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New rules in the Shareholder Rights Directive II

take effect on 10 June 2019

New rules in the Shareholder Rights Directive II

What you need to know

The updated EU Shareholder Rights Directive applies in the UK from 10 June 2019. Companies, asset managers and institutional investors need to be prepared to comply with the changes it introduces in the three specific areas below.  Select each of the links for details. 

New rules for related party transactions

Main Market listed companies will need to put procedures in place to comply with new requirements for material related party transactions, including a need for board approval and public announcement.

The requirements, which are being brought in to comply with the EU Shareholder Rights Directive, will apply to both standard-listed and premium-listed companies when they enter into certain types of transaction in financial years starting on or after 10 June 2019.

Our briefing paper covers the following topics. 

  • What does this mean for listed companies?
  • What transactions are caught?
  • What if you enter into more than one transaction with the same related party?
  • What are the requirements for a material RPT?
  • Do these rules still have to be met by a premium-listed company that complies with LR 11?

Directors' pay rules

The EU “say on pay” rules in the Shareholder Rights Directive are similar to the UK directors’ pay regime so there is no major overhaul of the UK rules. But companies will need to comply with some new miscellaneous requirements, in particular, increased website disclosure of remuneration reports. This applies to UK-incorporated (i) quoted companies and (ii) unquoted traded companies. 

Watch our short, animated guide for a quick overview of the new changes and when companies need to comply.

Our briefing paper covers the following topics. 

  • Extended website disclosure requirements for remuneration reports and pay policy resolutions.
  • Remuneration policy changes including consequences of shareholders rejecting a policy and greater transparency.
  • Implementation report changes including new comparisons of annual change in each director’s pay and greater disclosure of fixed/variable pay in the single figure table.
  • Extending the pay rules to unquoted traded companies.
  • When will the new rules apply?

Click here to download our full briefing paper.

See the Linklaters’ Directors’ Remuneration Report online guide. This is a unique, new and interactive compliance tool to directors’ pay policy and disclosure to help companies navigate this increasingly complex landscape and prepare the annual remuneration report. Click here to view pages from different sections of the guide and here for the brochure.

Transparency for asset managers and institutional investors

SRD II requires much greater transparency on shareholder engagement activities, asset management mandates and investment strategies for asset managers and institutional investors investing in listed companies.

Alongside implementing SRD II, the Financial Conduct Authority (“FCA”) is considering broader regulatory changes on the subject of stewardship, and the Financial Reporting Council (“FRC”) is revising the UK Stewardship Code.

Since our briefing paper was published the FCA have finalised their rules implementing this part of SRD II. However, there were no significant changes in comparison to the rules they consulted on which are discussed in our briefing paper.

Our briefing paper covers the following topics. 

  • Shareholder engagement disclosures by asset managers and institutional investors.
  • Disclosures by institutional investors on investment strategies and asset management arrangements.
  • Disclosures by asset managers on their investment strategies to institutional investors. 
  • The FRC’s revisions to the UK Stewardship Code. 
  • The FCA and FRC joint discussion paper on potential further stewardship reforms.

Click here to download our full briefing paper.

Webinar – UK - Asset Management Spotlight Webinar - Tuesday 2 April 2019. This one hour webinar is available to subscribers on the Linklaters Client Knowledge Portal
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