Better Finance comments on the EU Shareholder Rights Directive

Better Finance, a representative body for European shareholder associations, has issued a press release commenting on the review of the Shareholder Rights Directive. It points out a number of defects in the proposals. Here are extracts from the press release:

Guillaume Prache, managing director of Better Finance has stressed that many individual shareholders of EU companies will still have to pay high fees to exercise their voting rights across borders within the EU. If the internal market for capital is to carry any meaning at all, cross-border voting by EU citizens within the EU should be cost free, as is the case within Member States.

Many others, especially those whose shares are lodged by intermediaries into omnibus or nominee accounts, and those who are domiciled in a different EU Member State than the issuing company, will still not be able to vote at all, mainly due to the persistent failure of financial intermediaries to identify the beneficial owners of shares and to send them the voting material.

This is all the more unacceptable as these very same intermediaries are perfectly capable of identifying beneficial owners when it comes to paying them dividends on their shares. For voting rights to be genuine, all beneficial owners must be provided with adequate voting material in a timely manner.”

One surely cannot argue with that. For the full press release see:

http://www.betterfinance.eu/fileadmin/user_upload/documents/Press_R…

Better Finance have also published an extensive review of the Shareholder Rights Directive here: http://www.betterfinance.eu/fileadmin/user_upload/documents/Positio…

The policies promoted by Better Finance are very much in alignment with those put forward in ShareSoc’s Shareholder Rights campaign, such as on this point:

“Voting Rights for the underlying shares in Nominee Accounts (or for those cases where a third party is holding shares on behalf of end-investors) should be provided without any restrictions to the beneficial owner. It is important to promote a direct relationship between investors and the companies in which they invest by placing investors’ own names on share registers and thereby ensure their legal rights of ownership.”

Another idea they put forward which we have not specifically considered in ShareSoc but which may be of interest is this:  “Most individual shareholders are by nature long term holders. Issuers could reward long term shareholding further through the mechanism of loyalty shares. However, there should be no departing from the “one share, one vote” principle”.

It is good to see Better Finance promoting such ideas in the labyrinthine bureaucracy of the EU as UK legislation in this area is driven by EU Commission Directives.

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