The AMF publishes its response to the European Commission’s consultation on the review of the Shareholder Rights Directive (SRD)

The AMF welcomes the European Commission’s ambition to revise the Shareholder Rights Directive (SRD), which presents an opportunity to further harmonise shareholder rights and the issuer-shareholder relationship.

The context of the AMF’s contribution

The Shareholder Rights Directive (SRD 1 in 2007 and SRD2 in 2017) laid down the foundation for a European framework for shareholder rights, with the objective of strengthening the rights of shareholders in listed companies and facilitating their exercise. In response to the 2008 financial crisis, which highlighted shortcomings in the relationship between issuers and investors, SRD 2, adopted in 2017, sought to promote long-term shareholder engagement, enhance transparency in the governance of listed companies, and regulate the exercise of shareholder rights, particularly in the context of general meetings.

The AMF consulted with various stakeholders in the Paris financial market (issuers, investors, intermediaries, depositories…). These consultations revealed that several challenges persist. Shares in listed companies are frequently held through complex chains of intermediaries subject to divergent national regimes and practices across Member States. This fragmentation makes the exercise of shareholders’ rights more complex and, in some cases, can limit their effectiveness — particularly regarding the transmission of pre-general meeting information or the execution of voting rights on a cross-border basis.

Summary of the AMF’s proposals for the SRD review

To address the market fragmentation issue, the AMF urges the Commission to remove from the directive the numerous options currently available to Member States. This step is essential towards achieving greater harmonisation in the effective exercise of shareholder rights throughout the European Union.

The AMF also emphasises that fostering long-term shareholder engagement remains a fundamental objective of the directive. In this regard, the revised directive should aim to facilitate shareholder dialogue, not only in the period surrounding general meetings, but also on an ongoing basis throughout the year.

In light of these considerations, the AMF has conveyed the following proposals as part of its response to the European Commission’s public consultation:

Better regulating the format of general meetings

In the context of the digitalisation of the economy and the increase in cross-border shareholder engagement, the AMF has long been in favour of the development of hybrid general meetings with real-time remote voting. However, the emergence of certain formats raises concerns regarding the objectives of the directive and the effective exercise of shareholder rights. First, closed-door general meetings, excluding in-person or remote participation by shareholders, appear incompatible with the directive’s objectives and should therefore be prohibited. In addition, virtual-only general meetings could be further regulated under the directive, notably by requiring shareholders’ regular approval for their use.

In the case of hybrid or virtual-only general meetings, the effective exercise of shareholders’ rights should be guaranteed (e.g., the right to ask questions).

Facilitating the exercise of shareholder rights

Given the persistent barriers shareholders encounter in exercising their rights in some Member States, the AMF proposes several key measures : first, introducing an EU-wide standardised proof of entitlement for shareholders as of the record date; second, further harmonising timelines surrounding general meetings by more strictly regulating the leeway given to intermediaries to set voting deadlines and to Member States to determine the record date while ensuring overall calendar consistency. Finally, requiring from intermediaries to electronically confirm, without delay, the receipt of votes by issuers.

Harmonising and making the threshold to submit resolutions progressive

To further enhance shareholder dialogue and ensure greater proportionality, the AMF supports the introduction an EU-wide harmonised threshold. Inspired by the French regime, this threshold – expressed as a percentage of capital - should be lower for companies with higher market capitalisation to make it easier for shareholders to submit resolutions at general meetings.

Improving issuers’ right to identify their shareholders

The right for issuers to identify their shareholders remains underutilised within the European Union, largely due to the limitations defined in the SRD. Drawing on the French transposition of the directive, the AMF advocates for the removal of the option left to Member States to restrict issuers’ identification of shareholders to those holding more than 0.5% of the voting rights or capital. Additionally, the AMF supports an expansion of the scope of financial instruments (bonds, fund units…) and companies (including those listed on a Multilateral Trading Facility) so that more issuers can identify all their shareholders.

Strengthening transparency requirements regarding the shareholder engagement policy

The directive’s provisions on the engagement policy and its monitoring remain flexible and do not allow for comparability of disclosures. The AMF calls for the transparency obligations imposed by the SRD on investors and asset managers to be clarified, particularly regarding prioritised engagement topics, allocated resources, and expected versus achieved outcomes.

Considering an EU-level supervision of proxy advisors

Given the difficulty of supervising cross-border actors operating in an oligopolistic context at the national level, and considering ESMA’s involvement in establishing the existing code of conduct, a revision of SRD could provide for a European supervision of these agencies by ESMA.