Bill to implement the revised Shareholders' Rights Directive adopted by the Lower House of Parliament

On 2 April 2019, the Lower House of Parliament adopted the bill to implement the revised Shareholders' Rights Directive to promote long-term shareholder engagement (EU Directive 2017/828). The purpose of this legislative proposal is to implement a number of amendments to Directive 2007/36/EC on the exercise of certain rights of shareholders in listed companies.

The bill contains rules for listed N.V.s and B.V.s, institutional investors, asset managers, intermediaries and proxy advisors (proxy advisory services). Some of the proposed provisions relating to the remuneration policy also apply to non-listed N.V. companies.

The bill amends the Dutch Civil Code, the Financial Supervision Act and the Securities (Bank Giro Transactions) Act. The amendments to the Dutch Civil Code relate to the remuneration policy and the remuneration report of listed companies as well as to (material) transactions with related parties, such as a director or a shareholder. The amendments to the Financial Supervision Act and the Securities (Bank Giro Transactions) Act relate to the shareholder involvement of institutional investors, asset managers and proxy advisors.

The bill introduces the following rules and regulations:

  • An obligation to establish a new remuneration policy to ensure that shareholders have control over the remuneration policy of management board members. Under these rules, the remuneration report must be submitted to the annual general meeting for a vote.
  • Rules to ensure the protection of the interests of companies and shareholders when the company enters into transactions with an affiliated party. For example, transactions that have not been entered into with a related party in the ordinary course of business or under normal market conditions should be made public.
  • Transparency obligations for institutional investors (life insurers and pension funds), asset managers and proxy advisors. These obligations include the preparation and publication of an engagement policy that includes the broad outlines of an investment strategy.
  • Rules concerning the identification of shareholders, the exchange of information between shareholders and the issuing institution, and on facilitating the exercise of shareholders' rights.

EU Directive 2017/828 must be implemented by 10 June 2019 at the latest. The bill is currently under discussion in the Senate (the Upper House of Parliament). We will keep you updated on any developments concerning the bill.

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