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EC-Serbia Explanatory Screening meeting Chapter 6 – Company lawBruxelles – 11 December 2014

European CommissionJustice

Content

Treaties – Legal basis for company law

Articles 49 and 56 of the TFEU guarantee EU companies:

� right of establishment

� free provision of services � free provision of services

throughout the Community

Practical implementation - harmonisation to:

� prevent distortions due to non-economic factors

� protection of all parties (shareholders, creditors, etc.)

� Cross-border provision of services.

Limited Liability Companies –Protection of members and third parties

1st Company Law Directive (68/151/EEC)

• mandatory disclosure of companies' documents and particulars• mandatory disclosure of companies' documents and particulars

• validity of obligations entered into by a company and

• nullity of companies

Directive 2003/58/EC

• streamlined access by the general public

• simplified disclosure formalities

• electronic means 1 January 2007

• any EU language.

LLC – Protection of members and third parties

Directive 2009/101/EC

• official register for public and private LLC

• in electronic format• in electronic format

• documents of legal relevance have to be entered

• accessible to the public

• may be relied on by company against third parties only after

publication in the national gazette.

Interconnection of business registers

Directive 2012/17/EU

• Amends 3 company law directives:

� Directive 89/666/EEC

� Directive 2009/101/EC� Directive 2009/101/EC

� Directive 2005/56/EC

• Introduces requirements for a system of interconnection of

business registers (BRIS) – part of 2009/101/EC

• Entered into force on 7 July 2012

• Two transposition deadlines: (1) 7 July 2014 and (2) two years

after adoption of implementing act on technical specifications for

BRIS (to be adopted early 2015)

Interconnection of business registers

Directive 2012/17/EU

• BRIS will ensure:

� Interoperability of European business registers

� Easy public access to information on European companies via the

e-Justice portal

� Exchange of information relevant to branches registered in

another EU country

� Electronic notifications as regards cross-border mergers

• Other changes to 2009/101/EC:

� Information on provisions of national law acc. to which third

parties can rely on information in the business register

� Disclosure of documents filed by company normally within 21 days

Disclosure of branches

11th Directive (89/666/EEC)

• MS and Third Countries

• Host country disclosure rules• Host country disclosure rules

• Compulsory disclosures

• Optional disclosures: Articles of association, securities on

property, translations

• Penalties.

Questions?

Transparency of regulated capital markets

• Directive on minimum transparency requirements for listed

companies ('Transparency Directive' 2004/109/EC)

� Objectives: investor protection, enhanced investor confidence

and a better functioning of European capital markets

� Disclosure of performance, financial position and changes in

major shareholdings

� TD + IAS + MAR/MAD + Prospectus = EU market Disclosure

Regime.


•Implementing Directive 2007/14/EC

Detailed rules on: Detailed rules on:

� issuers' disclosure of financial information in half-yearly

reports

� major holdings

� pan-European dissemination

� minimum requirements for accepting equivalence of third-

country regulations.


•Amending Directive 2013/50/EU

� Easier access for SMEs - Quarterly financial reports abolished

� No more secret stakes build-up - voting rights notification attached to

all financial instruments, including cash settled derivativesall financial instruments, including cash settled derivatives

� Oil, gas, mining and forestry to disclose payments to governments (+

country by country reporting)

� Harmonisation concerning notification rules

� Administrative sanctions

• Adopted: 22 October 2013

• Deadline for transposition: 26 November 2015

• ESMA regulatory technical standards (RTS)

The "Takeover Bids" Directive (2004/25/EC)

The Takeover Bids Directive contains minimumrequirements for the conduct of takeover bids,including disclosure, involving securities with voting rightsof companies governed by the laws of Member States, whereall or some of these shares are admitted to trading on aregulated market in one or more Member States.

The "Takeover Bids" Directive Objectives

• Legal certainty, clarity and transparency in respect of takeover bids;

• Protection of the interests of shareholders, in particular minority shareholders, and of employees and other stakeholders;

• Facilitation of takeover bids;

• Reinforcing the single market.

• Equal treatment of shareholders;

• Protection of minority shareholders on change of control;

The "Takeover Bids" Directive General principles (Article 3)

• Prohibition of market manipulation or abuse; and

• Shareholders must have sufficient time and information to make a properly informed decision on the bid.

� These principles should be complied with by Member States when transposing the Directive; any national derogations must still comply with these principles.

The "Takeover Bids" Directive Supervisory authority and applicable law

Member States are to designate the authority or authorities competent to supervise bids (Article 4):

• The authorities must be either public authorities, associations or private bodies recognised by national law or by public authorities expressly empowered for that purpose by national law.

• Impartiality and independence from all parties to a bid; professional secrecy.

• Rules on competence in individual cases;

• Cooperation and exchange of information.

The "Takeover Bids" Directive Main provisions

Mandatory Bid Rule (Article 5)

• Where a person, as a result of acquisition of securities of a company, holds securities directly or indirectly conferring a specified percentage of voting rights, giving control, Member States shall ensure that such a person is required to make a bid for all securities as a means of protecting person is required to make a bid for all securities as a means of protecting

minority shareholders;

• Control defined at national level, but normally around 30%;

• Bid to be made at 'equitable price'.

Squeeze-out Rule (Article 15)

Sell-out Rule (Article 16)

The "Takeover Bids" DirectiveOptional rules on defensive measures

• Board Neutrality Rule (Article 9)

• Breakthrough Rule (Article 11)

• Reciprocity (Article 12(3))

Recommendation on independent directors and board committees

• Commission Recommendation 2005/162/EC of 15 February 2005 • Commission Recommendation 2005/162/EC of 15 February 2005 on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board (OJ L 52, 25.02.2005, p. 51)

Recommendation on independent directors and board committees- Summary and scope

• The main objective of the 2005 Recommendation is to protect shareholders, employees and the public against potential conflicts of interest within listed companies.

• Independent directors have a particular role both in companies with dispersed ownership – where managers need to be made accountable to weak shareholders – and in companies with controlling shareholders – where independent directors can help protect minority shareholders.

• Member States should take all appropriate measures to ensure that listed companies having their registered office in their territory or having their primary listing on a regulated market established in their territory have regard to this Recommendation.

Recommendation on independent directors and board committeesMain provisions

• Minimum standards for the qualifications, commitment and independence of non-executive or supervisory directors

• The administrative, managerial and supervisory bodies should include an • The administrative, managerial and supervisory bodies should include an appropriate balance of executive/managing and non-executive/supervisory directors so that no individual or small group can dominate decision-making.

• Boards should be organised so that a sufficient number of independent non-executive or supervisory directors play an effective role in dealing with potential conflicts of interest.

• Nomination, remuneration and audit committees should normally be created within the (supervisory) board. The Recommendation defines minimum standards for the creation, composition and role of those committees.

Recommendation on independent directors and board committees - Main provisions (cont'd)

• A director is considered independent when free from any business, family or other relationship – with the company, its controlling shareholder or the management – which might controlling shareholder or the management – which might jeopardise his or her judgement.

• The (supervisory) board should be composed of members who, taken together, have the diversity of knowledge, judgement and experience to properly complete their tasks.

• All directors should devote the necessary time and attention. When the appointment of a director is proposed, his or her other significant professional commitments should be disclosed.

Questions?

Mergers of public limited liability companies - outline

• Common rules for mergers of public limited liability

companies companies

• References to national law, but key aspects harmonised

• Separate requirements of competition law - national and EU

(Merger regulation)

• Objective: facilitate mergers – simplify, harmonise

requirements

• Cooperative societies – could be out of the scope

Mergers of public limited liability companies - content

• Merger by acquisition - Key aspects :

- draft terms (minimum requirements like type, name,

registered office, information on shares/dates/advantages registered office, information on shares/dates/advantages

granted)

- publication (electronic versions, web-sites)

- report explaining the merger to members, creditors and

employees

- independent expert/experts report (before the date of

the general meeting)

- approval by the general meeting

Mergers of public limited liability companies - content

- Protection of rights of employees

- Protection of interests of creditors

- Consequences of the merger- Consequences of the merger

- Civil liability of members of administrative/management

bodies and experts

- Nullity of mergers

• Merger by formation of a new company

• Acquisition of one company by another which

holds 90% or more of its shares

• Other operations considered as mergers

Cross-border mergers of limited liability companies - outline

• Common rules for EU cross-border mergers

• Still a lot of references to national law, but key aspects • Still a lot of references to national law, but key aspects

harmonised

• Separate requirements of competition law - national and EU

(Merger regulation)

• Objective: facilitate cross-border mergers – simplify, harmonise

requirements

• Cooperative societies – could be out of the scope

Cross-border mergers of limited liability companies - content

Key aspects:

- common draft terms of reference (minimum requirements like - common draft terms of reference (minimum requirements like

form, name, registered office, securities, dates)


- report explaining the merger to members, creditors and

employees

- independent expert/experts report (before the date of the

general meeting)


Cross-border mergers of limited liability companies - content

• Pre-merger certificate (court, notary, authority) - scrutinise the

legality of mergerlegality of merger

• Applicable law - entry into effect of the merger

• Consequences of the merger

• Employee participation:

• - generally the country of "new" company, but could be different

rules, if employees previously subject to employee participation

rules - specific provisions

Division of public limited liability companies - outline

• Common rules for divisions of public limited liability

companies companies

• References to national law, but key aspects harmonised

• Objective: facilitate divisions – simplify, harmonise

requirements

• Protection of interests of members, third parties and

employees

Division of public limited liability companies - content

• Division by acquisition - Key aspects :

- draft terms (minimum requirements like type, name,

registered office, information on shares/dates/advantages registered office, information on shares/dates/advantages

granted, description and allocation of assets and

liabilities)


- report explaining the division to members, creditors and

employees

- independent expert/experts report (before the date of

the general meeting)


Division of public limited liability companies - content

- Protection of rights of employees

- Protection of interests of creditors

- Consequences of the division- Consequences of the division

- Civil liability of members of administrative/management

bodies, experts

- Nullity of division

• Division by formation of new companies

• Division under the supervision of a judical

authority

• Other operations considered as mergers

Questions?

European Economic Interest Grouping (EEIG) Statute - content

• Rules on methods of formation of an EEIG (contract, registration –

official address, legal personality, legal capacity)

• No start-up capital required; all forms of contributions are

possible

• EEIG can transfer its official address across borders without

having to wind up/re-establish

• Any profits taxable at the level of members (proportions laid down

in contact)


• Rules on methods of formation of an EEIG (contract, registration –

official address, legal personality, legal capacity)official address, legal personality, legal capacity)

• No start-up capital required; all forms of contributions are

possible

• EEIG can transfer its official address across borders without

having to wind up/re-establish

• Any profits taxable at the level of members (proportions laid down

in contact)


• Rules on internal governance

• EEIG members have unlimited joint and several liability for its

debts

• Formation and liquidation must be published nationally and in the

EU Official Journal

• Need to create a special entry into national registry

• Public interest clause – MS competence

European Company (Societas Europaea) Statute - outline

Objectives - enable companies with a European dimension to:Objectives - enable companies with a European dimension to:

• operate more easily across the EU (according to one set of

rules)

• better reorganise and restructure, transfer their seat across

the EU

• choose between different board structures.

European Company (Societas Europaea) Statute - content

• Rules on methods of formation of an SE (by merger, conversion, • Rules on methods of formation of an SE (by merger, conversion,

ex nihilo, generally at least two companies in two Member States)

• Minimum capital requirement: 120,000 euro

• Higher minimum capital in some Member States

• Rules on transfer (registered office to another Member State, but

registered office and HQ in the same MS)

• Sanctions if HQ and registered office not in the same MS -

liquidation


• Registration - national registry – abbreviation SE

• Rules on its internal governance; structure of SE: choice between

one-tier or two-tier system

• Rules on employee involvement: governed by Directive

2001/86/EC


Key aspects:

• common draft terms of reference (minimum requirements like

form, name, registered office, securities, dates)form, name, registered office, securities, dates)

• publication (electronic versions, web-sites)

• report explaining the merger to members, creditors and

employees

• independent expert/experts report (before the date of the

general meeting)

• approval by the general meeting


• Pre-merger certificate (court, notary, authority) - scrutinise the

legality of mergerlegality of merger

• Applicable law - entry into effect of the merger

• Consequences of the merger

• Employee participation:

- generally the country of "new" company, but could be different

rules, if employees previously subject to employee participation

rules - specific provisions


Outside the scope of Regulation:Outside the scope of Regulation:

• Taxation, competition, intellectual property, insolvency law –

national law

• Some EU aspects – harmonised accounting for credit institutions

• Other company law aspects – national law applicable to public

limited companies

European Company (Societas Europaea) Statute – latest developments

• Overall number of SEs: more than 1400 as of Sept 2012

• Present in 25 out of 30 EEA countries (most in CZ, DE, UK, SK, • Present in 25 out of 30 EEA countries (most in CZ, DE, UK, SK,

NL)

• November 2010 Report on application of the Statute:

o advantages: European image; possibility to transfer the

registered office and restructure more effectively on a cross-

border basis

o shortcomings: high set-up costs; many references to national

law; lack of sufficient awareness/experience with the Statute

European Economic Interest Grouping (EEIG) Statute - outline

• Creates a single EU legal form (28th regime), same in all Member

States

• Objective:

o facilitate cross-border cooperation at EU level between

companies/individuals

o help develop economic activities of its members (not to make

profits for itself) – does not replace the activity of members

European Economic Interest Grouping (EEIG)

• Who is concerned?

• Natural persons, companies and other legal bodies from different • Natural persons, companies and other legal bodies from different

Member States

• What is the function of EEIG?

• Function similar to a temporary grouping of enterprises, but

characteristics of both a partnership and a company

• More than 1500 EEIGs created so far

Questions?

Directive 2012/30/EU on formation of public limited liability companies and maintenance and alteration of their

capital

• So-called 2nd Company Law Directive, originally from 1977 – codified• So-called 2nd Company Law Directive, originally from 1977 – codified

• Main rules:

o rules on formation of the PLC, in particular on the content of the statutes

o rules on capital formation, including rules on valuation of contributions in kind

o minimum capital requirements for PLC (25 000 €)

o rules on distributions to shareholders

Directive 2012/30/EU on formation of public limited liability companies and maintenance and alteration of their

capital

• Main rules (continued):• Main rules (continued):

� limits on acquisition of own shares by company

� rules on capital increase, including pre-emption right to shareholders in case of capital increase

� rules on capital reduction, including redemption of shares

� principle of equal treatment of all shareholders in the same position

Directive 2009/102/EC on single-member private limited liability

companies

• So-called 12th Company Law Directive, originally from 1989 –

codified

• Sets out rules to ensure transparency for private limited liability

companies where all shares are held by a single shareholder

• New proposal on single-member private limited liability companies

(COM(2014)0212).

Directive 2009/102/EC on single-member private limited liability

companies

� Transparency is ensured by e.g.:

o Registration/disclosure of the character of single-member company and o Registration/disclosure of the character of single-member company and

the identity of the sole member

o Decisions of the sole member exercising the power of the general

assembly recorded in minutes/drawn up in writing

o Contracts between the sole member and his company recorded in

minutes or drawn up in writing

� Directive applies also if MS allow single-member companies in the case of

public limited liability companies

New proposal on single-member private limited liability companies

• Commission proposal for a Directive: April 2014

• Main objective: Facilitating cross-border establishment of

subsidiaries for SMEssubsidiaries for SMEs

• Harmonisation of key features for a company form ("Societas

Unius Personae" (SUP)) which Member States would have to

provide for in their national law:

o On-line registration; template for articles of association

o Minimum capital of EUR 1; creditor protection by balance

sheet test and solvency statement

• Proposal currently under discussion by the legislator

Questions?

Remuneration Recommendations - Introduction

• The "2004 Recommendation on directors´ remuneration"

• Commission Recommendation 2004/913/EC of 14 December 2004 on fostering an appropriate regime for the remuneration of directors of listed companies (OJ L 385, 29.12.2004 p. 55)

• The "2005 Recommendation on the role of non-executive or supervisory directors"

• Commission Recommendation 2005/162/EC of 15 February 2005 on the • Commission Recommendation 2005/162/EC of 15 February 2005 on the role of non-executive or supervisory directors of listed companies and on the committees of the (supervisory) board (OJ L 52, 25.02.2005, p. 51)

• The "2009 Recommendation on directors´ remuneration"

• Commission Recommendation of 30 April 2009 complementing Recommendations 2004/913/EC and 2005/162/EC as regards the regime for the remuneration of directors of listed companies (OJ L 120, 15.5.2009, p. 28)

• The "2009 Recommendation on remuneration in financial services"

• Commission Recommendation of 30 April 2009 on remuneration policies in the financial services sector (OJ L 120, 15.05.2009, p. 22)

Remuneration Recommendations -Summary and scope

• The main objectives of the 2004 and 2005 Recommendations as regards remuneration policy are:

• to ensure pay for performance and stimulate directors to ensure the medium and long term sustainability of the company. the medium and long term sustainability of the company.

• to ensure transparency of remuneration practices, shareholder control on the remuneration policy and individual remuneration through disclosure and the introduction of a mandatory or advisory vote on the remuneration statement and shareholder approval for share-based remuneration schemes, effective and independent non-executive supervision and at least an advisory role of the remuneration committee with regard to remuneration practices.

Remuneration Recommendations -Summary and scope (cont'd)

The main objective of the 2009 Recommendation on directors´The main objective of the 2009 Recommendation on directors´remuneration is:

• to give further guidance by setting out best practices for the design of an appropriate remuneration policy.

• Member States should take all appropriate measures to ensure that listed companies having their registered office in their territory or having their primary listing on a regulated market established in their territory have regard to these Recommendations.

Remuneration Recommendations -Summary and scope (cont'd)

The main objective of the 2009 Recommendation on remuneration in the financial services sector is:

• to ensure that financial institutions have remuneration policies for • to ensure that financial institutions have remuneration policies for risk-taking staff that are consistent with and promote sound and effective risk-management, which is consistent and complementary to the Financial Stability Forum principles on pay and compensation as agreed by the G20.

• This Recommendation covers all sectors in the financial services industry, regardless of the size of the financial institution or whether or not it is a listed company. The principles apply to all categories of staff whose professional activities have an impact on the risk profileof the financial institution.

Remuneration Recommendations -Main provisions

• On remuneration policy and on the remuneration of individual directors, the 2004 Recommendation provides that:

• each listed company should disclose a statement of the remuneration policy of the company, which should be part of an remuneration policy of the company, which should be part of an independent remuneration report and/or be included in the annual accounts and annual report of the company. It should also be posted on the company's website. The Recommendation provides which information should at least be included in the remuneration statement.

• the remuneration policy and any significant change to the remuneration policy should be an explicit item on the agenda of the annual general meeting. The remuneration statement is to be submitted to the annual general meeting of shareholders for a (mandatory or advisory) vote.

Remuneration Recommendations -Main provisions (cont'd)

• On remuneration policy and on the remuneration of individual directors, the 2004 Recommendation provides that:directors, the 2004 Recommendation provides that:

• the total remuneration and other benefits granted to individual directors over the relevant financial year should be disclosed in detail in the annual accounts or, where applicable, in the remuneration report. The Recommendation provides an overview of all the information which should be provided for each director.

• Share-based remuneration schemes, including share options, should be subject to the prior approval of shareholders by way of a resolution at the annual general meeting prior to their adoption.

Remuneration Recommendations -Main provisions cont'd

• The 2005 Recommendation provides that a remuneration committee should be created within the (supervisory) board, considering that the potential for abuse and conflicts of interest essentially lies in the area of executive remuneration.executive remuneration.

• The role of the remuneration committee is essentially to make sure that, where the (supervisory) board plays a role in the remuneration setting process, this role is performed in as objective and professional a way as possible.

• The remuneration committee should be composed exclusively of non-executive or supervisory directors. At least a majority of its members should be independent.

• The Recommendation sets out the role of the remuneration committee with respect to executive or managing directors, with respect to senior management and with respect to stock options and other share-based incentives which may be granted to directors, managers or other employees.


On structure of directors' remuneration, the 2009 Recommendation invites Member States to:

• set a limit (2 years maximum of fixed component of directors' pay) on severance pay (golden parachutes) and to ban severance pay in case of failure. pay in case of failure.

• require a balance between fixed and variable pay and link variable pay to predetermined and measurable performance criteria to strengthen the link between performance and pay.

• promote the long term sustainability of companies through a balance between long and short term performance criteria of directors' remuneration, deferment of variable pay, a minimum vesting period for stock options and shares (at least three years); retention of part of shares until the end of employment.

• allow companies to reclaim variable pay paid on the basis of data, which proved to be manifestly misstated ("clawback").


On the process of determining directors' remuneration, the 2009 Recommendation invites Member States to:

• extend certain disclosure requirements contained in the existing Recommendation to improve shareholder oversight of remuneration policies; Recommendation to improve shareholder oversight of remuneration policies;

• ensure that shareholders, in particular institutional investors, attend general meetings where appropriate and make considered use of their votes regarding directors´ remuneration;

• provide that non-executives should not receive share options as part of their remuneration to avoid conflict of interests;

• strengthen the role and operation of the remuneration committee through new principles on (i) the composition of remuneration committees; (ii) the obligation for the members of the remuneration committee to be present at the general meeting where the remuneration policy is discussed in order to provide explanations to shareholders; (iii) avoiding conflicts of remuneration consultants.


• As regards remuneration in the financial services sector, the 2009 Recommendation invites Member States to adopt measures in four areas:

• Structure of pay: remuneration policies should be consistent with sound and effective risk management. An appropriate balance should be sound and effective risk management. An appropriate balance should be struck between core pay and bonus (the payment of which should for the major part be deferred). Performance measurement criteria should privilege longer-term performance and adjust the underlying performance for risk, cost of capital and liquidity. Financial institutions should also be able to claim back already paid bonuses (claw-back).

• Governance: remuneration policy should be transparent internally, clear and properly documented and contain measures to avoid conflicts of interest. The board should have responsibility for oversight of the remuneration policy with an adequate involvement of internal control functions, HR departments or experts. Staff involved should be independent.


• As regards remuneration in the financial services sector, the 2009 Recommendation invites Member States to adopt measures in four areas:areas:

• Disclosure: remuneration policy should be adequately disclosed to stakeholders. The disclosure should be made in a clear and easily understandable way and contain core elements of the remuneration policy, its design and operation.

• Supervision: supervisors should ensure, using the supervisory tools at their disposal, that financial institutions apply these principles and policies to the largest possible extent. Supervisors should take account of the nature and scale of the financial institution and the complexity of its activities in order to assess compliance (proportionality).

Questions?

Commission Recommendation 2009/384/EC on remuneration policies

in the financial services sector

• Applies since 30 April 2009

• Includes principles on the structure of remuneration, process of • Includes principles on the structure of remuneration, process of design and operation of remuneration policy, on the disclosure of remuneration policy to shareholders, and on supervisory review

• Remuneration should be consistent with and promote sound and effective risk management, and not induce excessive risk taking

• Applies to remuneration of categories of staff referred to as 'material risk takers' (directors and other high level persons), in all sectors of financial services industry (listed and non-listed)

• Non-binding, i.e. the Commission does not have a possibility to open infringement proceedings against a Member State which did not implement it

Capital Requirements Directive IV (Directive 2013/36/EU) & Capital Requirements

Regulation (Regulation (EU) No 575/2013)• Apply since 31 December 2013 and 1 January 2014 respectively

• Cover remuneration of categories of staff referred to as 'material risk takers' (directors and other

high level persons), in credit institutions and investment firms (listed and non-listed)

• Binding• Binding

• Builds on and complements the principles of the 2009 Recommendation, but provides for more

detailed rules, incl:o Governance with respect to the process of design of remuneration policies (role of the board, remuneration committee,

shareholders)

o Structure of remuneration: capped ratio between fixed and variable components

o Pay out of variable component: rules on spread of payment, form of payment (instruments), retention period

o Ex-post adjustments of variable component: malus and claw-back

o Detailed public disclosure requirements

o Remuneration policies and their link with risk management are within prudential oversight in the supervisory review

process

• Form part of the Single Rulebook: European Banking Authority has the task to deliver binding

and non-binding rules on specific elements of CRD/CRR package, in order to ensure legal

certainty in the single market for financial services

Directive 2007/36/EC on the exercise of certain rights of shareholders in listed

companies

2007 Directive � applies since 2009

Aimed to:

• Ensure that shareholders can effectively exercise their voting rights in general meetings • Ensure that shareholders can effectively exercise their voting rights in general meetings

of listed companies in a cross-border context, and

• Enhance shareholder rights including their role in holding the management of

companies accountable for their actions.

Main measures facilitating the cross-border exercise of shareholder voting rights:

• record date system for shareholder participation and voting in general meetings

• minimum convocation periods

• minimum content of the general meeting notice and deadlines and methods for its

publication

• removing obstacles in national laws to voting by proxy and to using electronic means for

the organisation of the general meeting

Proposal for amendment of Directive 2007/36/EC as regards encouragement of

long-term shareholder engagement

• Proposed in April 2014

• Deals with the problem of insufficient and inappropriate shareholder engagement

(shareholder "absenteeism")

• Evidence from financial crisis shows that institutional investors did not exercise sufficient • Evidence from financial crisis shows that institutional investors did not exercise sufficient

control or even supported excessive short term risk taken

• Main elements of the proposal relate to:

• Shareholder identification and facilitation of exercise of shareholders rights

• Transparency on costs

• Transparency of institutional investors and asset managers concerning their

engagement and investment policies

• Transparency of proxy advisors

• Remuneration of directors

• Transparency and approval mechanisms of related party transactions

• Currently under debate by European Parliament and Council

Questions?

Thank you for the attendance and attention.

• More info at:

• http://ec.europa.eu/internal_market/company/index_en.htm

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