Shareholder Rights Directive review (“SRD II”)


The Shareholder Rights Directive II (SRD II) is a European Union (EU) directive, which sets out to strengthen the position of shareholders and to ensure that decisions are made for the long-term stability of a company. It amends SRD1 which came into effect in 2007, with the objective of improving corporate governance in companies whose securities are traded on the EU’s regulated markets.

SRD II, as an amending Directive, will require transposition into each Member State’s national law and is expected to be implemented during Q2:2019.


SRD II establishes requirements in relation to the exercise of certain shareholder rights attached to voting shares in general meetings of companies. This applies where a company has their registered office in a Member State and the shares of which are admitted to trading on a regulated market situated or operating within a Member State.

It also establishes specific requirements to encourage shareholder engagement, in particular for the long-term. The requirements apply in relation to the:

  • Identification of shareholders;
  • Transmission of information;
  • Facilitation of exercise of shareholders rights;
  • Transparency of institutional investors;
  • Asset managers and proxy advisors; and
  • Remuneration of directors and related party transactions.


SRD II sets out obligations applicable to an intermediary. Intermediaries will be required to facilitate a company’s right to identify its shareholders and to also facilitate the exercise of shareholder rights. This is achieved by making the necessary arrangements to the shareholder without “undue delay” (i.e. provide voting forms to shareholders and/or registering votes with issuers, or putting a shareholder in touch with an issuer) so the shareholder can exercise their rights. The scope has also been extended to third country intermediaries (Non- EU firms holding EU shares for shareholders).

Requirements on Institutional Investors

SRD II also requires member states to ensure that institutional investors disclose to the public how their equity investment strategy is aligned with the profile, the duration of their liabilities, and how it contributes to the medium to long-term performance of their assets.


SRD II mandates that shareholders must be given the right to vote on the company’s remuneration policy and on the remuneration report at a firm’s annual general meeting (AGM). The aim of this requirement is to try and create a better link between pay and performance of company directors.

Core Objectives


  • increase the level and quality of engagement of asset owners and asset managers with their investee companies;
  • create a better link between pay and performance of company directors;
  • enhance transparency and shareholder oversight on related party transactions;
  • ensure reliability and quality of advice of proxy advisors; and
  • facilitate transmission of cross-border information (including voting) across the investment chain in particular through shareholder identification.

 Interesting article by BNY Mellon | Perching dated January 2018.  Read the full article here.