In 2007 the European Parliament and the European Council adopted Directive 2007/36/EC, the so-called “Shareholder Rights Directive” (SRD I) to ensure better protection of the shareholders’ rights in listed companies.
The financial crisis revealed that on many occasions, the shareholders supported the manager’s excessive short-term risk-taking. The monitoring of investee companies and engagement by institutional investors and asset managers was often inadequate and focused on short-term returns, often leading to suboptimal corporate governance and performance. Furthemore, the complex chains of intermediaries rendered the exercise of shareholder rights more difficult, and this was considered an obstacle to shareholder engagement.
As a response to the abovementioned issues exposed by the financial crisis, the European Commission introduced SRD II, to improve the area of corporate governance, to encourage long-term shareholder engagement and to enhance transparency between companies and investors. More information may be found here.
Our lawyers are closely monitoring the developments to the local regulatory framework. For more information, please contact a member of our Capital Markets team.