Proxy vote confirmations one step closer as UK publishes SRDII implementation plans

The UK government has published the full text of its planned Shareholder Rights Directive (SRD II) legislation as it moves closer to bringing the new rules into law. 

Despite the country’s exit from the European Union, the UK has been working on incorporating SRD II into local law over the past 18 months. 

Some of the directive’s requirements are already in force: proxy advisory firms were required to register with the Financial Conduct Authority by April this year, while asset management rules have been in place since June 2019. 

The UK’s version – introduced to parliament earlier this month as the Companies (Shareholders’ Rights to Voting Confirmations) Companies (Shareholders’ Rights to Voting Confirmations) Regulations 2020 – will come into force on 3 September this year. 

While some aspects of SRD II are already covered by existing UK company law, the new legislation brings in rules regarding the identification of shareholders, transmission of information, and how shareholder rights can be exercised. 

Specifically, the new rules: 

• require electronic vote confirmation to be sent to shareholders on receipt of their electronically submitted vote, and 
• require shareholders to be provided with, on request, information confirming that their votes at general meetings have been recorded and counted properly. 

For UK pension funds, the government has previously called for trustees of DB and DC schemes to update their Statements of Investment Principles relating to policies on financially material considerations, non-financial matters, and stewardship, as well as improving transparency about arrangements with asset managers. 

A full summary of the UK’s transposition of SRD II can be found here. 

The full SRD II measures will come into force across the EU on 3 September 2020 as scheduled, despite lobbying from intermediaries including custodians and banks to delay the directive by a year, citing operational difficulties.  

The EU introduced the directive to encourage long-term shareholders such as pension funds, asset managers and insurance companies to increase their engagement with and monitoring of listed companies in the wake of the 2007-09 financial crisis.