can receive confirmation that the vote expressed in the general meeting has been registered and counted by the company (article 3-quater). The decree introduced article 125-quater TUF paragraph 2-bis which specifies the duty for issuers to transmit certain information such as those concerning the calling of the meeting and those additional information necessary for the exercise of rights (identified in the the Italian Companies and Exchange Commission secondary regulation).
The European legislator deemed that to encourage the shareholders partecipation to corporate strategy it is necessary to attribute them the right to vote on the remuneration policy of the members of the administrative, management and control bodies (article 9 bis). In this light the decree intervenes on article 123-ter of the TUF providing that the vote of the shareholders on that policy is binding, and not simply consultative (except in certain and specific cases).
The “SRHD II” introduces some guarantees to protect shareholders, the company and all its stakeholders from transactions with related party. These transactions may cause prejudice as they may give the related party the opportunity to appropriate value belonging to the company. Thus the SHRD II ask Member States for adequate safeguards that shall be submitted to approval by the shareholders or by the administrative or supervisory body according to procedures that prevent the related party from taking advantage of its position and provide adequate protection for the interests of the company and of the shareholders who are not a related party (including minority shareholders). The Italian legal system regulated that issue in 2004 with the reform of company law. The decree, on this front, intervenes with a view to maintaining what is already provided for by the previous national law.