The directive, launched in September 2020, has been troubled by inconsistencies

Better Finance, the European financial services NGO, has launched a survey of shareholders after the Shareholder Rights Directive II (SRD II) encountered teething issues shortly after launch.

The European Commission introduced SRD II legislation in September 2020 to facilitate the rights of shareholders across EU member states. However, evidence from Better Finance, also known as The European Federation of Investors and Financial Services Users, suggests the directive does not adequately tackle the challenges faced by cross-border investors, resulting in shareholders not being notified of key general meeting information.

Subsequently, the group is launching a survey to evaluate the experiences of investors to determine whether SRD II has indeed resulted in the anticipated improvements.

Under the directive, shareholders should be able to receive notifications regarding key information, including, times and dates, of the general meetings of companies they hold in their portfolio, regardless of where in the EU these companies are located.

This is meant to ensure that shareholders can exercise their rights across borders and attend and vote at annual general meetings in companies located in EU Member States other than their own.

However, shareholder’s initial experiences of SRD II’s shareholder information scheme, as relayed to Better Finance, suggest that the system is not properly functional, and investors are not being properly informed about general meetings in another country, or are encountering serious obstacles when attempting to exercise their rights at a general meeting abroad.

As such, the organisation has invited European shareholders to take part in its survey, which it hopes will gather meaningful information on investors experiences with SRD II, and to evaluate whether the directive has achieved its aim of improving accessibility for shareholders to exercise their rights.

SRD II amends the original SRD, which came into effect in 2007. Beyond providing information for shareholders, the directive also aims to increase the level and quality of engagement of asset owners and asset managers with their investee companies and seeks create a better link between pay and the performance of company directors.