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Shareholder Rights Directive II – FAQs

Read our frequently asked questions (FAQs) on the European Union’s Shareholder Rights Directive II – the key requirements of which come in to force September 2020.


  • The original Shareholder Rights Directive (SRD) came in to force in 2007, with its overall aim being to help improve corporate governance.
  • SRD II as an amending Directive entered in to force in 2017.
  • Member States were due to amend their laws to implement the Directive by June 2019 – with key requirements coming in to force in September 2020.
  • The Directive applies to institutional investors, proxy advisors, asset managers, issuers and intermediaries.

The focus of SRD II is primarily on encouraging long term shareholder engagement, improving transparency and seeking to reduce short termism. Improving shareholder participation in company meetings and accelerating the exercising of shareholder rights whilst providing investors with more time to consider voting options ahead of lodging votes are key intentions of the Directive.

Further in a bid to foster closer ties between companies and their shareholders, recognition is also given to the current challenges prohibiting free dialogue between parties. The Directive recognizes that complex chains of intermediaries between issuers and shareholders limit the information flow between parties and seeks to redress this balance.

The Commission Implementing Regulation applies from 3 September 2020, and as referred to in the previous section, lays out minimum requirements that must be adhered to. As Northern Trust continues to monitor activity at Member State level, it is worth highlighting that not all Member States have met the 10 June 2019 implementation deadline.

Northern Trust continues to monitor as the markets seek to finalize their position and provide due guidance and confirmation in this context.

Who is impacted by the Directive?

The Directive applies to institutional investors, proxy advisors, asset managers, issuers and intermediaries.

  • The term “Intermediary” is defined under Article 1 of the Directive as an investment firm, credit institution, and a central securities depository (CSD), which provides services of safekeeping and the administration of shares or the maintenance of securities accounts on behalf of shareholders or other persons. Custodians such as Northern Trust are deemed to be an “Intermediary” in this context.
  • All investors – not just those located in EU. The rules are considered highly extraterritorial as they apply to any investor with holdings in EU listed assets.
  • Issuer companies located in the EU with shares admitted to trading on a regulated market or to companies registered outside the EU whose shares are listed on an EU regulated market.

The thrust of the Directive is intended to relate to activity regarding holding of “shares”. However, in certain cases it appears some Member States – through their transposition activity – may widen the scope to capture bonds and / or ADR’s and GDR’s. Northern Trust is working to identify in which markets this will be the case in order to adapt service requirements accordingly.

Read our FAQs to learn more.

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